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More and more companies are asking Finance to play a bigger role in their strategy and development. Here are some of the ways you should (and shouldn’t) be leveraging finance transformation to increase your team’s impact.
The role of Finance is evolving from traditional governance (accounting, auditing, and budgeting) into guidance-based support (advanced analytics, demand planning, pricing, etc.), and that many companies seeking this added support are facing increasing complexity due to rapid growth, new business ventures, and M&A activity.
So how can companies properly align their Finance teams to maximize the profitability of the business? Without the proper planning and execution, the short answer is they can’t. But with a clear vision and the right approach, finance transformation can make a significant impact.
Below are several common themes that offer insight into how to (and how not to) implement a successful transformation of your finance organisation.
Loosely defined, the term “finance transformation” is used to describe strategic initiatives aimed at improving Finance within a company. It can involve a variety of tasks, from shortening a budget cycle to implementing new Accounting software to reducing overhead costs. However, the general goal of any transformation is the same: to align Finance with the overall company strategy in order to become more efficient and provide better service to their internal customers. Typically, this can be categorized into improving one or more of the following
Governance: These core responsibilities include accounting, auditing, and budgeting. The importance of this area is mostly related to compliance, control, and minimizing costs.
The biggest mistake a company can make is having too broad of a goal by simply saying it wants a “world-class” Finance team. Too often, this means the company will attempt to cut costs and increase services simultaneously. Specifically, benchmarking against “world-class” metrics can lead to the following problems:
Focus on the return on investment for the company, rather than cost to serve. As you go about this, remember to: