Is Finance Broken?

glass-101792_640.jpg

The Finance Function similar to business in general is always changing.  It is evolving from a strictly paper reporting structure to a partner function that allows for more involvement and input.  Change is the nature of business and will continue to be for the foreseeable future.  Being able to change and adapt does not mean the current finance system is broken, it means it is well positioned for the future.  A lot of the finance functions that are described as broken are not really, they just tend to be large finance functions within large companies that have not adopted to “Big Data” or more efficient ERP systems, automated AR/AP and possibly offshoring.  Even then I would not describe them as broken but systems with challenges.

 

Determine what the data is for

 

Finance information comes in all shapes and forms.  If your goal as a finance function is to complete month end financial statements, produce a good P&L and move on, then you don’t need a lot of data.  The trouble comes when Sales asks what are their costs related to specific customers or lines of business, what do you do?  You need to set up cost centres that will pull in the information on a daily basis that can be dissected for sales needs.  If you are a manufacturing facility you will need to understand data at lower levels than financial statements, you will need to understand what’s driving your costs at the plant level to have the ability to make changes within the facility to drive cost savings.  You need to ensure as a company that you know what data you need and how to get this data before it can become applicable to your stakeholders.  This doesn’t mean it is broken, it just means a path needs to be created.

 

Is your system capable

 

Part of the evolution of the Finance function is the capability of the system you are using.  As a business grows you must ensure your system adapts with you to get the information you want.  You may move from a QuickBooks to a Sage or a Microsoft Dynamics to allow for more functionality and data.  This doesn’t mean anything is broken, it is the nature of business to evolve and change.  Almost any good small business finance system will provide you with the consolidation and financial statements you require.  What you must determine is what else do you want from your system?  Do you need a robust inventory tracking system?  Is your system able to track sales data by sku or product line?  Some of these changes will make consolidation and financial statements a little more work until your process is in place but provides greater value to the business.  This is the change that you want within your business, but it is not broken.

 

I encourage you as Finance/Accounting people to ask your company about the path that Finance is on.  Ask about the changes or evolution of the function over the next three to five years.  Ask what type of differences they are trying to make within the business to help drive the business forward.  Get an understanding about where it’s going and how you can help.  Don’t ever believe that the department is broken because of changes coming.  This will be a normal part of business going forward, change is inevitable.