Five Ways To Future-Proof The Finance Function

The finance function has both the opportunity and need to accelerate its evolution and influence over the next five years to effectively support the overall pace of change across industries.  Accenture research indicates that we are embarking upon the most radical transformation of the finance function since the introduction of the first-generation enterprise resource planning (ERP) systems more than a quarter of a century ago.  How the function organizes itself, the type of talent required, and the role data and technology play will be profoundly different.

It is an exciting time to be in finance.  While many traditional transaction processing and accounting activities will be reduced through automation, many new roles will be created as finance expands its mandate, leveraging data and analytics to provide insight and drive value creation across the enterprise.

Overall, finance will “move towards the edges,” doing much less of the lower value activities required to gather, reconcile, restate data and create reports. Instead we see the role of finance really starting when the report is delivered.   In this environment, finance people will be better-positioned to use their skills and insights, and they will be more closely aligned with the priorities of the business.

There are no low value people, but there are low value activities.  For finance to increase its impact and reposition the function, the organization needs to clear away the manual, time-consuming, lower-value tasks and enable finance professionals to be closer to the business, focused on the analytics, delivering insights and enabling action.

In our work with senior management, boards and chief financial officers at financial services firms and other industries, we focus on five key factors to reimagine and reinvent the finance function:

1. Redefine the appropriate allocation of finance cost and staff. Two common measures that organizations often use to look at the finance function – finance cost as a percentage of revenue and finance staff per billion dollars of revenue – can be misleading in a digital era of disruptive innovation and new business models.  Using such measures could lead to making cuts in headcount, rather than moving finance closer to the business and directly engaging in the insights and actions required for the intended strategy.  There is a need to focus on the outcomes in balance with the costs.

2. Transform the forecasting approach. Forecasting is often a long, detailed, calendar-driven process that produces little of lasting value. The use of analytics can deliver a much more dynamic and data-driven approach to budgeting and forecasting. The finance function, working with the business leadership, needs to develop a more prescriptive, statistically rich and data-powered capability that roots planning in the realities of current and likely future performance.
3. Reduce the pain of the accounting close. The accounting close is still a challenge for many organizations.  Finance should view every manual journal entry – and every matching or reconciliation process – as a cost of quality in the close cycle.  Moving towards continual close and enabling senior decision makers to confirm adjustments and positions as part of the process – rather than later when re-work is then required – is also important to streamlining the effort.

 

4. Embrace new roles for the finance function. Traditional services such as accounting, commercial finance, operations finance, budgeting, forecasting, reporting, tax, treasury and audit clearly remain relevant and critical, but they are only a subset of the potential value that finance can deliver to the enterprise.  Leading companies are giving finance new roles in areas ranging from working capital analytics to data governance to the management of cyber-related risks.

 

5. Use technology to unlock the power of the finance professional. The average finance professional spends up to 70 percent of his or her time getting ready to do their real job, whether in collecting, assembling and organizing data, or in creating and updating spreadsheet models. The application of the right technologies, including data ingestion tools, robotic process automation (RPA), automated analytics, artificial intelligence (AI), and visualization tools, can enable finance professionals to make faster, more confident and more impactful decisions across the business. Technology, properly applied, increases the impact finance professionals can make in their roles.

Digital technologies are helping finance reach its true potential.  We see a clear relationship between digital maturity, the effectiveness of financial planning and analysis, and enterprise performance, with high-performing, digitally-enabled finance teams helping their companies outperform their peers.  As finance makes the shift from recording and reporting to identifying new sources of growth, there has never been a more exciting time to be a finance professional.

Credit: Forbes