One of the biggest challenges faced by finance teams is shaking off the past reputation of finance being seen as an administrative function.
Finance functions have evolved significantly in recent decades and a modern-day finance function now creates significant business value by:
- Providing timely data to support decision-making;
- Driving operational change throughout each department; and
- Playing a vital role in delivering the company’s strategy.
Each of these activities has a big impact on the success of any company and hugely contributes to growing revenues, profits and company value.
Despite this, most finance teams have struggled to transform their reputation into being seen as an essential profit-enhancing department.
The inherent problem
Traditional finance functions spent most of their time reporting transactions, delivering compliance and implementing financial discipline. Whilst these are all critical components of a successful company, many finance functions struggled to showcase how they were delivering incremental value to the shareholders.
Despite finance functions delivering many value-enhancing activities, finance teams are still famous for performing unpopular tasks such as implementing controls, chasing missing paperwork and monitoring budgetary spend. These types of activities account for a high percentage of a finance team’s interactions with other departments, which creates an undesired reputation.
Most finance functions also spend far too long on low-value activities, such as closing the books, financial reporting and dealing with statutory audits. This adds to the perception of finance being seen as an administrative function.
This incorrect perception creates severe consequences for everybody within the finance team. Funding is typically prioritised towards other departments such as the Product team and Sales & Marketing, leaving finance teams under-resourced and unable to properly support their company’s needs.
Finance team members are often underpaid compared to their peer equivalents in other departments and work unnecessarily long hours delivering manual tasks due to an underinvestment in market-leading technology solutions.
The finance function suffers from poor relationships with other teams and is seen as the blocker of people’s ideas. Finance is often left out of the decision-making process and must retrospectively deal with the consequences of other people’s actions.
There are many ways in which your finance function can demonstrate itself to be a value-enhancing department and overcome the unwanted perception of being seen as an unpopular administrative function. However, it is important to recognise that some elements of your current perception will never go away as finance will always play a key role in reporting transactions, delivering compliance and implementing financial discipline.
Changing your reputation will take time and requires your team to focus on increasing the positive impact of your strategy and change roles, whilst decreasing the negative perception of your guardian and stewardship roles.
Increasing your positive impact
Fortunately, modern-day finance functions have more opportunity than ever before to positively impact your business. Finance professionals are typically high performers with excellent problem-solving skills and a powerful financial perspective, combined with strong commercial awareness and a robust knowledge of your company’s performance data.
Your unique set of skills and experience allows you to help other teams by:
- Transforming data into valuable insights that support people’s decision-making by implementing powerful business intelligence applications;
- Re-designing business processes into streamlined cost-effective procedures that improve efficiencies, whilst capturing more underlying data; and
- Solving the biggest challenges that are either holding people back from delivering their strategic objectives or preventing them from exploiting a new opportunity.
However, you will need to become closely connected to the wider business, educate them about how you can help and get involved in what really matters. This requires you to build trusted relationships that encourage others to share their biggest challenges and to buy into your recommendations.
Offsetting your negative perception
Let’s assume that your finance function will always take a lead on governance, risk management, compliance, financial discipline and reporting. Here are some examples of how to offset your negative perception with positive activities:
- Rejecting a product funding request: Whilst rejecting a product funding request, take time to benchmark sales prices against your key competitors to identify ways to increase revenues from that product. Schedule a meeting with your Product and Sales team to identify an approach that would generate the additional funds required.
- Reporting a missed sales target of 10%: Prior to communicating an underperformance at a leadership meeting, meet with your sales team to clarify the facts and understand the reasons why this happened. Allow the Sales Director to inform stakeholders prior to the meeting to explain what happened and outline their remediation plan. Provide the sales team with ongoing data to mitigate future issues and show your support for their actions.
- Implementing documentation and sign-off procedures: Prior to mandating additional payment approval requirements, work with the affected individuals to help simplify the expenditure process and embed new technologies to automate workflows. Remove unnecessary activities to offset any incremental documentation and review procedures. Embed additional reporting capability to communicate valuable data insights to them.
These examples show that there are nearly always opportunities for you to demonstrate your desire to help people and to create business value, regardless of the nature of your underlying task.
Training other people across the business
The level of financial literacy across most businesses is generally poor. Most non-finance people would welcome some basic training but will never come asking for it. There are huge opportunities for finance team members to generate easy wins by educating others about the financial impact of their actions and to suggest ways that they could do things differently.
Opening people’s minds up to different perspectives will often encourage them to find their own solutions. These positive steps will help to further shift the perception of the finance team into a value-added collaborative function.
GrowCFO for Finance Teams
In order to overcome the negative perception of finance teams, it is important for finance leaders to focus on developing their team’s skillsets and showcasing the value that they provide. GrowCFO has worked closely with the finance leader community to create ten essential online courses, including relationship building. Each course is designed for finance team members across all grades and collectively cover the biggest skills gaps within most finance teams.
These courses feature many experienced CFOs and professional mentors who share proven techniques and practical suggestions to help develop your finance team members. They also provide real-life examples to identify how inspirational financial leaders deal with common scenarios that carry the potential to weaken relationships.
Find out more and get started with GrowCFO for Finance Teams here.