"Factors that set apart top-performing finance teams
The finance functions of top-performing organisations tend to be more cost-efficient than their peers and spend more time on analysis instead of data gathering.
That’s one key conclusion reached by PwC’s annual finance function benchmarking survey. The global report showed that top-tier finance functions are faster at delivering budgets and have the time to provide sharper insight. The top-quartile companies also prioritise people management, business partnering, and generating a return on technology investment.
These points of emphasis represent the expanding role of finance in general and CFOs in particular. Finance functions that don’t adapt quickly to rapid business changes, the report said, could hold back organisations seeking growth.
PwC, which surveyed more than 400 companies around the world, listed four factors that set apart top-performing finance functions:
Cost efficiency. Through automation and more efficient use of capacity, shared services, or outsourcing, the cost of finance as a percentage of revenue is 40% lower among finance functions in top-quartile companies.
Faster turnaround. Budgets are delivered earlier, unwieldy IT infrastructure is being replaced by more adaptable cloud-based platforms, and new systems are cheaper and easier to use. The report says that the budget cycle has dropped to 80 days for top-quartile companies, from 90 days the previous year. Companies below the top quartile also report a faster budget cycle than in previous years.
Sharper insight. The proportion of finance staff in business partnering roles has remained steady, and those professionals are spending more time on analysis instead of data gathering. The percentage of time spent on analysis is 60%, compared with 47% the previous year, for top-quartile companies. That increase comes despite the percentage of finance employees in business partnering roles remaining steady.
Leaner operations. Top performers see value in taking a lean approach to processes, looking beyond systems to foster better understanding of user needs and to reduce waste in the form of errors or duplicative work. Some organisations still spend too much time on billing and management reporting, for example, two areas that could be helped greatly by automation.
PwC lists six key goals finance teams must consider to remain relevant:
Excel at seeing the future. Have the systems, people, and decision-making influence to judge how business models (rather than budgets only) might need to change. Build relevant valuation assumptions that can measure social, environmental, and financial impact. Get rid of legacy systems or other baggage that slows the ability to respond to change. Determine how finance employees’ qualifications and experience need to change. Have a diversity of people and ideas to understand, and access talent from, growth markets.
Carol Sawdye, CPA, the CFO of PwC US, said in the report that the challenges of fast-changing demographics and business technology are ones that CFOs must address.
“It is critical that CFOs collaborate with HR and IT,” she said. “The CFO needs to play a proactive role to push forward the business model and technology changes that are going to be required to increase operational effectiveness. CFOs need to push their C-suite colleagues by helping them see the financial impact of these accelerating demographic and technology trends.”"
By Neil Amato
July 13 2015