The emergence of finance as a strategic business function
Our latest white paper explores the results of our very own survey about the changing tasks of finance professionals. We asked more than 500 finance professionals about their experiences in finance roles, and the changes that have shaped the field over recent years.
Among the many takeaways that emerged from our study, we saw one very clear trend — the majority of finance professionals want to spend more time on strategic decision making, higher level financial architecture, and interdepartmental alignment.
These activities lie outside the typical remit of the traditional finance team as many people would know it. Indeed, the role of finance has shifted significantly in recent years, serving a much more strategic role in businesses of all sizes.
In this article we’ll take a look at what this shift means for members of the finance team and the teams they work with, as well as how it affects technology and software requirements.
The changing tasks of finance professionals
Why has finance developed into a strategic business function?
The shift towards what is often called ‘strategic finance’ has been largely driven by two main factors. Firstly, the pace of change and uncertainty in the business environment has brought about a need for more accurate, on-demand financial information and insights.
More than ever, businesses need to be able to adapt and alter their financial strategies in response to changing economic conditions, competitors, shifts in the market, etc.
At the same time, technology has progressed to the extent that real-time financial data and financial controls are a reality. Compared to the slow, periodic reporting, planning and controlling that used to be the standard in finance, most of these processes now take place in near real-time.
As the source or gatekeeper of this financial data/control and expertise, the finance department has somewhat naturally found itself acting in an advisory role for a variety of other departments.
What does this mean for the CFO and other members of the finance team?
As the head of finance, the CFO is probably the best example of the shift towards strategic finance. The CFO is no longer just responsible for overseeing the traditional responsibilities of the finance department. They now act as an advisor to the CEO, providing strategic advice and insights that are firmly rooted in financial data, as well as a key stakeholder for planning and strategy in other departments.
The ICAEW (Institute of Chartered Accountants in England and Wales) outlines six ‘roles’ that modern CFOs have to play when influencing strategy.
- Critical thinker
While this is more theoretical, rather than a list of actual attributes CFOs must adopt to do their job, it reflects the range of different stakeholders and activities within a business that rely on the CFO to get things done.
From taking the lead on developing strategy based upon financial insights, to pushing back against ideas which have no firm basis in data, and guiding the business planning process — the CFO is arguably the best positioned person within a business to work on strategy.
Likewise, the rest of the finance team works together with the CFO and other stakeholders to ensure that financial considerations are front of mind when any decision is made. A big part of this is educating other colleagues, who may not be familiar with finance at all, about the ins and outs of the company's financial policies. This may be encouraging reduced expense spending, guidance for budgeting, etc.
Equipping your business for strategic finance
To facilitate a truly strategic finance team, businesses need to invest in the right technology and processes. Going back to our study — finance professionals reported that they spend most of their time on repetitive financial tasks, like reporting, checking accounts receivable and payable, etc.
While these are essential parts of any business’s finance operation, they’re not things that offer much value to a business in terms of the on-the-clock hours that need to be invested to get them done. Experienced finance professionals’ time and expertise is much better invested in strategic or analytical projects, especially now that they serve a more central role within many organisations.
Luckily, technology and software is now able to handle most of this foundational finance workload almost completely independently. Smart spend management software can automate accounts receivable and accounts payable workflows with minimal input from the finance team. This frees them up to focus on tasks that are more valuable on a personal level, and more valuable to the business itself.
Additionally, it provides highly granular, real-time data about every aspect of your business's finances, so your team can develop effective insights.