Research in 2011 and more recently 2013 has looked at the finance and accounting function of organisations and benchmarked best practice. The results will be quite surprising to some, and of no surprise to others – depending on who you are!
There are many who think that the life of a Chief Financial Officer (CFO) is only about two things; firstly making sure the annual and monthly financial reports are prepared on time, and secondly saying no to all requests for funds. Unfortunately, while this view may be persistent, it is incorrect. Research in 2013 by the Finance Executives Research Foundation and Robert Half has found that:
- A Finance managers “normal” week will exceed 40 hours.
- The finance area is continually becoming more complex, with greater compliance, legislative, and strategic demands being placed on those in charge of the finance function.
- Worldwide it is increasingly difficult to recruit managers into the finance area, with many people unwilling to take the step up into management.
- The continued uses of manual processes are hindering the ability of finance managers to use their staff for high-value analytic activities.
From the research it was found that CFO’s typically handle a growing number of strategic tasks in an increasing complex environment, with fewer people prepared to take on the role. What about the CFO of your organisation? Have you taken the time to discuss their situation and the implications for your business into the future?
Of further interest for CFO’s, in a 2011 article, author Paul Thambar (click here to read the article) draws on research undertaken by the Chartered Institute of Management Accountants (CIMA) pointing to the finance function of high achieving organisations. Essentially the finance function can be broken into three components:
- Transactional – the recording of transactions and the preparation of compliance reports;
- Specialist – particular skills and services like taxation and internal audit;
- Management Accounting – dealing with budget preparation and reporting, costing of strategic alternatives, etc.
The growing trend is for the first two components to be outsourced, and only the management accounting function remains within the organisation.The CIMA research indicates this is a model many organisations (both for profit and not for profit) are already implementing, with much success. It takes the focus away from simply recording what has happened, and frees up resources to analyse and predict what can happen – a high value-add activity.
Perhaps this is a time when you might reconsider the operation of your finance function and how the resources allocated to it can add the most value to your organisation.
The Avondale Business School can advise your organisation on being effective in these areas – find out how by contacting Warrick Long at the Avondale Business School.
P: 02 4980 2168