The current movement in digital transformation brings a new shift in finance.
As such, teams can provide the business, or other departments, with insights that make their jobs easier.
As well as allowing the sales team to have impactful conversations and informing procurement for intelligent decision making.
This guide explores the evolving role of finance and how technology today allows for finance teams to become business partners.
What is Finance?
Finance is the process of channeling money from investors to entities that need it; investors have money readily available that can earn interest if put to productive use.
In addition to this, finance teams determine the value of assets like stocks, bonds and loans.
And, determining this value is crucial to making informed business decisions.
In the short term, finance is referred to working capital management, which relates to cash and inventory, whereas in the long term, finance is involved with balancing risk and profitability.
Consequently, with the world fastly moving towards digitalisation, the finance function has evolved from ledger books and manual accounting to a more computerised version.
However, even though this took away from some manual calculations, we were still left with piles of printouts that had to be manually analysed and reported from.
Changes Along The Way
Technology such as artificial intelligence and the cloud has had a tremendous impact on the finance function.
Because, traditional bookkeeping tasks have been moved to automated systems that provide more timely, accurate forecasting.
In light of these changes, finance leaders have been forced to evolve – towards that of a strategic business partner to the CEO.
As such, finance leaders are now expected to drive growth and work closely with all departments.
In particular, finance leaders are nowadays required to build a framework that ensures financial plans are in line with business strategy, and instead of relying on backward-looking financial metrics, the focus is on KPI’s that support this.
Therefore, the finance function now has the ability to transform operations and even business models to direct the business with confidence, contributing to future success.
Collaboration Between Finance and Procurement
For the success of a business, it’s a no brainer to have you finance and procurement departments aligned – there must be a relationship between the two.
The role for these two, is to assist with financial management activities, such as financial planning and reporting and annual budget forecasting.
As a result of these departments collaborating, the business has better success in maintaining and organising financial files that are compliant with audit and client requirements.
Lastly, collaboration between finance and procurement leads to better insights which thus, results in better decision making.
Ultimately, the technology that’s available today allows for finance leaders to transform into strategic business partners.
In the past, the finance function was in place to report on what had already happened – all retrospective, whereas now, it’s clear to see why the role of finance leaders goes beyond these requirements.
All in all, the future is bright for finance; with greater power comes greater influence and knowledge, and none of this comes with greater responsibility or harder work – in fact, transformation only ever makes things easier.
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