Finance teams are still finding their bearings in the 21st Century business, as ever-changing technology, legislation and new approaches to outsourcing apply unrelenting pressure. But despite that, Michael Richards, Chairman at WebExpenses, argues that once Finance teams find their feet, the only direction they’re going, is up.
Finance teams have undoubtedly changed dramatically over the past decade. Conflicting demands from internal and external stakeholders have put them under new pressures and taken them well and truly outside their comfort zone.
The regulatory landscape, from both Government and industry bodies, has put the function under increased compliance and reporting scrutiny. As legislative demands have grown, not least with the introduction of the Anti-Bribery Act 2011, and the continuing focus on clear financial management from HMRC, policy and legislation have become both daunting and time consuming.
Meanwhile the economic downturn, increased regulation and changes in the roles and demands from within business have increased internal pressures. With finances stretched or uncertain, businesses are looking to finance teams more and more for support and advice to back up business decision making.
These expectations - ensuring the numbers add up, and using those numbers to aid business decision making - although crucial for the modern business, are a departure from the finance department of old. Time was, we viewed the finance department as a support function: more reactive than proactive. The key focus was on processing and collecting business and financial data.
The challenge now is for finance teams to adapt to internal and external expectations and excel in the face of these additional pressures. But how are they going to do it?
Streamlined business processes
IT development has automated many of the day to day tasks of the traditional finance department, while providing finance teams with the tools that they need to add real business value, rather than just process data.
But it’s cloud (web-based) computing that can really stand to make the difference to finance teams.
Modern cloud-computing software empowers businesses to manage and implement powerful, integrated business processes at the click of a mouse. Because cloud computing provides centralised access via the web, it allows small firms with limited budgets to create strong, scalable systems, without being restricted by size or cost. And it allows large organisations to make dramatic savings in the time and cost of monitoring, recording and managing transactions.
Step out of the back office
The key role of cloud computing in business is to drive efficiency and increase productivity. For finance departments this means no longer relying on manual processes for day-to-day tasks, as business and accounting software will streamline and automate these processes; eliminating gaps and freeing them up to focus on driving business growth.
When it comes to the rest of the business, FDs will need to evaluate ongoing activities, scrutinising the importance of the tasks staff are performing and assessing whether staff are adding value in these areas. Tasks where staff output is not seen to ultimately impact the business should be automated.
As more of the number crunching is automated, finance teams will be increasingly expected to use the information available to them to offer more insight, support more business decision making and to enable them to make recommendations for the benefit of the business as a whole. Finance teams should be thinking about the future impact of their day-to-day activities and attributing their impact on relevant areas of the business.
Real time business data
Traditionally there has been a huge reliance on retrospective data within business. The finance department has been seen as reactive; by the time data is processed and analysed there is little opportunity for conclusions to influence decisions that need to be made quickly. The automation of financial processes will mean financial data will be more readily available on a day to day basis and will become a bigger part of everyday decision making.
The real evolution lies in highlighting to the rest of the business the value that the finance team is adding; moving away from the ‘bean-counting’ misconception prevalent in many organisations.
There needs to be a real focus on leadership skills, as well as technical skills. Finance employees must position themselves as strategists and leaders within their business and partners to the different business functions. They must be trusted to make clear judgements. By adapting to and utilising new technologies a plethora of information will be available to them. They need to analyse this information to make quick business decisions and articulate their impact on business performance. Essentially they need to make the finance function indispensable and show that without their knowledge the business will get left behind.