THE NEED for UK businesses to cut costs while increasing revenue has never been higher and companies continue to seek ways to get the most from their business operations. Technology has long been recognised as a way to drive efficiencies, especially when the country battened down the hatches to survive the recession.
Now as business confidence slowly returns and companies are looking to take advantage of the opportunities a post-recession marketplace presents, there is still a real need to derive value from each area of the business. Now, more than ever, the finance department is being asked to contribute and add true value to a business – it is no longer enough to be a slick back office operation.
Centres of excellence
As with any team within a business, the finance team – however large or small – needs to be structured in the right way in order to support delivery of the overall business objectives. The ideal is to structure your team on a functional basis and allow the team to specialise in different areas. The general accounting team should be structured around key processes such as bid support, project and contract accounting, cost accounting and financial planning.
Establishing these centres of excellence will in turn free-up the business partners – those members of the finance team working within each business unit – to focus on providing commercial decision support and improving business performance. The result is a more agile, better structured and specialised department that is closely aligned to supporting business outcomes and provides a clearer career framework for the team.
The contribution that innovation can play in driving UK plc out of the downturn into growth has been much talked about in the last 12 months. The impact of innovation is not limited to the IT and marketing departments however. We are certainly seeing a real need to bring innovation to the boardroom when negotiating contracts and deals with customers and partners.
A vanilla approach to contract creation will very soon I believe become unacceptable and will ultimately fail in supporting the business in winning new business and striking up partnerships. Innovation can and should be found in the structure of a contract or in the financing of it.
Creating centres of excellence not only provides a framework to standardise and automate your core financial processes, it also frees up members of your finance team to research and develop new solutions to business issues that can really set your business apart from its competitors. Customers are looking for innovation in long term partnerships – they want value in the relationship for both parties and inflexibility from the finance team can be a massive deal breaker.
Key to the success of this approach is that the finance team is involved in commercial discussions from the outset. How many of us are still brought into a deal by the sales team at the eleventh hour? Understanding the deal from the outset is key to tailoring a commercial solution that works for both parties – without that understanding deals can be thrown away.
Automate what you can
There is a residual reluctance towards adopting policies to automate finance functions. This reluctance comes from many quarters but there is certainly a wariness to relinquish human control. In addition to this automation conjures images of cut-backs and redundancies. But in the context of transforming the finance department and making it fit for success, this is not the case. The use of automation is not about cost cutting but how you can free up resource to redeploy into your centres of excellence to support business management. So automating activities by the use of technologies such as e-invoicing, workflow and account reconciliation tools allows your team to focus on more valuable activities.
The key to success is evolution and with a role impacted by both business, customer and market dynamics the need to regularly reflect on the finance team and evaluate its performance is pivotal. Periodically take a long hard look at the department – ask your internal clients how you are performing for them and what they need from you. Similarly garner external feedback to understand areas you can make a difference to the relationship between the customer and your business.
The potential for the finance team to add true value to a business is huge, but I don’t believe this opportunity is really being maximised with enough in-depth transformation programmes. Perhaps this is because it is challenging to transform a finance department in isolation to other areas of the business. Are companies failing in this area because it is simply too big a task? If that is the case I would ask businesses to consider if they can really afford the risk of not ensuring their finance team is fit for success.
Steve Clayton is CFO of Fujitsu UK and Ireland
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