The new age finance function

Today's finance functions are burdened with quite a few unique challenges and are expected to assume multiple new responsibilities.

The finance function is no longer expected to focus on traditional, accountant-like tasks but rather plays a strategic role while effectively balancing the risk, efficiency and performance of the business. The time has now come for the finance function to shed the ‘bean-counter' image!

The state of pandemonium

Immense turbulent economic climate, rising globalisation, giant leaps in technology, heightened need for transparency, ever changing regulatory framework coupled with demand for tighter controls in the wake of corporate scandals, poses a grave challenge for the finance function.

These factors have resulted in the emergence of complex accounting processes and systems, renewed focus on corporate governance, increasing pressure on cutting costs and demand for more accountability in the market place.

As a result, the finance function finds itself caught in the midst of a state of pandemonium that seems to be self perpetuating.

Are you ready for the challenges that lie ahead?

function of the future

Let's take a look into how leading finance functions have or are dealing with the challenges. What can be learnt from them? The world-class finance function drives value throughout the organisation, plays an influential role in shaping the strategy of the organisation and demonstrates stewardship for business performance.

It acts as a partner to the business, provides not just insights but also forward looking foresights to the business.

It also spends less time on cost control and more on providing decision support to the business, focuses on managing investor relations, consolidates global finance operations through adoption of a shared services model or outsourcing and leverages on technological advances.

state of ‘Nirvana'

Playing a strategic role necessitates that the non-strategic and non-value adding elements are taken care of, to allow the finance professionals to focus on providing value to the business.

This is only possible if the finance function moves away from the state of pandemonium to a state of ‘Nirvana'.

Its key elements are stable and mature transaction processing operations, paper-less processing through adoption of technology, integrated finance systems, information sharing on real-time basis, the ability to produce financial results within hours and controls embedded within the automated system.

Time for introspection

While most finance functions have taken steps in the right direction, the fact is that there is a lot more that needs to be done to drive better results.

Finance needs to get out of its state of denial and deeply introspect to understand to what extent are finance operations are optimised; business managers demonstrate confidence in the numbers that finance produces; it has the ability to influence and drive change in the business; it can influence long-term business strategy; managers consult finance on operating decisions; finance plays a stewardship role in reporting non-financial information?

The key questions are: Are you up there amongst the best? Do you even aspire to be amongst the best?

Having the right mindset

In the final analysis, it boils down to having the right mindset.

It's not about driving efficiency and cutting costs alone. It's about having a burning passion for excellence.

Unless there is a quantum leap in the change of the mindset, any change effort is not likely to generate any real or sustainable benefits. Finance now shoulders a higher burden and therefore needs to lead from the front and demonstrate more dynamism and embrace a customer-centric, service-oriented, innovation and performance-driven culture.

Road ahead

It's easier said than done but it's not rocket science either. So how do you go about being amongst the best out there? You should engage with the business to understand the organisational strategy, have a clear vision about how the finance function will support the business, align the finance model and operating model with that of the business.

Also re-engineer finance processes through automation, develop skills and build the competencies of the finance staff, effectively manage business performance and inculcate and nurture a performance-driven culture.

The length of the journey will depend on the current level of maturity of your finance function. For most of you, it will be a long journey that will demand visionary leadership, commitment and effective change management. The final perspective: How do you see your finance function?

Do you see it simply as a ‘bean counter' or do you see it helping you fly and soar higher and higher?

Yes, it's possible. The finance function should and can truly be the wind beneath your wings!

(Rajiv Gupta is Partner, KPMG and Dipesh Mody is Associate Director, KPMG.)

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