In a new small company, all the focus — and funds — tend to be on the development side, where the company’s product or service gets fine-tuned for the marketplace. The finance organization as a support function is often low on the priority list. But as the company grows — and tracking and managing the finances gets more complex — almost all spending will continue to be concentrated on other areas, leaving the finance department to fight over the bread crumbs.
Being a team player means making do with what you have, not complaining, and doing what it takes to meet your objectives. But sometimes, being a good soldier is detrimental to the overall good of the company. Consider just a few examples why finance should demand its fair share:
- Systems that don’t keep pace with your business put your company at risk: When the business grows in complexity, so should the methods and technology for tracking its performance. Workflow that is highly dependent on top-side adjustments to close the books and spreadsheet tracking of critical information (revenue recognition, stock awards, etc.) are prone to error.
- Rules and regulations are constantly changing — which means the company has to keep up: Staying current can take considerable time and effort, and not knowing what you don’t know can be harmful. Misapplying accounting rules to significant transactions can result in significant errors to your financial statements.
- Understaffed and underperforming accounting teams can result in delays to the close process: The slowdown not only hurts morale and the department’s ability to keep moving forward — it can have a direct effect on the company if management is running the business with inaccurate or insufficient data to make decisions.
In addition to jeopardizing your own reputation, the inability to produce timely and accurate financial statements can result in a decrease in the company’s valuation, its ability to attract financing at favorable rates (or at all) and win (or keep) strategic partners and clients. The problems could also derail a business combination or IPO.
It doesn’t have to be that way. Finance organizations are beginning to be looked at as more than just a cost center and are on their way toward becoming key players in the overall business strategy. To get to that point, they need to improve how they anticipate and support the needs of other departments and get recognized for such work.
Here are a few questions to consider as you evaluate how others perceive your finance organization:
- Do your cross-functional peers know what the finance organization does to add value to the business? How is finance communicating its value-add?
- Does finance take time to understand what the business is doing, and provide information to support the tasks that are underway? Is it proactive in this, or does it wait for others to make requests?
- Does the organization meet regularly with other departments to find out, from their perspective, what they need from the organization and how the team is doing in filling those needs?
- Is finance able to support the organization with reliable information on a timely basis?
- Does finance have a handle on the company’s current needs and realistic growth plans?
- Does the organization know what best practices are for your industry? Is it in line with your competition?
When finance teams make progress in these areas, their stature will be elevated and they will be seen as key contributors to the business, not a cost drain. This in turn makes getting finance’s piece of the pie much easier. And much more deserved.
For more information about building a foundation of financial integrity, read why timely, accurate financials are valuable for your company.
Pat Voll is a vice president at RoseRyan, where she mentors and supports the dream team, and heads up client management, ensuring all our clients are on the road to happiness. She previously held senior finance level positions at public companies and worked as an auditor with a Big 4 firm.