Ask any CFO for key priorities for their finance function, the most likely answer will be – compliance to rules and regulations, cost reduction, and noiseless operations. In real life, however, maintaining balance between these priorities can be a challenge – and if you’re a CFO, some of the pain points that might sound familiar include:
- Non-standardized and complex business processes
- Very low or negative returns from technology investments
- Multiple silos delivering similar processes across the organization
- Too much focus/time wastage on transactional processes and lack of strategic initiatives
- Too much reliance on Excel sheets that impact accuracy and increase the threat of cybersecurity
- Accountability without adequate control on the business to align and control processes
- Multiple applications leading to a mismatch in reports from respective applications
- Increasing compliance pressure.
However, while most CFOs face some, if not all, of these challenges, organizations tend to address them in very different ways. Breaking it down, these actions can be categorized into the golden triangle of people, process, and technology. Here are just some of the steps I recommend to my clients.
All actions to mitigate these common CFO challenges should start with three strategic initiatives:
- Establish a global shared services center (SSC) – migrating your organization’s entire processes to a global SSC can help to eliminate silos within the organization.
- Align your finance strategy and business objectives – for example, if business is set to grow rapidly in the next two to three years with margins under pressure, finance needs to plan for additional headcount while also leveraging automation to reduce costs.
- Implement a cost reduction project – initiate small targeted projects to control costs by comparing the actual costs against your budget and taking certain policy decisions to reduce costs.
Human resources are key to achieving your organizational goals. Taking the following steps can help you meet future challenges:
- Define the roles and responsibilities within your finance function, following the RACI (responsible, accountable, consult, inform) matrix for each process.
- Implement rewards and recognition to help keep employees motivated.
- Adopt job rotation to help your employees gain a variety of experience and job satisfaction by enabling them to change role every two to three years.
- Provide ongoing training to upskill your employees in emerging technologies and financial reporting standards.
Processes are sequential tasks or activities that enable your organization to achieve its goals. Key steps that can strengthen your processes, include:
- Standardize your processes through creating a global SSC across geographies. This should be driven from top to avoid request for customization.
- Establish and govern service level agreements (SLA) between the business and SSC.
- Ensure consistent application of accounting and business policies across your business units.
- Establish strong governance and control mechanism to ensure periodic review of the business, processes, and communication of progress to your leadership team.
- Implement ongoing monitoring and reporting of KPIs/performance matrices and any correction actions taken.
- Build application controls (input, processing, and output) and maker-checker controls into your processes to avoid your internal audit team having to perform and verify such controls outside the process.
On top of this, with most organizations going through some form of digital transformation, the finance function needs to lead the way in understanding and responding to the ever-shifting requirements of digital (for more on this, read our recent “Reimaging finance for the digital age”). For example, the mandatory requirement for e-invoicing in certain European countries means Finance has to implement automation technologies into the invoice process to reduce the amount of manual invoicing. This requires a certain amount of change management to transform the behavior and approach of finance teams.
Technology is a key enabler for the organization. Key recommendations to enable you to get best out of your technology investments include:
- Align your IT strategy and business objectives. For example, if your business objective is to increase your customer base, it’s critical to invest in a best in class technology platform that provides online services to you customers.
- Minimize the number of applications and implement a single, global platform for planning and reporting.
- Integrate your ERP, data warehouse, and reporting platform to ensure consistency of reporting and avoid gaps in reports between multiple applications.
- Automate your routine processes to save resources.
By combining tangible people, process, and technology actions with some solid and strategic initiatives can help you address and mitigate the challenges faced by your organization’s finance function.
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Ajay Gupta has diversified and rick experience in risk management, governance, risk, and compliance, automation and process transformation. He is currently the Head of Shared Service for Nordic countries at Capgemini.