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A successful finance transformation can have a significant impact on your organization. Our clients’ CFO and finance leaders are prioritizing how the finance and accounting organization can continue to drive strategic value across the entire organization. CFO priorities include becoming a strategic business partner for operations and sales, developing more robust analytics, and prioritizing strategic planning. To accomplish this, CFOs are taking their finance and accounting teams through a transformational journey.

This finance transformation journey aligns all key processes, organizational capabilities, and technologies with company goals. Transformational change requires discipline and leadership, with the finance organization typically taking on the leadership role.

One of our CFO clients explained, “Prior to our transformation, our participation on the QBRs were merely tallying up the sales forecast. Now we are asking more inquisitive questions to understand the true sales outlook.”

Here are six tangible ways to transform your finance organization and get on track with the strategic vision.

1. Develop guiding principles

Guiding principles are short statements that describe core values. They outline goals for interacting with and serving the rest of the business. For guiding principles to have a real impact, they should be based on input from all other areas of the organization. An example guiding principle for Finance could be: “To leverage our financial acumen to better the business regarding issues and opportunities within the company.” Leadership relies on Finance to provide timely and accurate information to support the strategy and decision making. As the primary department specializing in a “numbers perspective,” a guiding principle can be built around making the perspective accessible to everyone in the organization. Other guiding principles can be built around other capabilities and roles within the finance organization.

2. Have a process improvement vision

A process improvement vision is a picture of how well the company wants to perform across key processes and what capabilities are needed to accomplish the organization’s finance transformation goals. Creating a process improvement vision helps companies decide what peak performance looks like for each department within Finance. Will the procurement department be lean and use technology to get the job done quickly and accurately? How will the planning department share forward-looking information with Operations? A process improvement vision will guide departments as they improve. It will help to prioritize and organize steps taken toward the end goal. Begin with a clear idea of what the process should look like, and then create a process improvement vision to get there over time.

3. Know your data

Data can get messy, fast. If invoices are entered into the system incompletely or inaccurately, the date in the payables system will only get worse as time goes on. Dirty data can come from inconsistent naming conventions or formats, incorrect coding, unclear guidelines for creating new accounts, and more. For example, a large services company used one chart of accounts (CoA) to handle data from five different legal entities. The CoA contained thousands of accounts, some duplicated and many empty. Coding mistakes were rampant and reporting was nearly impossible without manual intervention. Recognizing the need for a change, the company took several weeks to streamline their account string and consolidate the CoA. When the data was clean, coding errors diminished significantly. Finance could easily share reports with the ability to view data across the legal entities and company divisions. Scrubbing your data will be time consuming, and maintenance must be intentional. However, clean, consistent data has a significant impact on daily operations at all levels.

4. Manage organizational impact

Once data is clean and a process improvement vision is in place, take a step back and evaluate how the current structure of the finance organization will fit into future processes. As processes become more streamlined and efficient due to continuous improvement, defining key roles and responsibilities becomes vital. Pairing a streamlined process with a bulky, slow organization will drag the process down. Companies must be willing to streamline the organization along with the process to get the most out of their work. It is possible the level of talent required to make the process work will change as finance capabilities change. If the focus of Finance shifts from performing simple transactions in the system to analyzing corporate financials, employees with more experience and knowledge in that area may need to be hired. Managing organizational impact means determining what kind, size, and caliber of organization will be most effective with existing processes.

5. Develop service level charters

Creating an agreement (service level charter) between Finance and other departments defines the role of Finance as it relates to the rest of the organization. Service level charters rationalize the work being done and drive accountability for meeting efficiency targets. Defining responsibilities and accountabilities can prevent duplication and reduce error rate. If a division accountant believes their charter is providing financial reports for Operations while the corporate accountant is doing the same, the service level charter will expose the duplication of work. A service level charter that defines roles between departments improves communication, provides a source of accountability, and increases efficiency for everyone involved.

6. Technology is last

This is the last step in finance transformation. Putting technology before process is putting the cart before the horse. Often, companies decide to put in a new ERP system, thinking it will solve all their problems. It rarely does. Extra technology and upgraded systems make terrible band-aids for a broken process. Adding high-powered technology to the mix only makes it more chaotic, less accurate, and more time consuming. Evaluation of process should always come first. Fix issues as they are found and get the process and organization right before changing technology. Systems are meant to support processes, not create them.

When working to support the overall vision of the company, consider the scope and key priorities of the transformed finance organization. Identify where inefficiencies exist today, and determine what leading practices are applicable. Decide what role technology will play in the future, and ensure processes are in place to support it first.

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