A colleague once asked me “What is a ‘finance business partner’? It’s a new term to me.” Interesting question. Finance business partnering is a trusted mutual relationship between the business stakeholders and the finance organisation. This relationship is fostered through providing credible analytics and finance insights for business decisions. An effective finance business partner is one who will walk the path with the business from start to finish.
A finance business partner can take on a variety of roles within an organisation depending on the size of the organisation. In larger organisations, there can be finance business partners for each section of the financial statements focusing on revenue, product line, COGS, SGA, assets and liabilities, etc.. However, finance business partnering is not the privilege of large corporations. Finance is a piece of the jigsaw that completes the picture. For SMEs, much like large corporations, modern finance is no longer constrained to providing these hindsight recommendations. Rather, the business is increasingly looking to their finance team to analyse data to tease out “interesting” facts and identify opportunities for improvement and growth.
How can finance business partnering support SMEs?
To help the business, Finance needs to look inward and eliminate inefficiencies. Finance should understand the purpose of each process and identify opportunities of improvement from within. This can range from changing how things are done through to the use of technology. Digital transformation provides ample opportunities for improvement and promotes a collaborative work environment. This can also help SMEs to maximize productivity with its resources.
Do not work in silos
Finance can no longer sit in the finance corner and crunch numbers. Finance should reach out to their stakeholders to understand their requirements, opportunities and challenges. Armed with this information, Finance can find ways to reach these goals and tackle these challenges. In addition, Finance should learn about the industry in which the business operates. This helps Finance to provide better contextual analysis.
Most finance analytics have been reactive and backward looking. Analysis that merely explains variance between actuals and budget is not useful to the business. Surprises are generally not welcomed in the business because they destabilize operations and often mean corrective actions are needed. Financial analysis should focus on helping the business understand what has happened and identify the reasons for the unexpected event. Finance should also help the business understand the implications if these unexpected events go unchecked. Finance can work collaboratively with the business for possible solutions or some form of measures that give early warning signs.
Fit for purpose structure
This may be the last thing Finance thinks of when looking for ways to drive value. A fit for purpose structure means that Finance can create the appropriate stewardship within itself to support the business. Finance can acquire the right talents for the services it is to offer to the business. Given the nature of SMEs, Finance tends to require a more all hands on deck approach rather than focusing on particular parts of financial statements.
The skills of finance are no longer limited to just finance topics. Finance needs to be able to communicate as well as influence the business if they are to add value. Technical background is useful in developing the right kind of analytics but the ability to think outside the box and ask the right question means Finance can better serve their customers.
The right mindset
So what is the right mindset when it comes to business partnering? Finance should foster a customer attitude just as the business is to generate value to its ownerships through customers. This is important for SMEs because the purpose of any organisation is to generate value for its customers. Without customers, an organisation loses its value to exist.
By Simone Collins, FP&A professional.
Disclaimer: Any views or opinions expressed are solely those of the author and do not necessarily represent those of any companies that the author has been and is working for.