Change culture is often one of the greatest challenges to successful projects and overall strategy, which often gets in the way of Finance truly adding value to the wider business.
It goes without saying that Finance is no longer a book-keeping function, but there is still some way to go with critically assessing how Finance teams really do add value.
Turning this strapline into a reality is not always simple – however it is a must to embrace and action to truly enable Finance to drive revenue and not just cut costs.
The changing role of the finance function
Business has always adapted to keep pace with an evolving culture. With the invention of Eli Whitney's cotton gin, the US ramped up cotton production so intensely that the raw material became its largest export within a year. This revolution put multiple industries out of business virtually overnight. Have you heard the phrase "you’re acting like a Luddite"? This term comes from a response to the worldwide advancements in cotton production. The Luddites destroyed modern textile machinery (amongst other technologies) that was created to keep pace with the advances in cotton refining. They were threatened by the advancements and feared losing their manual jobs. The Luddites just could not adapt to the technological advances and eventually disappeared from history.
Henry Ford's introduction of the mobile assembly-line revolutionized manufacturing process across all industry. Consumers now wanted goods quicker and cheaper and those who could not adapt or keep pace would not be around a decade later. Craftsman and artisans had to change the way they worked to keep pace with modern demand.
So enough of the history lesson. I present these anecdotes to outline the importance of adaptability, at no time has it been more important than now as the pace of technological advancement has never been so rapid. Many businesses function in a completely different manner than they had less than 20 years ago, and that is if they were even able to adapt to the rapid technical changes at all.
To constantly generate value for the wide business, the office of finance must be able to be responsive and proactive.
All aspects of our organisation are expected to seamlessly respond to change. The finance function is no different. The stereotype of the bookkeeper punching a calculator in the basement has long since passed. The office of finance is expected to be an agile and responsive function constantly changing and adapting to provide new streams of value and revenues to the wider organisation. Finance functions are increasingly interwoven with IT, and consequently the CFO and CTO must work hand-in-glove.
The role of the CFO has changed as well. The CFO now often acts as the CEO's right hand, providing the valuable insight and making key business decisions. CFOs are expected to develop and lead a finance team that can obtain and assess data in real-time and generate insight that steer the business through economic and industry change. The office of finance now must work cross-functionally and generate different avenues of value to all aspects of the business.
Being Lean and Efficient
One way that the finance function can generate value for the wider business consistently is by reflecting upon their own processes with a focus on efficiency. When cashflow is tight, reducing cost and streamlining for efficiency provides a great representation to the wider organisation. Providing insights relating to how to make other parts of the business leaner and more efficient ensures that the finance team is driving value.
Having a routine to audit time/money-saving opportunities and explore being more efficient is essential for a finance function. It is one way to proactively support active cashflow and make the wider business more adeptly responsive to change.
At VantagePoint we constantly investigate how we can be leaner or more efficient. We are the first to look at our processes to understand where we can be more streamlined. On projects we are constantly reassessing processes and systems to assess where improvements can be made. Partners of VantagePoint know that we strive to add the most value to the wider business for the lowest cost possible.
Being lean is not about running a barebone operation. Goals must be ambitious and diligent planning must be initiated to meet these goals. If there is an area that can be modified or streamlined with process automation, then it must be done quickly. VantagePoint helps partners reframe their culture so their finance team have the mindset to focus on this level of efficiency too.
A Clean Acquisition Plan
Acquiring new businesses means adding complexities with people, processes and systems. The finance team can drive the important decisions by providing the data to support the acquisition framework.
Leading the way with efficient consolidation processes means that time, energy and cash can be saved for the wider company. If consolidation processes are not up to par, it is a strain on the finance team and organisation, slowing the speed to reporting and ultimately decision-making.
Leading the way in Governance
The finance function is facing an ever-increasing suite of compliance pressures. Having a robust governance framework means that CFOs can be confident that their team can be responsive to the changes in statutory and regulatory reporting.
Regulatory changes impact the way our businesses function. The finance team needs to have a holistic understanding of the compliance and governance framework. Having systems in place to generate the data efficiently and in a functionable way ensures the finance team can provide support and insight to other business units.
These are just some of the many ways that finance functions can act as strategic partners to organisations, shifting away from the mentality and more importantly perception, of book-keeping and reporting. Ensure the strategy of your finance team is driving Henry Ford-esque revolution and ensure you’re not allowing the Luddites to take over!