Want to add extra value to the business? Finance professionals need to fix these problems first…

The finance function can and should offer so much more. 

It should be working collaboratively across departments, helping to highlight performance issues before they become full-blown business problems. It should be putting proposals on the table. And when possible new initiatives are weighed up, insight from finance should be central in helping the business decide which way to go. 

The switch to becoming more strategy-focused doesn’t happen automatically. You have to create additional bandwidth, so less time is expended on routine "transactional work - something that recent research from MHR shows a lot of businesses are still struggling with.

And as your organisation moves on from Covid, you should also be thinking about the type of areas where your expertise will be needed most. What questions will business insiders be asking? Do your existing processes and technologies enable the finance team to deliver answers quickly enough? 

Here are some areas to focus on…

To create more value, you need more time 

When Gartner asked finance leaders to visualise how the function will look in 2025, 93% imagined it as a hub for “complex problem-solving skills”, boasting a “high concentration of business acumen”. 

But alongside all the exciting stuff, finance professionals will still have their traditional stewardship role to fulfill. There are only so many hours in the day; and if huge chunks of resources are eaten up with things like month end reports, it leaves precious little scope for putting the department’s expertise to wider and more profitable use.

MHR’s latest survey, The Shape of Finance casts a light on how the department’s time and energies are currently expended. The top three most time-consuming activities turned out to be administering accounts payable/receivable, interpreting and presenting data, as well as consolidating accounts. 

These are exactly the type of areas that are ripe for automation with the right finance technology. And yet despite the fact they are slow, error-prone and rely on lots of manual data entry, spreadsheets are widely used for these types of tasks. In fact, our survey suggested that Excel is still used for more than half of financial processes.

How to fix it

• Consider carrying out your own audit to assess how exactly your resources are currently being used. If team members are still spending a lot of time on routine, frequently occurring tasks, these tasks are top candidates for process optimisation and a move away from outdated technologies. 
• You should also consider technical solutions for more complex tasks, where errors can easily lead to non-compliance. Right now, for many businesses, we are finding that lease accounting is one such pain point.
• Our research showed that larger organisations are often more reluctant than smaller ones to move away from slow, set-in-stone processes. An absence of agility, change inertia and complex processes all play a part in this. If this sounds familiar, make 2022 your year for getting the right external input to help you make a change.

Responding to post-pandemic unpredictability 

We’re over the worst of it. Our company is focused on growth - but there remain plenty of risks out there. 

This was the gist of Deloitte’s latest analysis of UK CFO sentiment. According to Deliotte, expansionary strategies such as new products and services, expanding into new markets and raising investment are a greater focus now than at any time since 2009. 

That said, there are still significant unknowns and operating risks to contend with: inflation, concern over energy prices and continued supply chain disruption are some of the most obvious. 

There’s a much stronger appetite for exploring new growth initiatives compared to the last couple of years. With companies still recovering from Covid, however, this is definitely no time for expensive mistakes. More than ever, business insiders are likely to look to finance for insight to guide their investment decisions. And if circumstances change, those same decision makers will need guidance on how best to respond.

Some of the questions asked of finance from across the business might include the following: 

• Energy costs have just spiked by 50%. What does this mean both for our bottom line, and for overhead costs at branch/location level? 
• Is this the right time to lock into a contract for materials, or should we wait until Q3/Q4? 
• If we expanded into X market, what would our requirements be in terms of workforce and other resources?
• If we adopted a near-shoring production model, would the benefit of shorter lead times outweigh any additional production costs? 
• What are our supply-side weak points that ought to be shored up? Which of our suppliers is most prone to delay and disruption? 

These questions all have at least two things in common: they tend to require rapid, accurate answers, and, in order to answer them, they need access to information from right across the business.

How to fix it 

• Business Intelligence (BI) and analytics capabilities enable finance teams to deliver answers to business insiders, right at the point of need. However, our research shows that just 45% have BI tools in place. Only 37% have a planning analytics solution. You need to assess your organisation’s BI requirements and identify a solution to match.
• You should also explore building up your ability to capture and analyse data from right across the company, as well as from external sources, side-by-side. 

Workforce planning: will finance be caught short? 

Persistent labour shortages was cited by Deloitte as one of the biggest operational risks facing businesses in 2022. It’s a problem that’s been on the radar of many finance executives for some time - with no sign of improvement on the immediate horizon. 

In terms of skills, it’s a seller’s market out there. You can no longer wait until a need becomes obvious and expect to be able to fill a gap immediately. At their worst, these labour shortages can seriously jeopardise your growth plans.  

This is a further important area where finance ought to be ideally placed to provide answers. It might involve analysing people data to see which categories of employee are most likely to churn, so HR can focus their retention strategies where they are needed most. Or it could involve modeling the financial implications of, say, a uniform pay rise, as opposed to various targeted interventions aimed at specific bands or departments.

How to fix it

• You have a critical business-wide strategic decision to make (e.g. creating a new service offering). How will this impact your operational plans - including recruitment requirements? To get the answers, many companies are moving away from traditional financial planning and analytics towards extended planning and analytics (xP&A). This provides for all operational, strategic and financial planning on a single platform, with powerful predictive analytics and modeling capabilities for more accurate insights and a much more holistic view of what’s happening.
• If you can unlock data residing in your HR system and integrate it with wider financial data, you are much better able to plan for future recruitment needs.

What’s stopping you from focusing on strategy? 

The Shape of Finance from MHR examines why some companies are finding it harder than others to translate their strategic ambitions into reality. To find out what’s happening, download the report here.