In days gone by the finance function – the people and processes used to ‘keep the books’ – was largely responsible for keeping score. Their remit was to report on what had happened historically and make sure tax and accounts were filed on time.
However times are changing.
As new technologies and business models create an unprecedented pace of change, what we ask of finance has changed. To compete and grow businesses need finance to deliver more. This transformation from ‘bean counting’ to business partner is not an easy one, so we’ve created a 5 point plan to help get you started, focused on resources, technology, processes, meaningful data, and support for wider objectives. All of these impact each other, so we should consider them together.
1. How well aligned are your finance resources to your wider business?
Many SMEs use a combination of internal and external resource to make up their finance team, often relying on part-time help from book-keepers and FDs. This type of blended team can be very successful but it is crucial to consider how best to create the finance outputs your business needs. As those go beyond just finance and tax filings this will often mean buying in a different blend of expertise – including bookkeeping and tax alongside strategic support and data analytics capabilities.
2. Are your processes fit for the future?
In an ideal world all finance processes would be deliberately designed, taking into account all the other 4 key elements and regularly reassessed as the business grows. We all know that this rarely happens though! It is, however, worth taking the time to consider whether the processes driving your finance function are enabling you, or constraining you; fit for the future or creaking at the seams. It is not uncommon for processes to be outgrown, but this can become problematic if not addressed.
3. Does your finance function give you meaningful data?
Given the overview finance has of your entire business it should be working towards becoming a data driven decision centre – i.e. using the wealth of data collected to help support strategic decisions. If this doesn’t currently happen then we need to ask why. Common reasons are an over reliance on spreadsheets; time consuming processes; and technology not focussed on supporting the whole business, but all these can be evolved!
4. How is finance supporting your business’ wider objectives?
If the answer to this is ‘they’re not’, then there is work to do. An up-to-date assessment of your resources, processes and data quality will help. The good news is that finance can do far more than just keep score; it does not have to be an administrative cost but can genuinely drive real value. The slightly trickier news is that as business leaders and entrepreneurs it is part of your role to question whether you are getting the value you need from finance and assess how to keep it moving forward.
5. How are you using technology to help with all the above?
It goes without saying that the technology your finance team uses will be crucial to supporting your ambitions. Advances in technology mean we have gone far beyond finance systems that solely keep the general ledger. Many growing businesses are now choosing to invest in systems – either directly or through advisers – that allow them to engage the whole business; efficiently produce quality management information; and are designed to be intuitive, so they’re easy to use.