A finance team needs to operate in four areas:
- Book keeping
- Historic or financial accounting
- Future or management accounting
- Direction of financial strategy
As a business leader you will be most interested in the fourth area of financial strategy but this relies on the first three having been properly and thoroughly completed. The book keeping provides the baseline data to enable accurate historic accounts to be prepared. The historic accounts provide evidence for the projection of the future in realistic and measurable terms. This future view enable a successful finance strategy to be developed.
The right finance strategy will balance growth, borrowings, investment and risk.
Without proper attention to all four areas the results will fall short of fantastic. Put simply if you don’t know where you have been or indeed where you are it is very hard to know how to get to your destination!
Finance functions that fall short of fantastic usually need to address the following:
- Lack of process automation results in resources being consumed on non-value added activities
- This can be exacerbated by poor usage of the accounting software through a simple lack of training
- Define success by the strength and accuracy of the financial strategy and not by a clean audit report
- Define the key business drivers
- Proactively assess finance risk and ensure it is managed
If you are not a finance expert or trained accountant, how will you know if these are issues to be addressed?
Well, if your finance function is always short of time, struggles to meet deadlines and is never ready to provide insightful financial leadership, it’s a fair bet one or more of the above needs to be tackled.
If you are unsure where to start, or you would like to get an external, unbiased assessment, feel free to get in touch. We’re always happy to help.