Why you need finance transformation – Part 1

Finance transformation is about optimizing performance to deliver on your organization’s strategic needs. It’s the process of helping finance companies work tactically on initiatives that increase their effectiveness and efficiency.

For instance, picture this: The financial year has closed – weeks ago – and yet the books are still open. Auditors are hovering in the wings and management are anxious to see figures, but there’s still nothing forthcoming.

It’s not like you need more staff. If anything, the finance team is over budget with more resources than seems reasonable. Somehow, they just aren’t getting the job done and you dare not cut costs, because who will complete the work that’s piling up?

The solution you need is finance transformation.

How to transform your finance functions

Consultants MorganFranklin partner with Nintex to provide transformation solutions for numerous contexts, including finance. They suggest focusing on three key areas:

1. Deploying resources for operational efficiency

Key processes can be clogged up with manual operations, duplication of effort, overly-complex or outdated systems, and errors in data quality. Businesses need to examine procedures like record-to-report, order-to-cash, procure-to-pay, and the close process to see if they are operating as effectively as they could.

It’s vital in this exercise to identify where the root causes of inefficiencies are. Once these are pinpointed, organizations can begin to understand what opportunities they have for improvement.

2. Quality decision making and accelerated insights

Finance is vital to the health of the business, and much of that value comes from the essential information it provides. Consider both the speed and quality of reporting that finance currently provides in terms of budgets, planning and forecasting, performance management reporting, business performance analysis, and cost management.

Problems arise with these functions when the systems and practices don’t meet the needs of the business. It’s critical that finance understands the informational requirements of the company, and can fuel the financial planning and analysis required. Ad-hoc reports, duplication of things like Excel spreadsheets, and no central data source can frustrate management attempts to get a clear picture of the road ahead. Conflicting data definitions, limited analytics and variance analysis that doesn’t link to operational drivers make the available information unreliable at best.

3. Emerging technology and strategic business alignment

Finance needs to be an effective partner with the rest of the business, engaging strategically with internal stakeholders as customers. That requires attention to the right service delivery model, organizational and departmental design, and talent management. These go hand-in-hand with the strategic employment of emerging technologies like RPA and process automation supporting better processes.

Some of the common challenges that organizations face in this area are poorly defined or conflicting goals, outdated metrics, and gaps in the accountability or planning that goes into the finance division. Partnerships need to be cohesive and functional, and particularly in the case of acquisitions, there needs to be careful planning to avoid these kinds of setbacks.

Does my business need finance transformation?

Finance transformation can sometimes go by other names, and there are numerous business situations that call for some kind of finance transformation activity.

Significant financial events in the life of the company will require some kind of finance transformation. Big transactions, an IPO, a merger, acquisition, or divestiture all shine a spotlight on financial management and can highlight where changes are needed. Similarly, the implementation of a major new system – like an ERP – can illuminate problem areas. When these things happen, often a business needs to triage and rapidly execute solutions.

Alongside those major events, more common triggers for financial transformation are process initiatives. When process excellence comes to the fore, operations come under the microscope, and performance issues are revealed. If tasks are going undone, or error margins are too high, operational goals will be suffering and the warning bells should be ringing.

Sometimes it’s as simple as a change of leadership that pushes an organization into finance transformation. As they come to understand how the business is performing, finance will come under scrutiny too, and if there are apparent changes to be made, it can lead to a more robust revision of processes.

This is a function of business maturity and is usually strategic – a decisive initiative intended to ‘stop the bleeding’ and optimize the organization’s common cycles while evaluating the effectiveness and efficiency of finance.

Look out for part 2 of this blog where we will discuss how finance transformation involves a change in culture and strategic evolution of the organization.

 

 

To hear how other financial institutions have leveraged the easy, powerful capabilities of the Nintex Process platform, read the case studies here.

 

 

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