In terms of finances and operations, the unpredictability of the past two years has presented new challenges for CFOs and finance teams alike. This has included increased urgency for more frequent reporting - which had previously been weekly/monthly, steering the future of the business through financial planning and analysis, and maintaining the financial health of the organisation through cash flow management.
This has led to common questions such as “What can the finance function do to overcome these new challenges?” and more importantly, “What reliable and agile solutions are available?”
With these new finance department pain points come new working methods, processes, and controls which CFOs must ensure also provide flexibility to allow finance teams to be productive and empowered in the workplace. This also includes reducing costs when they can be cut and seeking out new strategies and methods to boost revenue. Cloud accounting software enables CFOs to continue to provide value for the business while taking an active role in its operations.
How is the role of the finance teams changing?
These days, finance professionals are directly involved in the operation of their organisations, providing strategic direction, and aiding in high-level decision making. Finance teams no longer spend all their time on transactional tasks and recordkeeping.
With the growing importance of financial planning and analysis, finance roles are changing in a new and exciting way. However, this comes with new challenges and areas for finance teams to explore and overcome.
How to solve common pain points for finance teams
The importance of planning
It's human nature for people to put something off until things to go wrong before deciding to spring into action. However, this is no longer an option for finance teams.
Finance teams have quickly learnt to expect the unexpected, with increased importance placed on forecasting and planning for such situations before they occur. The challenge of keeping tabs on business partners was also important, as their performance or business health could have affected company finances. This led to planning for worst-case scenarios to evaluate how resilient their business would be if a customer failed to pay, or if a supplier failed to deliver.
Poor cash flow management strategy and planning is also among the biggest financial business risks. Over the past two years we have seen organisations in otherwise excellent business health sink into the ground simply because they didn't have a solid plan in place for cashflow problems.
Learning new skills
Cloud accounting technology has contributed to reducing the demand for certain traditional accounting skills such as bookkeeping, recording transactions, and keeping extensive records. These formerly manual tasks are gradually all becoming automated to allow finance teams to undertake value-adding projects. As a result, many finance professionals are now facing the challenge of getting to grips with newer skills in finance.
In addition to analytical skills – the subject areas of financial strategy and forecasting have quickly become increasingly important to the finance function. The learning of these new skills can also help businesses manage liquidity, control costs, and make wise investment decisions. Developing these high-value skills will allow finance teams to remain one step ahead in the future. The challenge, however, lies in simultaneously balancing the demands of work while learning and developing these technical and analytical skills.
Meeting real-time reporting demands
As accounting systems become more automated, management has access to up-to-date information that represents the exact situation of the company at any given time. Although every finance team aims to have real-time data, achieving it can be difficult. Many finance departments still rely on spreadsheets for day-to-day operations, even if this duplicates their workload.
Meanwhile, real-time reporting relies on accurate data to make quick decisions. Because of this, entering data correctly is essential. Errors in data entry can have an unintended domino effect, causing incorrect data to spread across the entire database of a company, not just one spreadsheet.
It is the responsibility and challenge of finance teams to ensure that all data is entered correctly, as an incorrect interpretation and analysis of data could lead to misalignment of entire business strategies. To ensure data quality, a Cloud accounting software system is essential.
Cybersecurity concerns
Financial information is one of the most popular targets for hackers. In any case, the information about a business that is stolen, such as bank account details, credit card numbers, or passwords, is extremely valuable to hackers. This means that financial departments must constantly keep an eye out for possible security breaches and monitor and manage them accordingly.
With the rapid increase in cybersecurity attacks, it is the responsibility of finance professionals to have all the necessary measures in place to protect financial data. They must ensure their accounting software is regularly updated as these updates often involve protection against the latest security risks.
Access to financial data should be restricted to only those who need it to perform their job duties. One of the key benefits of Cloud accounting software systems is that they are considered more secure than traditional software due to real-time updates. CFOs need to ensure all members of the finance team are fully aware of security policies, and what to do if they suspect something has been leaked or stolen.
Data protection and security
As a result of regulatory requirements, such as the General Data Protection Regulation (GDPR), data protection should be a top priority in all organisations. In addition to being good general practice, it's especially important in light of the continuing rise of data breaches.
Internally, they have access to employee payroll details, names and addresses, bank account numbers and various other sensitive details. It is possible that information about the organisation itself could also be dangerous if it fell into the wrong hands. Externally speaking, finance professionals are also entrusted with information about customers and suppliers, bank account details and credit card numbers, credit histories and addresses.
