Everyone expects more from Finance Functions

These rising expectations impose new pressures for finance, but they also represent a huge opportunity for finance professionals. Boards look to finance directors to increase shareholder value, manage financial risk, control costs and ensure compliance with more exacting governance regulations. Managers want more timely and relevant input to improve the quality of their decisions as well as better methods of planning, managing and monitoring performance.To be effective and value-adding, finance needs to shift from being a scorekeeper to an active business partner. It needs to support the achievement of business strategy through insight and analysis, brand value management and other key partnering activities.

Finance should be able to tell the business something it didn't already know, and to help business managers make fact-based decisions wherever possible. Additionally, business partners in finance should challenge the decision-making processes, providing transparency in results and estimates, and know when and how to say no. The challenge is finding the finance people with the right skills to do this. Not all excellent technical accountants will be able to make the transition to business partnering.

Getting the team structure right is also important. Finance functions often find themselves very stretched while performing their day-to-day activities. This means that organisations need to be more creative in making time available for the execution of higher value-adding activities. Finance business partnering is no exception to this challenge.

Many companies have already implemented shared service centres or outsourced transaction processing to focus finance executives' attention on decision making. However, some are going one step further and separating the production of management information from detailed decision support.

According to an article entitled "Good business-partnering needs vision and understanding" by Stathis Gould, from CIMA and Martin Fahy, senior lecturer in information systems at the National University of Ireland, Galway, many CFOs are struggling to meet the decision-support needs of senior executives while reducing the total cost of the function (without exposing their organisations to compliance risk). Transaction processing still takes up 60 per cent of finance staff time.

Discussions and benchmarking at the CIMA strategic enterprise management (SEM) network forum, which involves major organisations in different sectors, have shown that cutting finance's operating costs requires discipline and a focus on de-cluttering the function's agenda. The article suggests that "some trends are emerging:

  • shared-services centres are an established part of the finance architecture and companies are increasing their scope and flexibility
  • firms are focusing on improving productivity and cutting costs via consolidation in pan-regional centres 
  • single-instance ERP remains elusive, or uneconomic in some cases. But operating units across borders requires common processes and systems to ensure standardisation and simplicity 
  • workflow and electronic processes are emerging as standard, but full automation of financial transaction processing is some way off 
  • global strategies for shared services have led to cost savings of up to 50 per cent, but these have typically taken more than five years to materialise."

Previous debates on the future of the function failed to define a service delivery model for commercial finance. Neither did they help organisations to answer the key question of what high-quality business-partnering looks like.

The finance function is under constant pressure to do more with less. Becoming more efficient and effective in its traditional roles whilst also providing valued support, guidance and challenge to the business through business partnering is a sensible response to the situation.

Delivering the commercial finance business-partnering model requires a clear understanding of the requirements of the various parts of the organisation, and it needs the right people using the right techniques. Obviously, organisations must be clear about their vision, strategy and people development requirements. Some firms will benefit from rigorous finance training programmes to give individuals the exposure and skills they'll need in a finance partnership role. Others will need to consider how they can gain and deploy what are scarce capabilities. The opportunity for finance to spread its wings is there to be grasped.

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