Once regarded as stewards of organizational assets, financial executives in today’s information-driven market must become more strategic. Focusing only on financial accounting, cost reduction and compliance requirements is no longer considered enough to improve business performance and drive growth.
As technology continues to evolve, financial executives and their teams must adapt and respond to change, take advantage of the opportunities presented by new technology and move beyond reporting to analysis. This means elevating their business planning and analysis capabilities. In the past decade, finance has mostly focused on internal controls and cost-cutting initiatives. However, as organizations push into new and different businesses this is presenting an opportunity for financial executives to be more strategic and play a crucial business partnering role.
Instead of spending more time on transactional activities which add little or no value at all, financial executives and their teams must spend more time on value-adding activities solving problems and helping business leaders perform better. For example, business leaders need reliable and timely information to make strategic decisions that relate to diversifying product and service lines; developing new business models; increasing or improving R&D, increasing production capacity; mergers and acquisitions or divesting certain parts of the business. Finance can therefore play an important role of delivering higher quality information and better analytics to executive management as well as provide more support to business unit line managers.
To successfully execute their business partnering role, financial executives must ensure that the financial and performance management information they are presenting to senior management is of high quality and detailed. In other words, decision-making information must be available quickly, wherever and whenever business managers and their employees need it. Furthermore, the presented information must also be actionable.
It is therefore important to ensure that the financial close is done faster. Unfortunately, in some organizations the financial close takes between 15 and 20 days. By the time information is delivered to management, you are almost at the next month before you are telling the business how you performed last month and in most cases this information is no longer relevant and useful for strategic decision-making. The faster the financial close, the quicker the finance team can deliver actionable information to management, the quicker management understand business performance and make relevant and fact-based decisions.
Today change is happening very quickly and in turn the organization must be able to adapt and respond. By using information strategically and as an important asset, executive managers are able to make confident calls on strategic issues such as entering new businesses or exiting current businesses that are not strategically fit. Because of the information already within their domain, financial executives are uniquely positioned to be the strategic information leaders. For example, they can embrace developments in business intelligence and analytic tools. Implemented and used correctly, these tools assist managers gain access to insightful information which in turn helps them improve decision-making, drive growth and best increase return on invested capital.
Financial executives that need to become trusted advisors and create value for their organizations must start partnering with the business instead of staying behind the scenes. They must move closer to where the action is happening and empower business strategy. In addition, they should become strategic players by implementing enterprise performance management methodologies such as scorecards, dashboards, strategy maps, customer profitability analysis, predictive analytics, rolling forecasts, dynamic pricing, enterprise risk management and value-based management.