Guest Column: Refocusing the finance function to deliver business objectives

While economic indicators have not looked positive for the past 12 months and don’t get much better for the next 12, one challenge common to all FDs then and now is refocusing the finance function on how it can assist in not just being a scorekeeper, but being an active player in the business.

My aim over the past few years has been to get the rest of our business to understand this evolution – to get rid of the idea that finance is just an ‘overhead’, or a backroom operation. The finance team is seen as an equal partner in the success of the business, because it ensures strategic objectives are achieved.

Where the FD fits in is demonstrating that finance has a complete grip on the liquidity of the business: unless profits are converted into cash, there is no success.

We all know that businesses often fail in spite of reporting high profits because recession fuels a late payment culture. In many companies any direct contact between finance and clients only happens when there is a debt issue – and that has been the case for my company. I’ve had difficult conversations with some of our clients, but we have also been proactive in talking to and visiting them to establish a relationship with the aim of managing a sustainable business and avoiding seeing clients fall into receivership.

Short of providing banking services, our credit control team worked with clients to agree flexible credit terms. We recently agreed a deal with one client – who is finding it difficult in this market – not to pursue their debt as aggressively as we could. Business isn’t just about delivering success, but also about building those sustainable relationships so that when the economy picks up we will still have partners with whom to do business.

This type of client service from finance can also be delivered by using your IT department and the data systems you have. If used sensibly, IT can give a real competitive advantage – and in our business, we use off-the-shelf packages as well as some really elaborate bespoke systems to exploit all the captured information we have, not just for our benefit but for the benefit of our clients.

The trick is to make sure that the source of any data is a single point of input – so you don’t wrestle with endless databases or Excel spreadsheets – which you can use to populate any applicable parts of various systems. In many cases, FDs are faced with inheriting one or many old systems that don’t talk to each other and don’t serve your business needs today. So it is a real challenge for finance people to help either design or select their ideal system. And independent, specialist advice, though readily available, can at times lead to costly mistakes, so having the confidence to know what you want from systems (rather than having it bestowed upon you) is important.

It is essential that your IT providers understand the businesses strategic objectives and deliver on achieving that. The strategy of a business should not be led by the IT systems, but the systems should support the strategy. So in reality, my view is that there are not really any ‘IT projects’, but business projects, where finance has a significant role to play.

Even in a recession, opportunities will present themselves. We should not naturally assume that the business cannot respond to them and grow through them because it is operating in a downturn. The current economic climate is a perfect opportunity for all finance teams to make their mark in understanding this.

Hear Arif’s thoughts on using systems to help find growth by watching our web seminar here

Arif Kamal is FD at GL Hearn, a firm of chartered surveyors and planning consultants