3 minute read 20 Mar 2020
What steps should you take to ensure an efficient finance function?

What steps should you take to ensure an efficient finance function?

By

Johan Jacques

EY Belgium Advisory Executive Director

Finance transformation.

3 minute read 20 Mar 2020

Show resources

Too often, finance gets stuck in old patterns of accounting and controlling. Integrating more transformational roles can give the finance function an extra boost. But this requires new skills.

The role of CFO at many companies today is still limited to traditional accounting and controlling tasks. This old-school interpretation of the CFO tasks does not always offer much in terms of added value. Nevertheless, value creation is a core task of finance. How then should the role of CFO be reevaluated so that their package of tasks provides more added value?

From CFO to CVO: going for a redistribution of roles

The CFO must grow into a CVO, a Chief Value Officer, through the integration of transformational roles. These roles are agile, can deal with change, standardize processes, detect and seize opportunities for improvement, improve processes end-to-end and can properly assess the impact of data.

This transformation can only succeed if the resources that they are given are redistributed. Although the traditional role of accounting remains important, it will have to be standardized and automated as much as possible. In this way, a CFO can spend more time and energy on other tasks that do create added value.

New tasks require new skills

If the range of tasks changes radically, it requires new skills as well. This can be challenging to accomplish. Especially when people have worked too long in the same work environment or when people are not looking to reinvent their function. Are they open to new skills, such as multitasking, digitization, analytical skills and project management?

For many companies, matching content expertise and experience with the personal skills of the 21st century will not be easy. Reskilling profiles is one thing but taking on a transformational role is another. It is about more than just learning new skills or acquiring new knowledge. Employees need to be engaged. If the employee is not willing, the success rate of this process is very low.

Let us illustrate this with the changing function of controllers. They need to be continuously challenged within the company to proactively – rather than reactively – look for local business needs. A controller needs to understand the market and the product of their company, not just the figures. Only then will they be able to sense what financial data is needed and how it should be visualized.

Don't focus on quick wins but go for the long run: you only see the return on investment in a transformation process over the longer term.
Johan Jacques
EY Belgium Advisory Executive Director

Cost cutting in finance

Like so many other functions, finance does not escape the emerging trend of cost cutting. Today, the cost of a finance function must not exceed 1% of an organization's net income. Realizing that this percentage must come down to 0.4% makes it clear that this will have a considerable impact on current operational finance models.

Companies will increasingly have to organize themselves regionally, with centers of excellence and regional hubs. This will be at the expense of the local level, which immediately creates a paradox: how can controllers keep in touch with local business markets, while at the same time initiating a shift towards centralization? This creates tension.

Efficient finance: a path full of challenges

The shift to efficient finance is not a walk in the park. Many companies underestimate the trajectory they must follow. Just having an end goal in mind is not enough, the means to achieve this are equally important. A concrete example of this is the implementation of RPA (Roboting Process Automation): implementing a bot is not sufficient, process standardization must be reworked thoroughly. Because the fewer exceptions disrupt a process, the better a bot works, and less human intervention will be required.

A focus on the long term

An efficient finance function does not simply fall from the sky. It is a transformation process that requires a great deal of effort. Read: time, money and courage. Do not focus on quick wins. The return on investment in a transformation process in finance can only be seen over the longer term.

*This article was developed in collaboration with CFO Magazine.

EY Belgium newsletter

Stay up to date with our EY Belgium newsletter. 

Subscribe

Summary

In many companies, the CFO role in 2020 is limited to traditional accounting and controlling tasks. This old-school interpretation of the CFO tasks does not always offer much in terms of added value. Nevertheless, value creation is a core task of finance. This means that the CFO must grow into a CVO, a Chief Value Officer. This transformation can only succeed if the resources that these roles are given are redistributed. Although the traditional role of accounting remains important, it will have to be standardized and automated as far as possible. In this way, a CFO can spend more time and energy on their other tasks, which do create added value.

About this article

By

Johan Jacques

EY Belgium Advisory Executive Director

Finance transformation.