Finance team members have a particularly important role to play in this. Having access to a great deal of personal data, they are a prime target for cybercriminals, which exacerbates the problem if the right security measures aren't in place. The financial compliance officer also has some responsibility for this, but all members of the finance team must remain vigilant.
Regulations and compliance
Tying in with data protection, finance departments also face the pressure of needing to have a full and up-to-date understanding of the regulations that they are required to follow. Laws have been tightened over the years, and accounting practices have become tougher as regulators look to crack down on bad behaviour. It means that finance professionals need to make sure they're right up-to-date with the rules on everything from Making Tax Digital to the latest reporting regulations.
CFOs should work closely with their compliance officer to ensure that all those within the organisation that have responsibilities understand them fully (and have the necessary support to carry out their duties properly). Breaking the rules or failing to maintain good financial compliance can land your business in hot water, and in the long term, it can erode your customers’ confidence.
The importance of developing soft skills
Soft skills are something that most finance professionals lack as their nature of work has always been such that their interactions were limited. But if the finance professionals of today wish to become successful business partners, they need the training to develop these skills. With time, it has become increasingly important for finance professionals to develop soft skills. From being a separate function to playing a central part in managing the organisation, the roles and responsibilities of the finance department have changed.
The gap that previously existed between finance and other departments is gradually closing. Therefore, if finance professionals wish to liaise with other departments effectively, they need to work on building their communication and interpersonal skills. Doing so will allow them to connect with other stakeholders of the business and gain their trust.
Understanding the wider business
A finance department's role is crucial to steering and monitoring the business. Finance departments should build strong relationships with other departments and understand their goals, frustrations, and challenges. Though this may sound easy in theory, achieving clear communication can sometimes prove difficult for financial functions in practice. As remote working becomes more prevalent, finance teams now require online communication tools and access to data in real-time to stay on top of business operations across the board.
Through better communication, finance professionals can identify potential problems before they occur and provide insight and guidance to departments where required. The corporate functions within an organisation should also share the same business-wide vision and strive toward the same goals. It’s important to remember that communication with others is a crucial part of being a successful finance team - and that it must work both ways.
Finance department roles and responsibilities for CFOs
In 2022 and beyond, Cloud computing will be part of the finance department roles and responsibilities and necessary to maintain the business's functional capacity in the face of economic disruption. With the transition to remote working, finance teams operated manually, which revealed a lack of visibility and control in rebate management processes, but it could all be different with the Cloud.
Automation is key
Using spreadsheets and manual methods to process data can be challenging for finance teams. As a result, they must spend all of their time gathering data and assuring its accuracy. Their time is rarely left for analysis, reporting, and strategic recommendations, which leaves little time for other tasks.
Automation, however, is changing everything. Cloud-based platforms have now made it possible to replace these siloed manual finance processes and simplify rebate management dramatically. For a stronger, more effective business, CFOs are seeing the benefits of leveraging automation. Especially in a time when every penny counts, fragmented systems can result in costly operations.
A closer relationship with the CIO
Technology has become a key driver of business value and competitive advantage, so it is imperative that CFOs use this as an opportunity to coordinate closely with CIOs.
As technology continues to rapidly evolve, CFOs may find it challenging to keep up. Therefore, a partnership with the CIO is essential for determining capabilities and staying ahead of tech trends. The CIO can help the CFO to decide which technology is necessary and which can be eliminated, in order to modernise legacy on-premise systems, increase agility, improve business processes, and moreover, to fuel growth.
While new solutions may not be the answer for all organisations, IT leaders should research and study new and improved capabilities to see how they can drive the organisation forward.
There is no doubt that many CFOs are aware they must improve their digital technologies, hire skilled talent, and innovate, but this doesn't mean that changes will happen quickly. While it may be challenging for senior executives to buy into digital transformation, companies that fail to adapt will likely fall behind those who do.
Having the right tools
Considering the pain points addressed, CFOs and finance teams have a unique opportunity to enable their organisations to achieve the right degree of agility with the right tools to provide visibility, insight, control, and measurement.
With a wealth of features, Advanced Financials accounting software can help you and your finance department address challenges head-on and achieve operational awareness that no other team could even begin to approach. Click here to register your interest today.