Ideas for Improving the Finance Function

Ideas for Improving the Finance Function

Copyright: © 2022 |Pages: 13
DOI: 10.4018/978-1-7998-6929-0.ch004
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Abstract

There is no shortage of ideas, especially in the professional literature, for elevating the quality of the finance function. However, it turns out that much of that literature focuses only on improving financial processes or on the question of how to develop financial professionals from scorekeepers into business controllers. There is limited literature that provides a glimpse of what a high-performance finance function looks like and what its place and role are within an organization. In this chapter, interesting studies from the literature from the past decade are discussed to develop an overall picture of the finance function of the future. First a look is taken at the benefits of an excellent finance function and then the most interesting ideas in the literature for creating such a function are discussed.
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4.1 Benefits Of An Excellent Finance Function

We collected and summarized the benefits as mentioned in the professional studies in Table 1 (the details can be found in Appendix A).

Table 1.
Benefits of being a high-performance finance function vs. being an average-performing finance function
CriteriaBenefit
For the finance function itself
Internal client satisfaction65% more likely to meet stakeholder expectations
Time spentUp to 50% more on activities that add value
Business partneringUp to 41% more likely to be seen as valued business partner by the operation
Cost levelUp to 60% lower
Productivity improvementUp to 34% higher, mainly due to a higher level of automation
CapabilitiesFinancials seen as more innovative, knowledgeable in terms of operations, agile, proactive and commercial-minded
Talent developmentUp to 24% more training hours; 60% more retention of financials
Self-service for managersUp to 50% higher availability
ProjectsUp to 50% more successful, with a higher ROI
For the organization with a high-performance finance function
FinancialHigher revenue and market share (up to 20% higher), margin (6.7% higher), earnings before interest tax depreciation amortization (EBITDA, 4.0% higher), return on equity (ROE, 5.9% higher), and total shareholder return (TSR, 10.7% higher)

A clear conclusion can be drawn from Table 1: creating a high-performance finance function offers many benefits to the finance function itself as well as to the wider organization. The big question now is: how can such a finance function be created?

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