The FDs' FD: masters of finance
Many CFOs and their finance functions are struggling
They are facing huge challenges in a rapidly changing environment and having
to address a previously un-witnessed cocktail of critical concerns.
But the market leaders in finance let’s call them the ‘finance masters’
are managing to keep ahead of the game. So what is it that they are doing
differently?
We surveyed more than 70 global companies and found a link between the
maturity of finance capabilities and performance. The strongest link we
identified was between finance’s role as a strategist influencing business
decisions to ensure enhanced performance and value and as a catalyst by
stimulating the business’s behaviours to ensure improved performance.
We found that companies where finance acted as a strategist and catalyst, as
well as performing the key roles of a steward (ensuring firm-wide compliance and
managing risk) and operator (running the finance function in a lean way), were
more profitable and gave a better return on assets and shareholder value.
Theywere also more likely to succeed in today’s difficult markets.
No company in our research had mastered the strategist and catalyst roles
without a strong foundation in the core finance capabilities.
There are many examples of the activities of finance masters that set them
apart from other companies. Many are involved in the creation of marketing
strategies, they help drive pricing, they are involved in customer relationship
management strategies and they drive performance across the organisation. These
examples illustrate the breadth of the role of the finance function as a
strategist or catalyst.
Many companies have much to do in order to develop a finance function in the
same league as the finance masters, but the good news is that many have invested
significantly in recent years in these foundations. This has included investment
in improved processes and technologies for managing and monitoring cashflows,
financial and operational performance.
These capabilities provide a vital foundation for transforming business
performance through finance. However, by themselves, they are not enough. To
become a finance master and keep ahead of the game, companies need a road map
for a complete finance transformation and to start making the change now.
Margaret Ewing is a partner and vice-chairman at
Deloitte and former CFO of BAA