As finance departments navigate an unprecedented array of challenges, CFOs must deliver business insights with increasing speed, efficiency, flexibility, and control. A strategic partnership can help transform processes to drive sustainable long-term business value.
Transforming the Finance Function in a Rapidly Changing World
Finance departments face an unprecedented array of challenges, from talent scarcity to emerging environmental, social, and governance standards. Despite these disruptions, chief financial officers (CFOs) are expected to deliver business insights with increasing speed, efficiency, flexibility, and control.
Finance transformation involves leveraging technology and data analytics to optimize financial processes, improve decision-making, and drive business growth.
Key areas of focus include digital payments, cash management, and risk management.
According to a survey, 70% of 'finance leaders' believe that digital transformation is crucial for their organization's success.
Effective implementation requires a clear strategy, change management, and ongoing monitoring.
The Need for Strategic Partnerships
Traditionally, finance departments have responded to pressures by outsourcing tasks to shared services centers or external providers. However, today’s complex challenges demand a different kind of support. CFOs need strategic partners that combine specialized talent, technology, transformation experience, and operational management to cut costs, access hard-to-source talent and capabilities, evolve internal processes, and minimize risk.
A Chief Financial Officer (CFO) is a senior executive responsible for overseeing the financial strategy and management of an organization.
They analyze financial data, develop budgets, and make strategic decisions to optimize profitability.
The CFO also ensures compliance with laws and regulations, manages risk, and advises the CEO on financial matters.
According to a survey, 75% of companies have a CFO who reports directly to the CEO.
The average salary for a CFO in the United States is around $250,000 per year.
A good service partner can efficiently operate standard finance functions, such as payroll, compliance, and invoicing. Innovative partners, however, transform processes to deliver sustainable long-term business value. ‘The goal is not just cost reduction or cost savings but improving processes that drive better business outcomes year over year.’
Outcome-Oriented Finance Operating Models
Three organizational scenarios demonstrate the effectiveness of outcome-oriented finance operating models:
Outcome-oriented finance is a financial approach that focuses on achieving specific goals and objectives rather than maximizing returns.
It involves setting clear outcomes, such as retirement savings or investment growth, and creating a plan to achieve them.
This approach considers risk management, cash flow, and liquidity in addition to investment returns.
By focusing on outcomes, individuals can make more informed financial decisions and work towards their long-term goals.
Large Technology Modernization
Major projects like enterprise resource planning (ERP) migrations and upgrades to meet regulatory compliance requirements demand significant time and money. Instead of bringing in separate vendors for business process optimization, technology implementation, and change management, finance departments can choose a single provider with expertise in operating and transforming processes and implementing new technologies.
Mergers and Acquisitions (M&A)
In M&A, finance departments must integrate new and existing systems on a tight timeline. CFOs need to identify data gaps and process misalignments to ensure compliance with tax laws in all jurisdictions of the combined entity. The optimal third-party provider can document, standardize, and integrate critical processes, freeing the finance and tax practices to focus on strategic issues.
Business Expansion
When expanding into new markets or launching a new business, a service partner with expertise and presence in multiple jurisdictions, regulatory markets, industries, and sectors can help quickly set up finance functions and tailor them to each market.
Accelerating Transformation
The pressure to do more with less isn’t letting up. CFOs and tax directors face new questions every time they find an answer. ‘Is your existing finance model flexible enough to withstand business growth, regulatory challenges, the implications of generative AI (gen AI), tax challenges, and other disruptions?’ What’s the best way to capitalize on innovation?
One solution is to adopt an operating model that incorporates next-generation outsourcing – working with a single service provider to not only ease compliance burdens but also transform business processes to deliver better strategic outcomes year after year.
The Future of Finance Transformation
Managing the deluge of risks, requirements, and disruption facing businesses today requires innovative approaches. One solution is to adopt an operating model that combines the next level of outsourcing with a focus on outcome-oriented metrics such as optimized working capital, improved billing and payment cycles, improved compliance, and real-time reporting.
By adopting this approach, CFOs can transform their finance functions, drive better business outcomes, and stay ahead of the curve in a rapidly changing world.
