How do we create the future of the finance function?
It starts with changing our mindset from thinking like a cost center to a profit driver. Here's how...
There are five overall mindset shifts to make ๐งต
It starts with changing our mindset from thinking like a cost center to a profit driver. Here's how...
There are five overall mindset shifts to make ๐งต
1๏ธโฃ FROM MINIMIZING COSTS TO MAXIMIZING BUSINESS VALUE
Too many finance functions look at the benchmark "cost of Finance in %age of sales" and use it to drive down the cost of the function.
However, this drives a one-sided focus on being cheap and not necessarily good.
Too many finance functions look at the benchmark "cost of Finance in %age of sales" and use it to drive down the cost of the function.
However, this drives a one-sided focus on being cheap and not necessarily good.
World-class finance functions are both cheap and good so anything you save on the finance function should be re-invested into making it better.
Only good finance functions can drive maximum business value which is what business leaders are demanding.
Only good finance functions can drive maximum business value which is what business leaders are demanding.
2๏ธโฃ FROM EXPLAINING THE PAST TO IMPROVING THE FUTURE
Too many finance functions spend most of their time explaining their financials instead of focusing on the future.
Let's be reminded financials are historical numbers and cannot be improved.
Too many finance functions spend most of their time explaining their financials instead of focusing on the future.
Let's be reminded financials are historical numbers and cannot be improved.
Instead, we should look at leading indicators and work on improving those.
Spend 80% of your work on business drivers and 20% on the financials.
If movement in business drivers and financials are out of sync you should deep-dive into the financials to explain what's going on.
Spend 80% of your work on business drivers and 20% on the financials.
If movement in business drivers and financials are out of sync you should deep-dive into the financials to explain what's going on.
3๏ธโฃ FROM ELIMINATING RISKS TO TAKING THE RIGHT RISKS
Too many finance functions see risk as something bad that should be eliminated.
However, it's fundamental business knowledge that without risk there's no reward.
Too many finance functions see risk as something bad that should be eliminated.
However, it's fundamental business knowledge that without risk there's no reward.
Hence, it's not about eliminating risks but taking the right risks.
Once we take risks we should, of course, have mitigating actions prepared but that's a different story.
Once we take risks we should, of course, have mitigating actions prepared but that's a different story.
4๏ธโฃ FROM DATA & REPORTING TO GENERATING INSIGHTS
Too many finance functions spend up to 70% of their time working with data and reporting.
Too many finance functions spend up to 70% of their time working with data and reporting.
However, that adds little value. Business leaders want insights that can help them make better decisions.
Hence, we need to share information that they don't know but will aid them in their decision-making.
Hence, we need to share information that they don't know but will aid them in their decision-making.
5๏ธโฃ FROM OWN SUCCESS TO HELPING OTHERS SUCCEED
Too many finance functions are focused on internal KPIs such as shortening the month-end process or improving the time to payment or collection.
However, business leaders don't care much about finance KPIs.
Too many finance functions are focused on internal KPIs such as shortening the month-end process or improving the time to payment or collection.
However, business leaders don't care much about finance KPIs.
They want Finance's help to meet or beat their targets.
In short, no finance function can be successful if the business is not successful.
We must make the top business priorities our top priorities!
In short, no finance function can be successful if the business is not successful.
We must make the top business priorities our top priorities!
To make the shift you need to evaluate how you spend your time and enable the finance function with the right technology.
Otherwise, we cannot make the shift successfully.
How is your finance function working on making these shifts?
Otherwise, we cannot make the shift successfully.
How is your finance function working on making these shifts?
That's a wrap!
If you enjoyed this thread:
1. Follow me @LiuLindberg for more of these
2. RT this tweet to help CFOs make a mindset change
If you enjoyed this thread:
1. Follow me @LiuLindberg for more of these
2. RT this tweet to help CFOs make a mindset change
Check out how we help finance teams elevate the influence they have in their company at bpidk.org.
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