How To Become Great At Business Finance

In my series about creating a roadmap for the CFO to transform Finance, it’s now time to take a look at the Business Finance Function but before we go into details perhaps a proper definition of what business finance really is would be due. If you do a simple google search on the term “business finance” it will tell you that it’s the discipline of how you finance your business. That’s not the definition I use though and when you see business finance teams pop up in many companies it’s not because they want a new look on how to finance their business. Rather business finance is…

“…the alignment of the finance function and business operations i.e. the frontline with the goal of finding the best way for finance to support the business”

In a business finance team, you would typically find either financial analysts or finance business partners depending on the maturity of your finance function. The problem for many companies is that they are not getting the value they need out of their financial analysts and business partners. Just take a look at this article from CFO.com from last year and you can clearly see that CFOs are not getting what they thought they paid for. This is the most frustrating part. They know they need this. They are willing to invest money in getting it. BUT they are just not getting a return on their money.

It’s both the plan and the execution, stupid

So where does it all go wrong? From what I have seen there are a couple of things Finance needs to do differently to get the expected return from their investments in business finance (or FP&A depending on where in the world you're located).

1.      Finance needs a better plan for what it want’s from its financial analysts and business partners. Way too often the plan for creating a business finance function has been “let’s hire some really good finance people and ask them to go partner with the business” Using this approach without taking into account the state of the rest of the finance function means you will most likely end up with a less effective business finance function.

2.      Finance needs to execute better on the plan. It requires rigorous follow-up with the financial analysts or business partners to ensure they have both the support they need in the form of tools, one set of numbers and a well-functioning finance function and that they quantify their results and successes.

On the first point, the key element is to create a plan with a significant amount of detail. Historically the expectation has been that financial analysts and business partners being smart people would by instinct know exactly how to go and create value for the business. Naturally, a selected few would know but the vast majority would need further guidance. This guidance should include.

• A detailed job description
• A detailed overview per responsibility in the job description including

- Who are the stakeholders

- What reports are used

- What meetings are involved

- What are potential outcomes and actions from finance’s involvement

• A well-defined systems landscape and data definitions supporting one set of numbers
• A good support structure of peers from other countries, business units etc. to challenge how to become even better and to share best practices

In the execution phase, one thing is to follow the guidance but another is to actually create results. This needs to be measured in monetary terms as that’s what matters in the end. It doesn’t mean that Finance should create this value all by themselves or be credited the value of decisions and outcomes created by the business. It just means that where Finance is involved or supporting better decision making where a monetary value can be measured Finance should celebrate the results to ensure all financial analysts and business partners have role models to turn to. Whether this is done via rewards, awards, public recognition etc. is not that important but the important bit is that you commit to creating results that improve the bottom-line rather than just being satisfied with being part of a meeting or helping someone create a new report. A business finance function must ultimately be able to create value for the business either directly through own initiatives or indirectly in collaboration with the business. If you’re not able to that you haven’t justified your existence.

It’s time for Finance to put the money where the mouth is!

So there you have it. Enough talking about creating a finance function that supports the business. It’s time to be very concrete about you want to do and then measure your results. If you set objectives for your finance business partners then you need to attach a value to them. Find X amount of $ in savings, improve customer mix for Y amount of $ in additional revenue etc. Of course, you need to have a stringent process for evaluating the $ impact including the buy-in and accept from your stakeholders but if you want to make your CFO less frustrated about the poor returns from money invested in business finance then this is what you need to do.

What are your thoughts on business finance and how Finance can become a value creator in collaboration with the business? Are you being measured on your $ impact on the business or is it a more vague approach? Would you even be comfortable having your performance measured like this? After all, you’re not a commission-driven sales person so I’m curious to learn what your view is? As always let me know what you think of the post by liking, commenting and sharing. I always appreciate a good discussion!

For past post in my series on how the CFO should transform Finance, you can continue reading below and further below there are more posts about finance business partnering.

The CFOs Roadmap To Transforming Finance

How To Fix Your Basic Finance Function

Finance Systems For The 21st Century

Big Data Needs Big Data Scientists 

Can Big Data Nerds Speak Business?

I also encourage you to take a tour of my old posts on finance transformation and not least “Introducing The Finance Transformation Nine Box” which is really that starting point for the transformation. Last but not least, you should join my Finance Business Partner Forum where we will continue to discuss this topic.

Financial Analyst vs. Finance Business Partner

You’re A Finance Business Partner, Now What?

Case Study: Becoming A Finance Business Partner

Why We Need Business Partnering Transformation

How Finance Can Help When Business Is Bad

How Finance Can Become An Analytics Powerhouse

How Finance Business Partners Improve Company Performance

There Is A New Kind Of CFO Needed In Town

Anders Liu-Lindberg is the Senior Finance Business Partner for Maersk Line North Europe and is working with the transformation of Finance and business on a daily basis. Anders has participated in several transformation processes amongst others helping Maersk Drilling to go Beyond Budgeting and transformed a finance team from Bean-counters to Business Partners. He would love the chance to collaborate with you on your own transformation processes to help you stay out of disruption. If you are looking for more advice on how to get the most of LinkedIn Anders also has a few tips to share as well as if you want help in your job search. Don’t be shy! Let’s get in touch and start helping each other.