6 Essential Deliverables for the Finance Function of the Future
Kevin Dancey | October 28, 2019 |
Businesses face increasing complexity, more demanding customers and a wider range of risks – all of which make long-term value creation a challenge. The remit of chief financial officers (CFOs) now extends into all areas of business including strategy, enterprise risk management, performance management, and communicating the story of the organization to the outside world. At the same time, accounting and finance roles are changing due to automation and digitalization.
As a result, the finance function can no longer survive as a support function. So what’s a CFO to do?
CFOs and finance functions are well-positioned to drive organizational success by helping navigate, measure and communicate what matters to long-term success and brand reputation. Accountants must work to manage, measure, anticipate, and communicate value and risk holistically throughout the organization.
Given this context, the opportunity for CFOs and their finance teams to enhance their contribution to the business is significant. But to retain its relevance – and to maximize its contribution to the overall business – the finance function must position itself at the heart of decision making.
It can do this by focusing on 6 essential deliverables:
1) Actionable insights
Boards and management need insight into how value is going to be created and protected over time. Actionable information helps them to make trade-offs and difficult decisions for the short- and long-term.
2) Performance analysis
To steer the organization toward long-term profitability, organizations require a comprehensive picture of performance and what is driving value creation. A focus on performance helps to ensure alignment between strategy, planning and delivery.
3) Enterprise risk management
Businesses face more emerging opportunities and risks than ever, many of which will impact their long-term viability. As climate risks continue to grow, for example, supply chains and business models are being disrupted across the globe. Accountants must drive enterprise risk management within their organization to manage uncertainty, opportunities, and risks in the face of significant challenges in the external environment.
4) Effective communication and storytelling
Without a compelling story on how they create value over time, organizations will operate in obscurity or lose the trust of their key stakeholders. Speaking the language of financial reporting does not elevate the finance and accounting professional to be an effective communicator nor business partner. Instead, the CFO and finance function need to use their insights and business understanding to weave accurate and compelling narratives that make the organization’s purpose, strategy, business model and performance tangible for external audiences.
5) Trust and confidence
With trust in business eroded by poor governance, short-term decision-making, and data breaches, maintaining trust and confidence in an organization is critical to protecting its reputation. Specifically, the CFO and finance function need to reinforce confidence in the organization’s governance, data, processes, systems and reporting.
6) Integrity and professionalism
Professional accountants across the globe are held to a global Code of Ethics. Our professionalism and commitment to the public interest are hallmarks of the accountancy profession. Within businesses, the CFO and finance function should be powerful agents of an ethical culture.
The future of the finance function is one of great change and opportunity. As such, developing a finance function vision is key. It will help to identify the enablers of change and associated development plans to ensure that the finance function is fit-for-purpose to partner with the business and be at the heart of decision making.
To this end, we have developed an evaluation tool to help boards and management identify strengths and areas of improvement for their finance team, as well as a vision for the finance function of the future and redefined roles for the next decade.