The Finance Professional 4.0

This is the channel "Trends in Finance and Accounting" which has more than 98,000 subscribers! Click "Subscribe" to receive a notification and an e-mail when I publish new articles on this channel every Thursday and the occasional Saturday.

Join me at 1530 CEST as I discuss the last of the CFO's top 10 priorities for 2021 being working capital optimization. You can click here to join.

The Finance Function is undergoing a generational shift. The increasing automation of technical accounting and finance tasks, alongside a greater appetite for technology within Finance teams, has meant that the role of Finance professionals is rapidly morphing.

In the last post in this series exploring the rise of the Finance Function 4.0 we looked in detail at the ways in which the Finance Function is changing, and the new lay of the land for modern Finance practitioners.

For professionals in Finance Function 4.0, there is one key principle: we must create value. Finance professionals are no longer ancillary - that is, they no longer simply provide support or information that is passed up the chain. Instead, they must take an active role in driving better outcomes throughout their organization.

So what does this mean in practice for the new Finance professional? And how is value creation different in the Finance Function 4.0?

The new day-to-day

Finance professionals in the new paradigm are doing far more than sitting in front of a screen analyzing numbers. Of course, the nitty-gritty of analysis remains important, but it is no longer the whole story. The days of siloed working, with Finance professionals cordoned off from other business functions, are over.

It is also no longer enough for a Finance professional to simply have top-drawer SQL or R skills. There is an increasing recognition that these are not the be-all and end all of finance work. Instead, they are tools that should be put to work in the service of broader value creation within an organization.

So, in addition to the numbers themselves, Finance Function 4.0 professionals need comprehensive communication skills. This new landscape is about relationships - about communicating the meaning and importance of the data that is being analyzed, and about signposting the ways in which it can be used to make better decisions throughout an organization.

In Finance Function 4.0, practitioners take on a more fundamental and more embedded role within their business. In order to succeed in this paradigm professionals must have a holistic understanding of their organization, bridging gaps between data and action. Modern Finance practitioners need to think beyond the established boundaries of the Finance Function and focus not only on the inputs they are analyzing but also on the outcomes that can be produced through the application of that analysis.

Until recently, the Finance Function was about pointing out gaps or opportunities in business processes and strategies and then passing the baton further up the chain where solutions would be devised. By contrast, in Finance Function 4.0, professionals don't just find the gaps - they also drive the actions required to plug them. It's not just about providing information, but instead about turning that information into actionable insight and taking responsibility for the dissemination of that insight throughout an organization.

Measuring success in the Finance Function 4.0

Clearly, such a significant shift in the scope of the Finance professional's work also requires a change in the ways we measure success. How do we know when the new Finance Function is performing well?

Meeting or beating targets set by leaders in the organization will, of course, remain crucial. But measuring success in the Finance Function 4.0 is not only done through quantitative work - there is also an important new qualitative aspect.

Success in Finance Function 4.0 hinges on the depth and breadth of Finance professionals' contribution to their organization. How are you helping across the business? Are you providing not only information but also strategies and recommendations to ensure that the information is leveraged to produce better real-world outcomes? Are you going beyond simply reporting, and instead playing an active role in the development of the business? In order to measure this impact, Finance professionals need to consider new metrics, sometimes borrowed from other business functions. For example, at BPI we use NPS measures based on feedback from business leaders. This "customer satisfaction" scoring gives us a firm handle on the real-world outcomes of our work and is a useful tool for all modern Finance professionals.

This new landscape also requires Finance professionals to adopt a different approach to career development. It is now important for practitioners to document the value-add they have delivered within their organizations. By demonstrating your creative and strategic input (and, crucially, the outcomes that were derived from them), and not only your technical proficiency, you will be well-placed for more rapid and fulfilling career progression. We'll look further at the new career paths opened up by Finance Function 4.0 in the next article in this series.

From cost center to profit driver

For too long, the Finance Function has been treated as a cost center - an overhead that needs to be minimized and streamlined. The explosion in automation has meant that huge swathes of Finance activity can now be carried out with little human input. This sounds like a disaster for Finance professionals, but in fact, it is the opposite.

Modern Finance practitioners have a huge opportunity to broaden the scope of their work, moving up through the value chain and driving better outcomes for the organizations in which they work. As machines take on more of the technical work, Finance professionals can begin to fulfill their real potential as crucial hinge-points within the business. It's time to stop thinking of the Finance Function as a cost center, and instead, recognize its importance as a profit driver. How many decisions did you influence in the past week, and what profit was driven from those?

If you like what you read and would like to make a voluntary donation to support my continued content creation you can use one of the below options. All content continues to be provided for free!

For international donations please transfer via PayPal here: PayPal.Me/liulindberg

For Danish donations please transfer via MobilePay on 876201

This was the second article in my new series "Finance Function 4.0". You can read previous articles in the series below.

Welcome To Finance Function 4.0

Do you want to learn about the changes that are happening in Finance and Accounting these years then I have few recent articles for you that you might find relevant. Check them out below!

A Week In The Life Of An Accountant Post Finance Transformation

Re-Imagining Finance In The Face Of The Pandemic

Data Agility Is The New Competitive Advantage For Finance

The Top Ten Priorities For The CFO In 2021

Take An Experimental Approach To Discover The Impact Of Tech In Finance

How Technology Enables The Future Of Finance And Accounting

Finance Is On A Change Journey - Here Is How To Take Charge

You can read a lot more articles about FP&A, Business Partnering, and Finance Transformation below. It all start's with “Introducing The Finance Transformation Nine Box” where you set the ambition for your transformation. You should join the Finance Business Partner Forum which is part of the Business Partnering Institute's online community where we will continue to discuss this topic and you can click here to follow me on Twitter.

All Successful Business Partners Are "Leaders" (the last article in the series about our new capability model)

Should We Keep Talking About Business Partnering? (part of a 17-article series where we deep-dive on the WHY, WHAT, and HOW of business partnering by putting it on a formula)

Your Journey To Successful Business Partnering Explained

How To Create Value Through Business Partnering

Everyone Can Adopt A Business Partnering Mindset (part of a six-article series about FP&A Business Partnering)

From Business Partner To Working Within The Business (part of an article series where I interview finance professionals about their careers in FP&A and Business Partnering)

Is Your Product Optimized For Value Creation? (part of a toolbox series where we look at what tools FP&A professionals should leverage to drive value creation)

How Business Partners Turn Analysis To Insight (part of case study series where I interview business partners about how they drive value creation using real cases)

The Future Of FP&A: Two Ways To Take The Reins

What Is The Accounting Profession Paradox?

What Defines A Finance Master?

The New Career Path For Finance Professionals

How Finance People Can Be More Successful

The CFOs Roadmap To Transforming Finance

How To Become A Finance Business Partner

Financial Analyst vs. Finance Business Partner

Finance Business Partner Is A Bullshit Job

How Business Partners Keep A Plan On Track

Anders Liu-Lindberg is the co-founder, COO (Chief Operating Officer), and CMO (Chief Marketing Officer) at the Business Partnering Institute and owner of the largest group dedicated to Finance Business Partnering on LinkedIn with more than 9,000 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a long-time Finance Blogger on LinkedIn with 57.500+ followers.