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  Date : 14-10-2015   Platform/Online Media: Business World : Your Story Source

Building A High-performing Finance Functions

"Business situations by definition come with uncertainties and risks. Ride to growth is never smooth and simple. Companies look at their CFOs as a navigator to guide through all challenging situations. Effective CFOs find ways to get a grip and to navigate through complexities."

With increasing need for CFOs play to the role of strategic partners, it becomes obligatory that the core Finance function is run effeciently. Efficiency in finance is all about performing tasks in a timely and cost effective manner. Harmonize, simplify and standardise is the new manthra! Things like bundling repetetive and non-core activities through shared services and leverage technology is almost a norm. Key to their success is optimizing operating processes and to streamline and simplify the finance organization

Several emerging trends are throwing up challenges for CFOs. Some of the key ones that comes up all the time would include:

1. Talent shortage: Ability to attract, train and retain qualified people seems the top most worry. At one level the demands on finance function continue to swell, with somehow everything landing at CFOs table or the CFO mailbox if you like!

2. Limited bandwidth : Periodic requirements do pop up, but here are no bench strength to manage these. It is never possible to simply hire more people to manage the growing responsibilities. Besides, talent comes at a premium. Many of the initiatives are either timebound or has seasonal patterns. Finance leaders are grapling with ways to augment and leverage existing systems to variabalize and optimise their functional costs

3. Increased regulatory needs : Sobox, IFRS, Internal Control fameworks, Risk management, besides VAT, tax and other regulatory requirements across geography. The list only seem to be increasing! CFOs want their organizations to be agile enough to respond to the various complex regulations

4. Increasing Complexities: Explosion of IT has created another level of challenges and oppertunities. There are new network possibilities on web, new ways to access data. One key challenge normally noticed is moving from complex legacy systems to manage the complex needs of a growing organization and managing in the new environment

5. Disjoint Processes: Finance Managers struggle with multiple incongruent systems running financial applications. Unsynchronized systems, standalone budgetting using spreadsheets, too many offline applications all leading to difficulties in consolidation and to neverending reconciliations. Against this backdrop, CFOs are charged with looking at typical end-to-end process like Purchace to Pay, Order to Cash or Book to Report

It is pretty much becoming evident that operational excellence is necessary in the core aspects of finance function, before taking on the other challenges and participating at a strategic level. At one level, CEOs are looking to CFOs to provide greater decision support while finance organizations are struggling to produce basic reliable reports and not be able to come anywhare near providing persuasive analysis

Business heads needs to be guided clearly on which products are performing the best or which customers are most profitable. Budgetting and rolling foreasts should help organizations to redirect their activities and resources to the areas of greater returns

An effective and efficient finance organisation alone would be in a position to provide valuable analysis and guidance to the business. Aligning with strategy across the organization, transforming the finance operating models, proactive role in managing business performance, digitizing the finance function, and developing finance capabilities in advanced newer areas are some of the key essentials to CFOs. Then what could be the top 10 agenda for immediate results?

1. Standardization and Harmonization : Standardize and integrate systems and leverage technologies. Standardizing financial processes and making sure that relevant and reliable data is contributing to business analytics

2. Automate and Reduce errors: Stress on automation and seamless data capture. Ensure that the necessity for keying and re-keying data is avoided at all times. Avoid 'double work' and related errors. Quality of financial reporting is only as accurate as primary data in the system.

3. Simplify Process and more 'self service': Use of workflows for approvals and automated expense reimbursements. Enable employee own-managed expenses claims and release finance team involvement. Allowing vendors to track their own payables online. Set up bill presenting systems for customers. All such initiatives would lead to enormous productivity gains in finance function

4. Speedup Reporting and use Dashbords: More timely and accurate information to support management decisions. Achieve more timely, accurate and transparent reporting through a smarter close and standardized processes throughout the book-to-report cycle. Bringing up core KPIs through a dashboard are more impactful than lengthy reports

5. Integrated financial planning: Annual Budgets are becoming a passé. Why spend four months to put that together while it becomes outdated by the time it is ready? Budgets are no longer a controlling tool. Nothing much is achieved in explaining the variance year long from an out dated budget! Rolling forecast and predictive modeling applied to scenario help more to optimize recourses

6. Focus on lead indicators : Focuse more on extrapolative, forward looking insights using internal and external indicators. Integrate financial planning and operational data to provide consistent and accurate reporting across the business verticals

7. Redefine cost models: Increase the level of investment in technology. Leverage enabling technologies in corporate performance management. This is pertinent, given that more companies turn to mobile, big data, analytics and cloud computing etc. There is a need to constantly redefine the cost model of the business as these new technologies are implemented

8. Leveraging technology to drive compliance: Given the growing requirements for regulatory compliance, a single, integrated system would provide robust controls and greater visibility into essential processes and data. Deploying strong compliance trackers and dashboards would help avoid any breaches. Such systems should be designed to meet both present and be flexible to meet future regulatory changes

9. Improve accountability: There is an urgent need to optimise risk management, compliance and control to establish a sustainable cost effective control environment. No surprices! Key parameters are greater transparency and accountability also better management of risk

10. Drive Value based Management: Focus on maximizing returns on assets at all time. Use analytic tools to provide more actionable insight into where key business opportunities are. Finance could also play a lead role in showing how these opportunities can be seized. At all times finance need to set plans and budgets that are truly reflective of strategic directions and priorities