Importance of Finance : No one likes being limited by a budget, but nearly every person and organization has one. In the absence of unlimited capital, the separation between business planning and finance can end up seriously hurting an organization in the long run.
In the past, finance departments were viewed as strictly a budgeting entity and often kept at an arm’s length during strategy discussions, leaving teams squeezing initiatives into preapproved budgets without proper discussions around the constraints. Using a dedicated business finance team, you can make a concerted effort to make sure your finance department is continuously engaging with business partners and is part of the conversation about where the business is heading, rather than being brought in for specific needs or tasks.
This business finance team is charged with connecting the traditional finance department with the different business development and customer experience teams across the company. Creating lines of communication between the finance team and other departments has helped us operate more cohesively. Dedicated teams that have deep and specific product line knowledge have provided insights into activities such as optimizing marketing processes to target higher-value customers and identifying inconsistencies in external partner processes that have led to multimillion-dollar true-ups.
Although the shape of a business finance team can look different in every organization, for CUNA Mutual, our team members are centralized within the finance department and are also given a specialization. Each business area has a team comprised of a senior manager and a combination of senior and junior financial analysts. The business finance team also has a team to support our shared service areas, which is staffed with more junior financial analysts.
Each team member works very closely with the group they support; they are keenly aware of the specific factors driving the part of the business they are involved with and are a permanent part of strategy development and execution discussions. They are a “jack of all trades” focused on building the relationship and asking the right questions but skilled in the many different elements of finance.
Importance of Finance Regular conversations between business development team members and finance ensure that budgets are met and that budgets are allocated in a way that best fits the needs of initiatives. Accurate financial planning requires a deep understanding of the way a business is operating, what is working and what isn’t working. When these departments work in unity, processes are more efficient and companies save money, time and frustration.
At our organization, capitalizing on these efficiencies has allowed us to make improvements, such as accelerating our speed to market of new products and using cost models to improve contract negotiations with our business partners. The relationship between the business finance team and the rest of the organization has ensured that the accounting, treasury and tax teams are aware of developments across the business.
They are aligned with the priorities of the business and able to perform due diligence when necessary. In the past, these teams were often engaged late in the game, causing delays and stress leading up to product rollout or contract signing.
When finance is not involved from the beginning, there is a complete breakdown in the support model. If business finance teams are not given a seat at the table, they must play catch-up, creating inefficiencies and introducing potentially inaccurate assumptions into financial plans.
Involving the finance department throughout the entirety of the business development conversation has the potential to make or break the bottom line of an organization. Importance of Finance A business finance department can ensure that you continue establishing practices like these that promote alignment between business and finance, paving the way for enhanced growth down the road.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.