CFOs and their Finance functions have a clear opportunity to ensure that they remain a highly relevant, flexible department that supports business growth at a time when there is an ever more pressing need to react quickly.
And if finance is to achieve its true potential it requires strong leadership.
The adaptive Finance function
Finance needs to be agile. Forward thinking CFOs are developing agility in order to support the business to develop long-term strategies for profitable growth and sustainability in a rapidly changing market. While not losing focus on cost and efficiency, Finance leaders must recognise that improvements to the way the function operates internally will have much less impact than solving business problems and delivering increased value to stakeholders. This means creating the space to think more broadly about what the business needs and how Finance will operate in future.
When transactions are instantaneous, rapid decision making based on up to the minute information is of paramount importance: the business cannot wait a month for Finance to catch up. Many organisations now expect Finance to be involved in decision-making beyond its traditional realm. In today’s faster, more agile business environment, organisations need decision support, particularly from Finance, more than ever before.
Review, review, review
But how exactly can the Finance function of the future satisfy various stakeholders, and also gather, analyse and explain metrics – both traditional inputs and new data – and participate in more complex planning and budgeting?
The first step is knowledge.
Finance leaders need to gather details of every penny that leaves the company, who it goes to, what it's for, what spending is overdue, when current and future payments are due. These are just examples of the more obvious things that need to be managed…but they are just the tip of the iceberg.
Finance also needs to review the terms with suppliers, which suppliers are responsible for the bulk of spend, the agreements or contracts in place and the associated risks.
Ideally, modern Finance functions will have the tools, and staff, in place to get a handle on financial and cashflow operations. If the team is in a position to make the necessary changes to reduce risk, renegotiate payment arrangements, and remove roadblocks in the process, for example, this is the first step to improving the bottom line.
When thinking about what the future will demand, visibility of data will become a key determinant of competitive differentiation. Effective information management is quickly becoming an essential requirement to achieve control of spend and a healthy bottom line. For many organisations, this takes the form of data-driven spend management, i.e. strategic purchasing, cost reduction, and supply chain management informed by in-depth data.
The speed and sophistication of management dashboards is vital. Business users should be able to ‘self-serve’ their analysis and ‘slice and dice’ data, and results should be presented in a visual way.
In terms of spend management, CFOs need to be able to provide:
Clearer insights, by communicating performance and highlighting shortfalls.
Faster insights, so that management can understand recent performance and make decisions to change its trajectory quickly and decisively.
Richer insights, based on more robust datasets from a wider variety of sources, providing broader perspectives than those based only on internal financial data.
Digitising the Finance function
A digital Finance function offers CFOs a way of delivering on ever-increasing expectations and provides the kind of real-time financial insight needed in today's complex and increasingly competitive business environment. CFOs who take time to understand digital finance's potential and use this to help plan their way forward, will provide their organisation with a competitive edge.
The best spend management solutions can overcome these tricky issues and more. Modern tools ensure that Finance constantly have the right information, at the right time, with 100% insight into the organisation’s financial and operational performance. They can aggregate, cleanse, validate, categorise and analyse every ounce of data across transactional systems.
Contact us today to speak to an expert about how to achieve these requirements.