Changing the Role of Finance Teams: Moving from a Focus on Transactions to Becoming Valued Business Partners

Assuming the role of CFO in a new organization is no small feat. When I first started, I took the time to observe and analyze how the finance team operated. My goal was to identify ways the team could significantly impact the organization and create meaningful growth opportunities for individuals. After reviewing the team's processes, it became apparent that we needed to shift our mindset from one focused on transaction and compliance to one centered on business partnering.

Typically, non-finance personnel enter an organization at a lower level, excel in their duties, and advance to managerial positions. However, overnight, it is often assumed that they suddenly now possess an innate comprehension of financial concepts such as profit and loss statements and budgets and the ability to identify factors that can improve their outcomes.

In today's rapidly evolving business landscape, the role of finance teams has undergone a significant transformation. No longer confined to traditional tasks such as planning and analysis, core finance, controls, and compliance, finance teams are now expected to collaborate with other departments and drive business performance. This shift towards finance business partnering has become essential for companies to adapt and thrive amidst geopolitical, economic, technological, and competitive changes.

The Importance of Establishing Finance Teams as Business Partners

The traditional perception of finance teams as bean counters sitting in the back office, hiding behind their spreadsheets, and as corporate police, only engaging when something goes wrong, is no longer sufficient. Business leaders now demand and expect active partnerships from the finance team. They consider finance the center of corporate intelligence, information, and decision-making. Finance teams must establish themselves as strategic business partners to meet these expectations and add value.

A finance business partner (FBP) is a role within the financial department that supports and challenges the business to create value against acceptable levels of risk. FBPs turn opportunities and threats into business drivers, leveraging enablers and anticipating constraints. They use technology for competitive advantage and look into the future to provide in-depth analysis and insights for practical performance assessment. Establishing the finance team as business partners requires a shift in mindset and adopting best practices.

The Role of Financial Business Partners

Financial business partners are crucial in bridging the gap between finance and other organizational departments. They act as a strategic link, providing financial insights and recommendations for decision-making. FBPs are responsible for turning external opportunities and threats into drivers for business partnering. They leverage enablers, such as real-time information, and anticipate constraints hindering value creation. FBPs utilize technology to gain a competitive advantage and make data-driven decisions. By looking into the future and conducting in-depth analysis, FBPs contribute to the overall performance assessment of the business.

Transitioning from Transaction Focused to Business Partners

Several vital steps must be taken to establish the finance team as a strategic business partner. These steps include adopting best practices for financial planning and analysis (FP&A), automating manual processes, standardizing data and definitions, investing in an integrated business planning and analytics tool, and encouraging cross-functional collaboration. By following these steps, finance teams can effectively transform themselves into value creators and play a crucial role in strategic decision-making.

Adopting FP&A Best Practices

Adopting FP&A best practices is crucial for finance teams to become effective business partners. This includes undertaking financial analysis to identify trends and patterns, preparing reports for operational and financial success, collaborating with departments to collect and consolidate financial data, creating and maintaining financial forecasts and models, and preparing detailed reports and presentations for decision-making.

Automating Manual Processes

In the current volatile business environment, finance teams must rethink their models for financial forecasts and plans. There is a greater focus on building scenarios and understanding their implications on the business. Automation saves time and allows teams to focus on value-driven tasks. Finance teams can improve efficiency and accuracy by automating data preparation, importing data from various sources, and running comprehensive what-if scenarios.

Standardising Data and Definitions

Standardizing data and definitions is crucial for practical analysis and decision-making. Relying on manual data collection and analysis is time-consuming and prone to errors. Cloud-based financial forecasting and planning tools can help gather data from various sources, creating a single source of truth. This allows for identifying trends and correlations between data types, leading to better strategic planning and decision-making.

Investing in an Integrated Business Planning and Analytics Tool

Investing in an integrated business planning and analytics tool can significantly enhance the capabilities of finance teams. These tools allow decision-makers to manage trends and exceptions more rapidly, iterate scenarios faster, and understand the likely impact of decisions. Features such as data consolidation, dynamic model creation, scenario planning, and advanced reporting enable finance teams to provide accurate insights and identify trends.

Encouraging Cross-Functional Collaboration

To establish themselves as strategic business partners, finance teams must break down decision silos and foster cross-functional collaboration. Collaboration with other departments, such as sales, IT, human resources, and marketing, is essential for understanding key business drivers and aligning financial goals with overall organizational objectives. By working closely with other functions, finance teams can provide instant access to information and analysis, enabling proactive decision-making.

Developing Meaningful Insights

Finance teams must focus on developing meaningful insights that drive strategic decision-making. With the aid of technology, finance business partners can build conviction around strategic moves based on data-driven insights. This involves continually shifting between planning, execution, and delivering critical business insights that empower leadership to make informed decisions.

Promoting Awareness of Finance's Value

To establish themselves as strategic partners, finance teams must promote awareness of the value they bring to the organization. Streamlined planning, forecasting, and budgeting can drive significant organizational cost savings. By showcasing their role in delivering value and promoting transparency, finance teams can gain recognition for their contributions.

Conclusion

Transforming finance teams from being transaction-focused to becoming strategic business partners is crucial in today's dynamic business environment. The transition requires a change in mindset and a commitment to continuous improvement, but the rewards are worth the effort. As finance teams embrace their role as strategic business partners, they can position themselves as valuable assets to the organization and play a crucial role in its success.