[Interview] How can the finance function better meet the needs and expectations of the wider business?

As guardian of the corporate purse-strings, the finance function has long enjoyed a privileged influence on strategic and operational decision-making. But that influence is now being threatened by other executives keen to gain the confidence of the CEO. To investigate this changing dynamic we spoke to Jamie Lyon, Head of Corporate Sector at global accountancy body ACCA. Jamie leads ACCA’s global thought leadership, research and insight programme on the CFO agenda and the future of the finance organisation.

 “The real skill is about being commercial while making sure the business ticks over day-to-day.” 

The role of the finance function in changing across the corporate world. The drivers of this change are largely external. “The state of play of the global economy dictates what corporates expect from their finance people,” says Jamie. For example, during the economic downturn, and for a considerable time afterwards, the watchword was survival. This meant the finance function focused on its core responsibilities to control costs, encourage efficiency and maintain cash flow.

Now market sentiment is more buoyant and many mature economies have returned to sustained growth. This different market environment brings with it different expectations on how the finance function can best serve its partners in the rest of the business.

As other corporate functions become more involved in strategic decision-making, the finance team also needs to take on a wider, more commercial role. There is an opportunity for finance professionals to collaborate with departments such as Sales and Marketing to work out which channels to market are most profitable.

So how can the finance department adjust to this new role and remain a trusted business partner to the rest of the executive team? For Jamie Lyon the answer lies in balancing the competing demands of the role: “The real skill is about being commercial while making sure the business ticks over day-to-day.” He shares three important tips:

1. Align the finance function to the KPIs that really drive value

As the corporate agenda switches from efficiency to growth, so too should the priorities of the finance function. “One of the big challenges that corporate finance functions face is aligning their finance work and commercial support to the things that drive real value in the business,” says Jamie Lyon.

This requires a sophisticated understanding not just of the core business activities, but also an appreciation of how value is assessed by the rest of the business. What is it that colleagues in other functions genuinely value? How should this be appropriately measured, tracked and reported? This insight will help the financial team put in place the right KPIs and prioritise efforts on activities that will maximise value-creation.

2. Be open to risk

Taking risks is not a natural element of the typical CFO’s psyche. The training that finance professionals receive is often compliance-focused; it priorities financial controls and rigid assessment of the payback on investment. This leaves little room for taking risks.

However, Jamie’s advice is clear: “Finance teams must be prepared to take calculated risks to seize growth opportunities. They are used to taking a rational and measured approach. With the current business environment still shrouded in uncertainty, this is the right time for many businesses to reassess their risk appetite.”

3. Make the most out of available data

“The balance between financial and non-financial data is becoming more important. Finance professionals have to step up to the mark and accept that there’s a lot of change happening,” says Jamie Lyon. Senior executives want to be able to assess the health of their organisation in the round, and are looking beyond the balance sheet. With increasing frequency, information about other organisational priorities – risk, talent, technology, innovation and customer – are being given equal attention alongside financial data when boards take business decisions.

To be an effective finance leader and business partner means showing willingness to work with and synthesise this range of data, and investing in the systems and processes to do so efficiently. “Finance teams need access to good tools which will allow them to conduct the data synthesis, extrapolation, forecasting, modelling and progression that they require,” says Jamie.

To be an effective finance professional means learning to adapt to the changing expectations of colleagues, and having the right skills, mind-set and confidence to work collaboratively across the business. The rewards for those willing to embrace this new model can be significant: the most commercial finance teams are viewed by their colleagues as facilitators of growth, not policemen of cost. This means they are able to secure a privileged influence over strategic decision-making for years to come.