The finance department occupies one of the most honorable and respected places in a company. Its employees are involved in accounting, developing regulations, drawing up budgets, balancing sheets, and preparing for audits. But these are only a tiny part of the functions assigned to the finance department. How profound is the impact of finance on business operations?
A competent financial director with a reliable economic team is not an employee but a full-fledged business partner. He is responsible for generating intelligent analyses for the decision-makers in the company. The finance department provides a dynamic allocation of resources and is a significant growth driver for the business.
This approach in the finance department is called strategic finance and has already become the new gold standard in business today.
In this article, you will learn about this concept and the main ways to make it central to a company's financial operations. We will also look at what processes in the company are slowing down the finance team.
First, we need to look at strategic finance and how high strategies can be implemented in the financial area of a particular business.
Strategic finance: what is it?
The essence of strategic finance is to base a company's finance function on its growth and vision for the long term. It may take immediate sacrifices to create long-term change, and the decisions may be controversial. Still, these actions are invariably made based on the available data.
Key decision makers rely on the finance department to create an action plan. It provides strategic analysis that helps to delve deeper into operational issues. The main goal of strategic finance is to achieve success. For different companies, success can be defined as increasing profits, achieving sustainable results, reducing environmental impact, etc.
Financial experts argue that the cornerstone of business transformation should be the synergy of planning and analysis as the primary financial functions. The Wallester platform, which includes many useful tools for planning and analyzing the financial situation of any business, can help implement the new strategy.
Why is it optimal to choose the financial function as the basis of strategy?
The finance department in a company stands at the crossroads of all its divisions. Finance managers actively collaborate with all other departments. Without this, it is impossible to create bottom-up budgets and implement most financial initiatives.
Finance executives are also among the most senior positions in the company. They must interact with all decision-makers. With financial credentials, these executives become the real engines of progress on the issue of strategic planning at the right time.
Let's examine the two main reasons why the finance function can be considered strategic.
If you take the structure of any large company, the best analysts will work in its financial department. They are often focused on numbers and information, which is not usually the case with representatives of other departments. Such employees are an invaluable resource for any corporation. They can process data and high-level knowledge in the same way to achieve the company's strategic goals.
The financial department first receives information about costs, revenues, and expenses. It is much easier to immediately track and analyze the consequences of any changes related to strategic decision-making.
The main service unit
A finance department is a service unit that keeps specific numbers and provides them to other departments. Knowing these numbers provides an in-depth analytical view of the company's reality and what lies ahead for the foreseeable or distant future.
Suppose you pay attention to the work of the sales and marketing department. In that case, its employees are focused on getting a specific result. At the same time, the financial service has a different task because it does not work within the business but over it. It is not important to get a result but rather to intelligently assess potential risks and opportunities. Due to the financial department's strategic nature, all decisions it makes are implicitly accepted by the rest of the company and deeply respected. Even controversial decisions are non-negotiable because they are all made to achieve the company's financial goals.
How to automate the strategic finance function?
It is difficult to overestimate the importance of the financial department. At the same time, in the daily work of its employees, there are many routine duties, the implementation of which takes up a lot of precious time which could be spent on achieving strategic goals instead. According to most employees of financial departments, about 40% of their activities are not beneficial. To make the work of the finance department more efficient, you should automate most of the day-to-day tasks.
Finance departments need tools to identify trends and data errors; automated programs can do this. Since business forecasting is based on looking at numbers, using specialized software will be much more effective than analyzing data manually. Outsourcing this part of the work will free up a lot of working time for strategic tasks.
Automating business processes is helpful because decision-makers can see the state of the business online. This will allow them to make decisions faster, react to market changes, and take appropriate action. Thus, using technology and automating routine processes as much as possible is critical to building a strategic finance function.
Where is automation needed?
The number of technologies to automate a business is almost endless. It's best to start automating the most time-consuming and tedious work first. Freeing up as much time as possible for strategic tasks is essential.
It’s most beneficial to start financial automation in the following areas:
- Expense management
- Forecasting for revenue generation and expenditures
- Task approval
- Manual verification of compliance with specific regulations and documents
- Control of accounts payable
All monotonous, regularly recurring tasks that do not require creativity should be automated. Automation should start with the functions that have the most significant impact on the financial department. Processes that take a long time to perform and make little difference should be automated.
Using strategic financial solutions from Wallester
Wallester offers its customers software based on the use of innovative technologies. It simplifies financial operations and optimizes the cash flow control system.
Through the Wallester platform, the finance department can monitor how money is spent in real time and see how much is spent against the budget. The platform eliminates tedious red tape and reduces the number of reimbursement emails and confirmation of various payments.
Thoughtful analysis of expenses will help the company identify the primary sources of income and weaknesses that need to be reinvested to maintain revenue. Automating information about payments will eliminate unnecessary costs and prevent them in the future.
Automating tasks related to cost control will free up time to achieve strategic goals, which is what the finance department should do.