By Jim Wong, CPA | April 20, 2016

Most businesses seek avenues for improvement at some point or another, many times with the finance function at the helm. Collectively, operations, finance and IT leaders develop a strategy—typically based off of data, research and benchmarks within the industry—and make assessments from that information.

It’s critical to know how your organization compares to other like businesses; and as a finance leader, it’s important to know how your finance function fares as well. This knowledge is important to help you decipher where exactly the company has the potential to go and what your team and your counterparts need to do to get it there.

In order to transform the business, the finance function really needs to act as a world-class organization in itself. Statistics show that the better advanced the finance team, the better the organization’s success.

So, how do you know if your finance function is considered among the elite?

Identifying benchmarks and knowing where you stack up comparatively is a good place to start. Otherwise, you’ll only be heading into the future blindly. Plus, in order for the finance team to be considered a world-class function of an organization, you need to know what actions and characteristics ultimately define that declaration.

That’s why, when I came across a recent e-book on Business Improvement Through Benchmarking, that talks about a benchmark study by Big 4 audit firm, PricewaterhouseCoopers (PwC), I knew it was a timely topic to discuss. Below is a summary of a portion of the e-book I found really beneficial, along with a few thoughts of my own.

1. Set a standard of excellence.
The top quarter of finance functions benchmarked operate at a much lower cost and at a greater efficiency than those who ranked lower. This is because they know what’s needed to achieve excellence. PwC says, “Rather than simply cutting spending, they adjust how they target resources.” This allows them to spend more time on business insight. Additionally, they tend to pay more for top talent, specifically in finance leadership roles that may cross over into other areas of the business.

2. Develop cross-functionally. 
I’ve mentioned this before in older blogs, but the topic is so important it bears repeating. Finance and IT leaders need to work together in order to accomplish business improvements and goals. This includes better communication, collaboration and cross-training. How strong is the relationship between your IT and Finance functions? If it’s non-existent, you need to start building those ties immediately.

3. Transform Finance roles.
Often times as a finance leader during the transformation of your role and responsibilities, you get pulled into business initiatives and strategic sessions. This big-picture role often gets blended with regular finance responsibilities, leaving room for confusion about where the finance leadership role starts and ends. However, world-class finance functions know how to facilitate this transformation seamlessly in order to achieve success.

4. Reap the benefits of ‘lean’ finance.
Top-tier finance functions are capitalizing on ‘lean’ finance because of the process improvements that have taken place as a result. Those finance functions that are not deemed as world-class are often lacking the type of standardization needed to be most effective. This gets in the way of streamlining processes that are attempting to improve how the finance function performs.

5. Know how to manage people.
Even when finance functions of different businesses have similar processes and systems in place, you can see varied levels of success because of another important factor—the way team members are managed. If there is poor leadership, such as the finance leader relying too heavily on a few key people and underutilizing the rest, it can make it nearly impossible to get stuff done if said key people are unavailable. Additionally it can lead to people working in silos, alienating other team members who may be imperative for completing projects, and turn over can increase. Having impactful leadership can make all the difference in developing a world-class finance function.

6. Use technology that brings benefit at lowered cost.
World-class finance functions not only adopt technology to automate and streamline processes, but they implement multiple technologies that work together for the betterment of the organization, as well. Doing this successfully can show a return on investment while reducing and consolidating costs. The ease, flexibility and automation of much of these tools is what allows for the time and energy of finance team members to be spent elsewhere on other important projects.

7. Turn data into intelligence.
Big data is nothing new but the ability to analyze it and turn it into intelligence is something not every finance function has the ability to do these days. World-class finance functions have the advanced technology to analyze their data and numbers in order to gain intelligence for what actions to take for future success. This includes new technology and data visualization to uncover data insights and actionable story-telling.

8. Navigate a broader and more creative landscape.
Elite finance functions are able to implement a broader view of the current workplace landscape and navigate it aggressively but gracefully. Rapid developments in the global economy, technology, social behaviors, urbanization and resources have impacted the way that finance leaders adapt in their roles. The study shows this will continue to change the way finance operates for many years to come.

What are some other factors that lead to a world-class finance function? Comment below and let us know!

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