Finance as a Business Partner Posted In: CFO / FD 19 Mar 2013

Finance departments – cost centre or business partner?  Gatekeeper or valued counsel? Friend or foe of Operations?

All businesses have a finance function; small businesses may have it completely outsourced, as may be the case for parts of a large finance department.  But how finance interacts with the rest of the business differs from organisation to organisation.

For some, Finance is the classic cost centre, the team that process expenses, run the payroll and send us our monthly management accounts.  The year end accounts preparation means they shouldn’t be disturbed in December or January; no-one likes an angry accountant!

For other businesses Finance is fully integrated with the operations, a true business partner supporting key decisions and working along side their operational colleagues ensuring that Finance adds as much value to the business as any other department.

Of course many businesses are somewhere in-between; the finance function does add value and is seen as a strong resource for the business. However, to move your finance function to be a true business partner consider these factors:

 

  • People.  If you are moving from a cost centre to a business partner set-up for finance you have to have the right people in the key roles.  Some people may be technically very strong and ideal for preparing the year-end statutory accounts.  It doesn’t mean they are the ideal people to partner the operations.  Consider:
    • Communication skills
    • Personal preferences of the key individuals
    • Gaps in training to fulfil what can be described as a more consulting role for your finance team
  • Culture.  How is finance perceived right now in your business?  Is it that cost centre where the accountants get angry in December?  Consider:
    • The message from the top – change should be seen as permanent and of great value to the business
    • Lead by example and ensure your operations people know the additional value they are getting from their very capable counter-parts in Finance
  • Systems.  Many companies have a well oiled ERP system that will very comfortably churn out management accounts and almost write the budgets and forecasts for you. Consider:
    • Are finance knowledgeable enough to challenge operations on the budget and forecast
    • Ensure Finance becomes a true business partner and doesn’t just facilitate the passing of the management accounts by clicking print and send.
    • Are finance bench marking the industry? Looking at the wider impact of the strategic direction of the business and its likely impact on financial results?
  • Process. Much of what is written above can be summarised as process.  Consider :
    • Documenting the business processes for disseminating business information
    • Ask the recipients of that information what additional value could you bring
    • Ask your finance team to document where else they think they can add value – business proposals, budgeting process, procurement, investment decisions, performance analysis, forecasting

Finance has a huge role to play in any business, if you decide to integrate Finance as a true business partner, it could, as the points above indicate, have multiple benefits.  Not least, your accountants may be in a better mood in December.