FDs still have to keep an eye on the future despite the demands of the present crisis
The modern FD is expected to fulfil four key roles in an organisation – that
of steward, operator, strategist and catalyst. This is a challenging remit at
the best of times, and the credit crisis and economic downturn have seen most
FDs focus attention on the first two of these roles.
Survival and steadying the ship have been the business imperatives. And they
remain key today. A close eye on access to finance, working capital, debt levels
and costs remains vital.
So what of the role as strategist and catalyst? Well, they are still
important. The last 12 months has been a period of substantial change.
Many organisations have seen a change of FD, other boardroom turnover,
significant business reorganization and restructuring and some major
transactions. The majority of FDs expect M&A activity to increase, and a
glance at the business pages suggests that they may be right. This change has an
impact on the whole business and a direct impact on the finance function.
It needs to trigger a significant re-evaluation of the finance function.
If the FD is to successfully fulfil the roles of strategist and catalyst, the
finance function needs to be fit for purpose. He or she must create a finance
function with the right capabilities that exceeds stakeholder expectations,
achieves desired performance levels, influences and leads the changes and drives
value throughout the organisation. To get there may mean transformation, not
just change within the finance function. Giving thought to the following three
challenges will help define what needs to be done.
Firstly, can the finance team provide timely, valuable and cost effective
management information, while keeping a focus on governance and controls?
Secondly, do the controls and processes in place meet compliance requirements
while also being sensible for the business?
And, thirdly, can the FD find the story behind the numbers? Can the finance
function produce accurate and timely reports that will enable management
discussions around what to do, what does this mean for the future and if goals
can be achieved?
The bottom line is that, while one hand needs to stay firmly on the tiller,
there also needs to be a clear ambition and blueprint to develop a world-class
finance function if an organisation is going to stay competitive and reap the
benefits of recovery.
Margaret Ewing is a partner and vice chairman at Deloitte