The finance function has changed massively over the years; even just the last 5 years has seen significant evolutionary changes.
Historically, finance tasks were achieved in order to meet legislative requirements, such as filing of accounts or paying invoices.
Fast forward to today, the finance function has a new responsibility: to help the business meet its extended goals by providing support through data analysis, forecasting and business partnering.
One reason for this change of the finance function is, as new powerful tools and technology emerge, we’re able to apply broader skills to deliver strategic objectives.
And so, finance business partners have found that their responsibilities have merged into IT and risk management.
But, the overall reason for the continued change of the financial function goes a bit deeper.
Why has the finance function evolved?
There is an increased focus on real-time demands and a squeeze on margins, leading to new technology reshaping the role of the finance function.
In other words, even in prospering organisations that would have traditionally been more flaccid with their financial controls, finance partners are expected to support the business through accurate insights and therefore the speed and focus of this change must meet real time expectations. And doing so is in line with the rate of movement in business, and the overall market in general.
The fact of the matter is: Business is moving rapidly now more than ever before, with the potential of further acceleration as technology gets integrated further into business operations, leading to even more investments into real-time data analytics. On a positive note, with a tighter reign on ongoing business proceedings, the overall positives for dynamic businesses are worth all this investment.
All in all, real-time data means faster and better informed business decisions are able to be made. More importantly, allowing decisions to be made whenever they need to be made.
And now, with the mainstream integration of AI and cloud-based sofrware, and the automation of a majority of the finance function, the focus has shifted on something more important within the finance function too: insights; and more importantly, accurate, real-time insights.
Accurate insights, in turn, are important to make informed decisions on how to effectively drive sales, reduce costs, save time and improve the customer experience – all which will help to drive past the competition and help businesses grow.
The Role of the Finance Partner
With these technological advances, the role of the finance leader has shifted into that of a strategic partner to the CEO, with an expectation to help drive growth by working closely with all departments within the business.
At the same time, a finance partner needs to ensure that strategy and costs are aligned and the impact of technological changes is managed properly, both now and for the future; finance plays a role in all of these areas.
Three key areas in particular include:
- Strategic Development: finance partners should build a framework that allows leadership teams to allocate resources effectively towards investments that will deliver long term value, and ensures financial plans are properly aligned with the business strategy.
- Performance Management: finance partners need to focus on KPIs that support the business strategy rather than relying on backward-looking financial metrics.
- Partner with the Whole Organisation: finance partners should build close relationships with the whole organisation to better understand challenges and offer advice based on scenario planning for the best possible outcomes.
So, the strategic finance business partner today has a greater focus on sharing insights to positively impact important decision-making through cross-functional leadership: involving multiple areas of the business.
As a key stakeholder, the finance partner should provide risk-free reports and analysis to forecast and predict future events.
By doing so, they will be able to help make the business stronger as a whole and lead the finance department into a profit centre.
Despite changes in the global economic market, the finance function remains the same – reporting financial performance to ensure businesses are driving positive results.
All in all, strategic finance business partners play a critical role in ensuring there is a clear link between the business strategy and operational execution to help the business continue to grow.