More and more firms have started realizing the importance of finance in strategy and development of a firm. Organizations are assuming their finance teams will offer enhanced support while lowering costs. There are a few ways that can leverage transformation of finance to enhance the impact of your team.
What is transformation of finance?
Finance transformation describes strategic initiatives that aim at enhancing finance inside the firm. This process involves a series of tasks, that includes shortening budget cycle, implementing accounting software to lower overhead costs. The general objective of any transformation is to align finance with the entire company strategy to become highly efficient and offer better service to its internal customers.
Why is finance transformation complex?
Finance transformation is a very difficult task when considering evolution of the finance role from traditional governance such as accounting, budgeting and auditing, into guidance support such as demand planning, advanced analytics, and pricing.
There are several companies who, in search for this added support, are facing enhanced complexity due to new business ventures, rapid growth, and M&A activity. Companies need to align their finance teams properly to maximize the business profitability.
What areas does financial transformation improve?
Financial transformation is designed to improve following areas:
The prime responsibilities involved in this sector include accounting, auditing, and budgeting. The significance of this sector is linked to control, compliance, and reduction of costs.
This is mostly in reply to new business needs such as acquisitions, growth, and new markets. The objective is to efficiently service and assimilate expanding businesses.
This kind of transformation focusses to offer improved financial insight to its customers via new and innovative analytics.
Obstacles in achieving Finance Transformation
Following are some of the issues that organization face while transforming their finances.
- Focusing entirely on finance cost management as a sales percentage
- Underestimating complexity of business and added services
- Looking for universal customer satisfaction
- Thinking that finance transformation to be a one-time task
- Thinking that one can’t accomplish a finance transformation without needing external assistance.
Best practices to achieve Financial Transformation
The key aspect of financial transformation is to have a clear vision. Below are mentioned guidelines and approach on the way to come up with the best results:
- Define your activities
- For infant companies, goal of financial transformation should be to streamline the accounting closing cycle or build a budget. For mature companies, the aim should be to invest in demand-planning activities.
- Establish objective to guide a company to its future state
- Focus on the ROI (return on investment) instead of cost to serve
- Manage expectations of business partners
These are several common themes recognized in analysis and research of CEB, that provide insight into how to implement a successful finance transformation. With a transparent vision and the correct approach, transformation of finance can really make an important impact.