Finance & Business Performance

The Finance Department, at the heart of the company’s performance management. The Finance Department both coordinates and controls operations, as well as managing and coordinating financial performance.

Managing performance in an environment undergoing major transformation

In addition, it is interesting to note from the outset that financial performance and global performance are very closely linked, with the former being the consequence of the commercial and operational management of the latter.

The Finance Department’s main tasks are as follows:

  • Coordinate the setting of targets, in accordance with the medium-term strategic vision and with operational departments
  • Measure performance and guarantee performance reliability using cost accounting and management consolidation methods
  • Promote communication internally using reports and indicators, and promote external communication via financial statements and investor roadshows.

These tasks are carried out in an environment that is increasingly unstable and increasingly difficult to predict. Companies need to deal with the major transformations taking place, which mostly cause customer/product positioning breakdowns. Often, in the medium to long term, their business model is challenged.

This situation requires:

  • Implementation of tighter management with more effective implementation of commercial, operational and financial viewpoints
  • Provision for shorter decision cycles requiring more frequent focus on the analysis of underachievement and the operational reasons for this
  • Reinforcement of data intelligence practices using quality data and adapted analysis tools.

The conditions in which the Finance Department conducts its tasks are actually significantly impacted, and the department faces four challenges. Firstly, it needs to review forecasts more frequently and in more detail to be able to compensate for any decline in market stability. This necessity impacts turnover and margins. Second, the department also needs to take frequent updates into account in terms of general regulatory standards and more specific accounting standards. It is also subject to a growing requirement to be more transparent and to reduce the time frame for publishing accounting and financial information. Lastly, the Finance Department must work towards greater operational efficiency in the same way as other company departments.

The Finance Department needs to make changes to create a quality database, improve the quality/cost ratio of its processes, adapt its information systems and integrate innovations, in particular digital innovations. To support the reinforcement of its management processes with operational departments, it must also rethink the way it manages talents.

Data quality: an essential database

Data is the Finance Department’s raw material. With the quality of data available in cost accounting often being poor, projects carried out over the last few years to shorten the closure of accounts period involved key actions to

The quality of data available in cost accounting is often unsatisfactory, due primarily to the following two reasons:

  • There are too many cost centres and a lack of coherence between them
  • Processes concerning the assignment of analytical categories need improving

With the aim of achieving integrated management focusing on improving performance and identifying operational causes, it is essential that projects to improve the quality of analytical data continue. These data quality enhancement projects should be linked to sales and operational data.

The Finance Department has legitimacy in terms of data quality. Knowledgeable and valued within the company in terms of accounting and analytical data, the department must capitalise on this asset to coordinate the linking of financial data with non-financial data as a prerequisite of an integrated and dynamic management system.

Less is more: simplify practices to increase added value.

In many companies, it is the quality/cost ratio that needs improving more than the quality of their processes, and this is particularly true of budget processes. Recent studies show budgets to be disconnected from operational reality. Fewer than 25% of finance managers consider strategy when setting budgets and approximately 2/3 of budgets do not incorporate an operational driver. In addition, setting these budgets is a long, complex and non-collaborative process. 50% of companies spend more than three months drawing up their budget. 64% of these budgets are obsolete at the start of the financial year and half of the companies consulted deem their workload to be barely manageable or unmanageable.

Simplifying budget processes to bring them into line with operational reality by improving collaboration with the sales and operational departments is therefore vital in making sense of these processes and placing the budget and forecast reviews at the centre of the company’s performance management.

Integrating technology innovations to add more value

Information systems play a key role in adding more value within the Finance Department, allowing repetitive and low-value tasks to be automated using RPA (Robotic Process Automation) in order to develop analytics capabilities. Using NLP (Natural Language Processing), they simplify access to information (Chatbot) and automatically generate responses. Cognitive layers make it possible to expand and progressively rationalise gap analysis whilst identifying operational causes. Lastly, through the use of data visualisation tools, information systems facilitate the analysis of data, the sharing of learning and the strengthening of management dialogue.

These tools complete the Finance Department’s existing applications. They must be integrated in a way that takes into account their respective maturity and capacity to support the major strengthening of management dialogue.

Managing talents

More than ever, the Finance Department’s capacity to develop the talents of its employees and to attract new talents from other areas of the company, is an essential part of the department’s transformation.

Its capacity to develop links and dialogue with other company business teams requires perfect understanding of the key accounting and management technical aspects. This requires an understanding of the challenges and the operational reality of the company’s business teams as well as.

The capacity to understand the company’s strategy and apply it to now essential analyses. Training is also required to be able to converse with business teams. In this relationship and in the absence of a reporting line, being persuasive is an asset.

The capacity to understand the company’s strategy and apply it to now essential analyses. Training is also required to be able to converse with business teams. In this relationship and in the absence of a reporting line, being persuasive is an asset.

Steering this transformation is increasingly part of a continuous process that is inextricably linked with the technical management of accounting activities and an ability to plan for technology developments and their benefits.

Developing the capacity for transformation therefore requires implementation of technology watch means, and informing and training employees in project management and agile methods.