We recently put credit control under the magnifying glass and identified the eight killer mistakes even the best finance teams can still fall prey to. Today we’re taking a step back and looking at finance function as a whole and what today’s elite finance teams are doing.
Read on for our breakdown of the six pillars of today’s elite finance function that every finance team should aspire to.
1. Delivery of monthly management accounts… within one week
Every great finance team knows there’s no excuse to not deliver monthly management accounts in the modern day. But apart from telling a story of how the business has performed over the month, your management accounts exist to inform management’s actions and decisions. Every day that trickles by beyond month end is another layer of fog to shroud the business’ current financial state, and serves only to impede good decision-making.
An elite finance function delivers its monthly management accounts within one week of month end, to ensure management can make swift, well-informed decisions in directing the future of the business.
For those that may think this is unreasonable, the availability of technology to catalyse the finance function means this is table stakes for today’s elite finance teams.
2. Robust systems & controls
Many of us have probably heard the old parable of the two builders - one who built his house on a foundation of rock, the other on a foundation of sand. When a great storm came, the first builder’s house stood strong while the second builder’s house came down with a great crash.
Elite finance teams view their systems and internal controls through the same lens as the wise builder viewed his house - no great finance function can be built on inaccurate info or unreliable systems.
Ensuring the numbers, in the first place, are what they say they are is a simple but core foundation for an elite finance function.
3. Catalytic technology
Although elite finance teams understand the importance of robust systems and controls, they make use of the technology to catalyse their work, making them more effective and efficient. They go beyond ensuring the numbers are what they say they are, to ensuring they also understand the numbers their technology is telling them.
Elite finance teams never abdicate responsibility to the technology they implement, and consciously eliminate the risk of wilful blindness.
4. Commercial cognisance
Simply having robust systems and controls, and catalytic technology, on their own is not enough to make an elite finance function. Another essential element is an intimate understanding of the business and industry the finance function is operating in, going beyond the transactional, beyond the debits and credits, and understanding the story they tell.
As such, an elite finance team knows the answers to questions such as:
- What goods / services does the business produce?
- How does the business produce its goods / services?
- Who are the business’ customers?
- What are the business’ differentiators and USPs?
- Which channels does the business primarily market through?
- How does the business measure the success of its marketing activity?
- What value does each area of the business contribute to the company as a whole?
With this commercial appreciation and judgement, an elite finance function can truly tell how the business is doing and how financially healthy it is.
5. Outstanding outsourcing
The modern finance function can be broad - credit control, cashflow management, statutory returns, sales & purchase ledger processing - the list goes on. The elite finance function, however, recognises opportunities for outsourcing and acts on them effectively.
By recognising which functions add value to the business by keeping in-house and which do not, elite finance teams can identify quality external providers to take on the latter and allow them to cover the remaining functions with greater effectiveness.
A classic service outsourced from elite finance functions is payroll, which for most medium-to-large enterprises provides little-to-no value keeping in-house.
6. Compassionate communication
It’s usually quite easy for businesses to identify their customers - ask any salesperson or marketer and they’ll likely be able to recite you a buyer persona (or at least direct you towards the document that details them). But what about finance teams? Who are their customers?
Many might think it’s the same buyer persona (or *gasp* no one at all!), but elite finance teams realise that their customer is internal - it’s the business itself. Armed with this knowledge, elite finance teams work effectively across every department by communicating clearly and with empathy.
We’ll be diving deeper into each of these pillars in our blog over the coming weeks. Sign up below so you don’t miss out on essential content to improve your finance function.