From bookkeeper to business partner: How finance is changing

It’s time to stop judging success by numbers alone. While organisations have traditionally been defined by their financial returns, a broader set of factors now determine performance and value.

With this shift must come an evolution of the finance business partner into a trusted adviser. For the accountancy and finance community, there’s never been a better chance to demonstrate value and deliver more, whether that’s helping an organisation measure and mitigate risk in new and innovative ways, or using data to identify and grasp growth opportunities.

Reflecting this trend, more than three quarters of finance professionals surveyed by PwC and ACCA said they see the importance of their role growing significantly over the next three to five years. However, there is still work to be done. Only 37% of respondents said finance business partnering is currently truly embedded in decision-making and strategy.

To make this broad transformation happen, there first must be changes within finance.

Traditionally, a finance department consists of three key elements: transactional efficiency, compliance and control, and business insights. Transactional efficiency covers areas such as payables, receivables and general ledger. It is often completed in a shared service centre (SSC) and with a focus on transaction and cost-efficiency. Compliance and control relates to risk management activities, which are often undertaken at corporate headquarters. Business insights, which may have traditionally been more rudimentary, include strategy, planning, budgeting, forecasting, analysis and improvement.

But times are changing. About 60% of respondents to the PwC and ACCA research - published in a report entitled ‘Finance Insights Reimagined’ - believe self-service reporting and automation will free up business partner time, taking transactional and compliance responsibilities off their hands within the next five years. For 28%, it is already happening or soon will. This will create more opportunity for finance to focus on added value - from supporting an organisation’s purpose to long-term strategic planning.

A more purposeful finance function

Organisations are placing ever greater importance on purpose: from the values they promote and abide by, to the causes they support and the difference they seek to make to their people, communities and the environment.

There is power in purpose: it can improve customer loyalty, company culture, brand reputation and business performance. It is also becoming a higher priority for investors. For example, Norway’s $1tn sovereign wealth fund has put ethical issues at the heart of its investment strategy, avoiding businesses for alleged violations of human rights and setting out expectations on climate risk.

This focus on purpose is an opportunity for finance professionals to help organisations articulate their purpose and make it as much a part of how the organisation assesses and reports its performance as its finances. The finance function can do this by providing a broader range of data-driven insights into areas beyond traditional financial performance, as well as working with the business to support and enable critical decisions and operations that enshrine its purpose for the long term.

Gavin Hildreth, senior manager at PwC, notes: “The finance business partner now has a rare opportunity to drive organisational purpose. They must take the lead in how the business is measuring itself, how it's thinking about itself, and what it wants to recognised for.”

Finance insights reimagined

As finance broadens its reach and remit within organisations, we are witnessing a revolution in finance-led insights. Almost three-quarters (74%) of respondents claimed finance business partners already focus on both historical and future performance, indicating a transition from a retrospective, reporting role to a more forward-thinking one.

The ‘six capitals of integrated reporting’ - financial, human, intellectual, manufacturing, natural, social and relationship - can help identify the insights finance must provide. Financial capital is no longer something to look at in isolation. The skilled finance business partner must be able to combine these capitals to develop a complete picture and analyse business-wide data to provide actionable insights.

Jamie Lyon, Head of Business Management, ACCA, notes: “With the inclusion of the six capitals into decision-making, CFOs will have to become the consciousness of the organisation, providing the guidance to make more challenging and purposeful decisions.”

One example of how the finance function can provide added value, reported in ‘Finance Insights Reimagined’, involves a finance business partner within a bank uncovering a way to reward customers with improved benefits while providing more revenue to the bank by managing the range of credit types awarded. Another example involves the finance business partner of a delivery company working with dispatch teams to establish optimal package sizing, thus increasing the speed and efficiency of deliveries.

People and skills

So, how does a finance function become a strategic business partner? It starts by focusing on a few key areas. Firstly, its people and skills, as the requirement upon finance extends beyond the core knowledge of accountancy and finance principles.

Failure to develop appropriate skills poses a serious threat to finance teams. More than half (55%) of survey respondents said their role could be obsolete within five years without appropriate skills development. Some finance leaders are already addressing this - 17% said it’s an issue they’re working on now, with a further 15% planning to do so.

A prerequisite is a detailed knowledge of the organisation, its business model and how to evaluate performance. But other important skills include: networking beyond traditional organisational silos; critical thinking and problem-solving; the ability to use analytical tools to provide actionable insight; and influencing, leadership skills and emotional intelligence.

Organisations must invest in the development of the finance function to ensure a strong balance of technical and softer skills.

Cultural and behavioural change

These investments in people should also complement another area of focus, which is driving cultural and behavioural change, as finance seeks to move from a backwards-looking, risk-averse culture to one that is agile, collaborative, innovative and customer-focused.

Effecting cultural change is a long-term commitment that must be embedded within the training and management of existing employees, as well as the recruitment of future team members, including potentially looking outside traditional finance recruitment areas.

Cultural and behavioural change must also be underpinned by the provision of the right technology to maximise productivity, from AI and automation to digital collaboration and the analytics tools needed to provide actionable, data-driven insights.

Data-driven insights

Putting clean and accurate data into the hands of finance is essential for generating effective insights. It needs appropriate governance and must be collected from a wide range of relevant sources to measure organisational value beyond financial goals.

Many organisations currently struggle to aggregate, format and harness the power of their existing data. This then limits their ability to identify trends and make informed decisions. The first step to resolving this is to identify the policies, structure and process required for data management. Once these are in place, it should be possible to select platforms or applications that address the analytics need, allow the extraction and storage of unstructured data and enable effective data processing.

Connected data lakes enable finance teams to generate more robust forecasts and provide deeper business insights. The data can also easily be pulled into an enterprise risk platform for compliance monitoring, while dashboards and reports can be hosted centrally for review and analysis. Ultimately, this helps drive new business models and services through monetising data assets.

Technology

Technology has a key role to play in enabling all of these changes through a strong digital core that exploits the advantages of cloud-based applications and automation.

For example, shifting and upgrading existing enterprise resource planning (ERP) systems to deliver new finance capabilities in the cloud reduces maintenance overheads, enables innovation and greater collaboration and provides improved scalability.

Meanwhile, automation can simplify, accelerate or redesign processes, and encourages a shift from detective to predictive controls. In turn, this can reduce manual work to allow a focus on strategic activities and building relationships with customers.

New focus, new finance function

As organisations begin to think differently about performance, finance must put itself at the heart of the change.

The role of finance business partners who have a worldview supported by a clear understanding of the business and the data will be essential. But to deliver this, finance functions must adapt. They must become proactive units that provide strategic advice and recommendations to stakeholders based on a range of data sources and expert knowledge.

This must be supported by a culture that embraces agile collaboration and is conducive to generating actionable insights.

Those teams best equipped to succeed will be the ones who recruit and retain the right people and skills, who effect cultural and behavioural change and uncover and communicate data-driven insights that help the organisation understand and capitalise on all opportunities.

‘Finance insights - reimagined’ is a joint report from PwC and ACCA, based on interviews with ACCA members, industry roundtables and a survey of more than 3,500 finance professionals. Download the full report.
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Gavin Hildreth

Gavin Hildreth

Finance Benchmarking Lead, PwC United Kingdom

Tel: +44 (0)7595 609676

Brian J Furness

Brian J Furness

Global Consulting Finance Leader, Partner, PwC United Kingdom

Tel: +44 (0)20 7212 3917

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