Why the finance function needs to be more future-focused

The finance function of Irish businesses need to be more proactive and forward-looking, a new report recommends.

A more proactive role for Irish finance functions is needed with professionals being seen as strategic, future-focused and delivering vital business insight. A new study by the Association of Chartered Certified Accountants (ACCA) and PwC called ‘Finance Insights Reimagined’ has found that Irish finance functions are behind their global peers, more likely to be taking orders than helping drive the business forward.

According to the study of 3,500 finance professionals worldwide, including 100 in  Ireland, the Irish finance function lags peers on strategy with only 32pc of Irish finance leaders saying their function is truly strategic, compared to 37pc globally.

“Finance teams need to deliver new insights in more relevant ways in order to address business needs”

The report recommends that the finance function of the future needs to be a strategic business partner, primarily forward looking and delivering vital business insight. This is even more important as Covid-19 continues to impact businesses.

However, only 32pc of Irish finance professionals reported that their finance function truly operates as a strategic business function which has earned the right to be a fundamental part of decision making – behind international counterparts (37pc).

Less than one in ten believe that their finance function is primarily focused on future performance (Global: 8pc; Ireland: 8pc). At the same time, less than half (43pc) said that the role is predominantly proactive in approach (Global: 55pc).

Defining the finance role of the future

“Defining the role of the finance function as a strategic business partner has become ever more important,” said Amy Ball, PwC consulting partner. “Traditionally a lot of finance activity has focused on reporting the historic. Finance teams need to deliver new insights in more relevant ways in order to address business needs.

“A failure to do so also threatens to marginalise the finance function allowing other parties to exploit the demand for this new approach. And with the uncertainties presented by Covid-19, being able to scenario plan and make quick decisions based on forward looking accurate data is critical,” said Ball.

Few Irish (14pc) and global (23pc) respondents ranked ‘problem solving’ as a valuable skill.  

This may indicate a marked reticence in evolving the finance function towards a strategic business partner – albeit global peers are ahead.

The survey highlights the key barriers to future progress including: lack of clarity of their role; too historic, not forward thinking; poor technology and lack of skills.

“The survey highlights that there is a need to develop a finance skill set to accommodate the shift of the finance function to become more strategic: one that embraces a range of technical skills, softer skills and business acumen driven by a new world view,” said Clive Webb, Senior Insights Manager, ACCA.

“And digital skills are so important in an era of remote working, where much of the workforce may remain at home for a long time yet.”

Data is more than just a numbers game

“The survey highlights that finance professionals have more work to do to get the best value from technology,” explained Jens Gladikowski, director of PwC Consulting.

“Technology and the availability of ‘clean’ data clearly have an important role to play in achieving relevant insights. The strategic finance function needs to fully embrace the need to invest in the essential technology as part of the digital transformation agenda. The opportunities that advanced in the evolution from ‘big data’ to ‘smart data’, the finance function has a key role to play in ensuring the integrity of data and generating insight from it. 43pc of Irish respondents reported that they already had ‘oversight of data integrity’ – ahead of global counterparts (35pc) – but there is clearly more work to be done.

“Just three out of ten (30pc) Irish respondents also believe that self-service reporting, AI and machine learning has already or will shortly free up business partner time from previous responsibilities (Global: 28pc).  The survey further suggests that the shift towards finance professionals who support insight generation will be at a slower pace in Ireland (33pc) compared to global counterparts (38pc).analytics and robotics can bring should also not be overlooked.”

There is a recognition that the finance community needs to think more broadly than just about finance, including having an influence in wider business areas such as HR, social and corporate responsibility and climate change.  According to the survey there is an increasing expectation that finance professionals will become more involved in these areas in the future. For example, currently 12pc of respondents have a role in climate change decisions while 30pc believe they will play a role in three to five years’ time.

“Any lack of clarity in the role of the finance function also suggests a cultural issue,” said Webb.

“Many of those interviewed commented that the key to successful insight was the culture of the organisation: the ability to be agile and to encourage collaboration across departments and teams. The effective finance function needs to be the ultimate agile collaborator and communicator.”

By John Kennedy (john.kennedy3@boi.com)

Published: 5 October, 2020