The finance department has always been well respected in the organization. This department provides insights that manage the organization’s complete monetary dealings. Thanks to advancements in technology, the executive finance department has evolved to become the go-to department for most business strategies. So what makes today’s finance department integral to business?
Executive Finance: management’s right-hand department
Today’s executive finance department must be trustworthy, headed by someone the business’ top management is comfortable sharing everything with. This includes the organization’s strategic ideas to the organization’s current and future prospects. The modern finance department shares specific ideological views and values with the top management, but it must think differently enough to offer alternative perspectives.
Additionally, the executive finance department should be actively involved in putting into action the business’ corporate vision. The department should appreciate the importance of culture, strategy, and brand, and work actively with the organization’s top management to justify other investments. In addition, the modern executive finance department must be in tune with the organization’s culture.
The modern role of an executive finance department
The traditional finance roles and activities continue to preoccupy this department, with 55% of finance executives asserting that they spend most of their time on costs, controls, and compliance. Even so, the department is increasingly taking up additional roles in the business. On the technology front, they are increasingly responding to the impact of new tools and digital business models.
Besides its traditional roles, the modern finance department is taking the lead in the next phase of the organization’s finance transformation. This technology-driven wave of change is ensuring that the executive finance department adds value to the organization by acting as the go-to source of insights and data for strategic decision making.
Through real-time data and analytics, the executive finance department plays the following roles in the modern business environment.
1. Defining the vision for executive finance
The finance department has evolved immensely over the past decades. It is bound to undergo dramatic changes over the next decade. A clear vision for the future of the finance department – one that is strategically aligned with the business’ overall mission and strategy – is to provide the executive finance department with a unified ambition while providing a focus for strategic decisions. In the digital era, the vision for the future of the business’ finances should include how smart people will work with intelligent technology to deliver value to the organization. Additionally, it should define how specific technology will enable the organization to thrive and maintain a competitive edge.
2. Rethinking executive finance technology
Capitalizing on extensive expertise in enterprise resource planning (ERP) solutions, the executive finance department understands how technology can improve the value and performance of the entire organization. It also identifies other departments’ shortcomings that hinder the organization’s ability to leverage technologies like advanced data analytics that have a considerable potential to transform financial reporting.
3. Investing in people
Breakthroughs in technology are disrupting business strategies and the way teams collaborate and work within the organization. The finance department seeks to manage today’s finance functions better while building tomorrow’s services. Thus, it will need to put together a team of skilled and motivated personnel to complement technological innovations. Take up new challenges. Differentiate roles and business approaches.
Tomorrow’s technology begins to play a role in the organization’s day-to-day operations. So, the need for adept finance department will not reduce in intensity. As a result, the executive finance department must build and extend the capacity of its team to include the following:
- IT skills, including data and analytics, that have emerged as the most integral expertise in today’s business environment
- Relationship development skills that are crucial for engaging key stakeholders
4. Business partner support from executive finance
To succeed, the business must turn data into better decision-making resources. The executive finance department should make business-partner support role a key priority. The department must have a team of highly skilled and credible staff that acts as the department’s interface with the rest of the organization. The team’s role should include aligning the work of the finance department with business priorities while helping top management understand the implications of financial data. According to a recent Ernest & Young report, improving partnership between the finance department and the rest of the business’ functions should be a significant priority for the finance department.
The traditional roles of the finance department include funds acquisition, management, and expenditure planning. However, as technology continues to evolve, so too is the purpose of the executive finance department of the organization. Without a doubt, the role of this department is growing as finance officers move away from crunching numbers to strategic business roles. This transformation is expected to propel the finance department into an indispensable business partner.