What are 4 signs that finance is not providing me value?

If ever there was a time for finance to step up and demonstrate its value to the organization at large, this has got to be it. Right now.

There’s a massive change under way in companies’ strategic orientation, as business leaders turn from navigating the later stages of recovery to pursuing outright growth. According to Deloitte’s most recent CFO Signals research (based on Q1 2011 data), CFOs have shifted their strategic focus toward revenue growth and away from cost reduction: “Revenue growth is now their dominant company challenge. … Nearly 30 percent of CFOs say they are focused on M&A activity, and 40 percent expect revenue from recently or soon-to-be acquired entities to be higher within the next year than it was before the recession.”

At this critical economic juncture, CEOs more than ever need their finance team to fulfill the role of provider of actionable insights backed with solid data. That means providing timely, accurate reports; a deep understanding of profitability drivers; and a clear view of where potential problems might arise.

The reality is that many SMBs find themselves caught in a tangle of poorly aligned skills and work roles and inefficient technologies that makes any significant increase in advisory value difficult to attain.

Do any of the following sound familiar? If so, chances are your finance function isn’t contributing as much value as it should:

1. Executives view finance as a function that pays bills and keeps the company compliant. SMBs generate huge volumes of potentially useful financial data, but much of it goes no further than reports aimed at meeting bank covenants or satisfying the demands of regulators. Of course, compliance activities are crucial, but it’s unfortunate that smaller businesses so often fail to leverage their information assets.

2. Your systems don’t talk to each other. You’ve got your G/L data in one system, operational metrics in another, your A/R info somewhere else, and nothing is integrated. The same information is maintained in multiple places or is dispersed across these resources, making it almost impossible to decide which products, customers, or projects are profitable and which are not. You’re aware that you need to improve your systems to aggregate the data, but you blanch at the thought of starting from scratch or investing in a costly ERP system.

3. Your best people are up to their eyeballs in tactical work. Finance leaders in SMBs may pride themselves on being team players who are always available to their staff, but do you really want these highly compensated resources spending their time on things like helping a staffer track down an invoice? The value that your top performers should be contributing at the highest levels of the organization is being poured into routine (often compliance-related) tasks.

4. You don’t receive management financial reports and analysis to make better decisions. Do you receive reports that track your key performance indicators? Do you receive reliable forecast information? Does anyone study day’s sales outstanding to get insights into reducing working capital? Even if some of these reports are generated, producing them is one thing, but analyzing the information, understanding what drives it, and leveraging it to improve decision-making and generate action — that’s where real value is created. If you lack high-value people, or you have them but they spend most of their time compiling and manipulating data rather than using it to create action plans that could actually impact results, your finance organization is providing less than its full potential value.

There are tried-and-proven ways to unpick this tangle and get more of a contribution from finance. Start with a close examination of your people, processes, and technology. To maximize the value of personnel with higher-level skill sets, consider distributing tactical work to lower cost resources. Leverage industry-wide best practices to tighten up processes and controls. Instead of that expensive ERP tool or systems overhaul, investigate software as a service (SaaS) products that can provide rapid ROI and paperless workflow.

With the benefit of some well-designed improvements and (fingers crossed!) a more expansive economic environment, this could be the perfect time for SMBs to scale up — and for finance to show its true worth.

Consero FaaS: Disrupting the Outdated Traditional F&A Model

  • Cash to GAAP conversion
  • Clean-up work
  • Interim oversight & support
  • Accounting software Implementation

Build it Yourself Solution

  • CFO / Interim CFO
  • Consultants / VARs

Consero FaaS Solution

  • CFO / Interim CFO
  • or Consero Interim CFO
  • Consero Setup/Transformation
Ongoing F&A
  • Monthly financials
  • Daily accounting support
  • Management reporting
  • Integrate add-on acquisitions

Build it Yourself Solution

  • CFO
  • Controllers & Accounting Team
  • Enterprise Accounting Applications

Consero FaaS Solution

  • CFO
  • or Consero Fractional CFO
  • Consero FaaS Enterprise F&A Software and Services

New PE Platform Investment F&A Challenges

Founder Owned Company Accounting:
  • Existing accounting done on a cash/hybrid basis
  • Run on SMB accounting software and other disparate applications
  • Inability to produce auditable financials
  • Lack of know-how to develop projections & KPIs
  • No consistency/structure to customer contracts
  • Underqualified staff
  • Non-scalable manual processes
Carve-Out Accounting:
  • Required to move off parent company accounting applications in a timely fashion
  • Have to build an entire F&A team
  • No documented operational policies and procedures
To Optimized Finance & Accounting:
  • Monthly financials available in 5-10 business days
  • Audit and diligence ready support details
  • Integrated enterprise grade accounting software
  • Budget and forecast reporting
  • Business KPIs
  • Efficient & scalable processes for rolling in add-ons