The world of work is changing. HR functions are taking up their place around the boardroom table as an effective and productive workforce becomes critical for agile business delivery – tapping into the best skill, when you need it. But the HR function is not the only business function that is developing a far more strategic role within the core of business operations.
Introducing: A New Strategic Finance Imperitive.
All eyes are on corporate departments as they’re being asked to do more, with less; cut costs and sell more, produce more, quicker by holding just the right amount of stock, and getting things done just in time. The focus of reassessed risk is upon all of us, and in a digital era where cybercrime and risk management becomes business priority, while an economic crisis stares many in the face with a “what’s next” question, the financial function has never been under more pressure to perform, and contribute to a more sustainable, long-term business plan.
But where many traditionally-stale departments feel stuck in the lack of ability to see clearly, and understand the important role they play in a far bigger, more influential picture, many businesses are notice critical structural changes that need to take place, putting the financial function at a clear position of contribution, productivity and insight.
How is the Finance Team strategic?
In a recent study conducted by McKinsey, 4 critical strategic value-players were identified within the finance team.
- Value Managers: These people are an integral part of the management team and it is there role to support the value and wealth creation of the business by identifying opportunities, providing critical information and analysis to make superior operating, strategic decisions.
- Business Partners: These people provide decision support, sound financial analysis to management for making financial and operating decisions.
- Process Managers: These people focus on processes and risk minimisation and typically demonstrate key capabilities in management reporting, tax, audits and treasury.
- Bean Counters: These are the members of the team who focus on the reporting and compliance function, spending most of the time on transactional management in financial accounting for the business.
The study found that of all the changes in the finance department occurring as a direct result of global economic turmoil, a majority of the respondents in the survey expected one constant finance function to occupy the highest rank of corporate agenda – and that was the continuous efforts to reduce costs. Most of the respondents in the survey felt that their critical change successes lay within the CFO’s influence within management in order to drive corporate success, cost reduction and risk mitigation.
Long-term strategic agenda
For many of the financial leaders taking part in the McKinsey study, it was felt that what was most critical to sustainable business success, was the centralisation of all financial and treasury functions, and that the role of the CFO into business strategy, risk management and performance management was already, and would be taking on, a far more relavent role within the overall business strategy – allowing the function, and the company as a whole, to manage themselves better through crisis. But where the importance of the CFO’s role was becoming clear, what was still surprising, is the lack of change within governance structure to incorporate the finance function as a critical player.
In a separate study conducted by KPMG, there was no deying that the finance function is quickly gaining in confidence with the majority of respondents feeling that their financial departments becoming highly credible functions within the line-of-business and functional management, the C-suite, the board of directors and all other stakeholders.
The trend towards Intelligent Finance
“The intelligent finance organisation of the future, and indeed of today, must go beyond its business-as-usual financial reporting and control role to become a value-adding provider of intelligence that the board and business units can depend on to make strategic business decisions” – KPMG
In the same survey conducted by KPMG, it was noted that the overall trend of high-growth organisations exhibit finance functions who communicate effectively with their board of directors, contribute well to the organisation’s long-term business strategy development, play a larger role in developing and executing business strategy year-on-year, provide greater support to the business as a whole and are experiencing a global momentum to transform the finance function into a more strategic business partner with acute decision-support capabilities, skills and methods.
CFPro has been working as critical strategic partners to businesses for over 30 years. Our teams have worked with functional roles across most sectors and levels of organisations, and delivering value to leadership teams and stakeholders. But we’re also accountants, advisors, communicators – and we understand the important role a finance team plays in delivering accurate concise business value. Because we see things from all sides, working with us means that you are choosing a business partner that not only delivers for you, but feeds into your long-term business strategy – placing you in the best seat for growth, and profitability.
Isn’t it time you spoke to us today?