©metamorworks/iStock/Getty Images Plus
As a CFO, you live in a sink or swim environment. It’s no longer enough to survive, you have to thrive. The tide will never stop rising, so you must be proactive and contemplate what lies ahead. The Berkeley Research Group, a global consulting firm, completed an online survey of more than 120 finance executives, asking about key business challenges, top priorities, and important roles. One of the survey’s noteworthy findings is that the CFOs feel that finance’s role must continue to evolve and place greater emphasis on driving performance improvements rather than accounting and transaction processing. This study underscores the importance on adding a new set of responsibilities to your team’s core competencies. This shift is Finance 2.0, and it’s becoming the new norm.
In Finance 2.0, there are three important factors that can help to elevate your team’s core competencies and value:
- Budgeting and forecasting;
- Identifying opportunities to improve the business; and
- Executing company strategy.
The traditional task of closing the books and reporting, while still important, are expected. If you can’t add the aforementioned competencies to your team’s toolkit, your team may be stuck in the Finance 1.0.
Here some things you should consider:
- How much time is your team spending on the financial close and reporting?
- Are the system and tools you leverage interconnected or are they siloed?
- How much are you relying on manual processes?
These questions will help you assess whether there is a gap differential between your team’s ability to execute in Finance 1.0 vs Finance 2.0.
Bridging the gap between Finance 1.0 vs Finance 2.0
1. Technology
As a financial leader, there are several enablers that can be leveraged to help you bridge the Finance 2.0 gap: the first enabler is technology. Technology can vastly improve many of the mundane, manual tasks that are part of the financial close, such as transaction matching and balance sheet reconciliations. An investment in technology enables you to streamline manual processes and improve accuracy, while helping your team become better aligned to the evolving finance responsibilities. As labor force demographics continues to change and baby boomers are replaced with Millennials and Generation Z, the implementation of technology is a factor that could enable you to drive higher levels of engagement, leading to increased retention and workplace satisfaction.
2. Better Reporting and Analytics
Moreover, an investment in technology also has another inherent benefit, better reporting and analytics. As companies began to successfully transition to Finance 2.0, they leverage data to: identify growth opportunities, build dashboards, and help drive the company’s strategy. In most cases, companies have sufficient data. So, the problem is generally more about turning the data you have into actionable insights and analytics that are informative and relevant. This task becomes more difficult when your systems and tools are not connected.
Much of your team’s time is spent deciding which data to use for reporting and whether it is accurate. More time. More frustrations. More errors. More and better analytics are critical to providing the insights needed to support decision-making and technology provides the path to improved analytical capabilities.
3. Talent
The other enabler you should consider is talent. Your company will look to you to start adding/developing new competencies that help you to transition to Finance 2.0. There is a combination of skillsets that are critical: data science, finance, operations, and communications. You will need to automate the finance function and reduce time spent on low-value activities.
Here are some questions you can ask to do a quick assessment of your team’s skill level:
- How effective are our reporting capabilities?
- Do our reports provide insights and analysis?
- Are we viewed as a true business partner by the rest of the company?
A team with a carefully designed balance of capabilities will enable a finance function, optimized to derive insights and work more effectively with the business to co-pilot performance improvements.
Interested in understanding how you can leverage technology to bridge the chasm between Finance 1.0 vs Finance 2.0? Click here for a demo.