A recent article published by the Association of Accountants and Financial Professionals in Business described "an on-going transformation that shows the finance function becoming more of strategic business partner within their organizations". This is critical for an organization to remain competitive.
Controllers are not only expected to provide financial data, but to be able to more effectively interpret data and contribute to making decisions for their organizations.
The Disparity in Perception
What is interesting about this article is that it highlights a disparity that has been with us for decades: The old school perception that the finance team is solely an administrative function vs. today's profit-making value of the finance department.
As a result, controllers and finance professionals are left wondering just how important they are in the grand scheme of things. In reality, in most organizations management has already learned the growing importance of finance groups in their organizations. They aren't just bookkeepers or "number-crunchers" anymore.
Yet such a disparity, while it may be attributed to a lack of understanding of what the finance department provides or even their lack of knowledge of how accounting works in general, it is indicative of a certain shortsightedness about the finance department's contribution to the organization.
This same article pointed out a very telling statistic about the perception of the role of the finance function in their organization. In a survey of business leaders, 80% of respondents within finance believe the department "adds a great deal of value to the organization", while only 22% outside of finance saw their role in the same light.
Those Outside of Finance Don't Get It
- Most individuals who are outside the accounting function simply do not understand the inner workings of accounting itself. Ask a sales person the difference between a debit and a credit and much of the time the standard answer is "what's a debit and a credit"? I can't really blame anyone for that as accounting itself is a process that many on the outside find too difficult or more so, mundane.
- As mentioned above, finance professionals assume that people on the outside see them as nothing more than a cost center, with no revenue generation to speak of. An assumption is made that finance is no more important than any other administrative function.
- Finally, there seems to be a perception that while finance and accounting systems get more sophisticated and automated, the role of IT may look more important than the tasks that accountants are faced with.
In reality, these perceptions couldn't be further from the truth today.
The Profit-Making Value of the Finance Department
Consider for a moment the impact of technology on the finance department. The ability to get at data and information in a quicker and more efficient manner has emboldened Controllers to increase their value and provide a level of analysis and reporting that is more useful to upper management.
As a result, rather than just providing information, the usefulness of the Controller and their finance group has evolved into a group that can actually contribute with profit-making decisions and value-added analysis. The ability to provide such information is here for the taking, so for those who seem to think that their value is anything less need to consider the following:
- Advanced ERP systems and other new technologies have made transaction processing significantly faster.
- Corporate or enterprise performance management (CPM/EPM) solutions provide a level of detail and analysis that is unmatched from the days of old, giving finance professionals the ability to produce reports and analysis in a matter of hours instead of days.
- The customers of the finance department do not have to be limited to upper management. In fact, consumers of performance information exist in almost every area of an organization - sales, marketing, plant, even other support functions such as human resources and IT. Finance touches every area of an organization.
- Finally - about that so-called "lack of revenue production" - if finance has the tools to provide better ways of generating revenue through information, yes, they contribute to profits. Reports from finance can highlight areas of weakness and opportunity in an organization. They can also be a force to be reckoned with for making better investment decisions - growing a stockpile of cash and securities into an even greater contribution to the bottom line.
For those finance folks that have this perception that outsiders think of them as nothing more than "number-crunchers", remember there is hope. They have the tools to rise to the occasion. As long as they make use of them, they can change that perception.
The post Is There a Perceived Lack of Respect for the Finance Department? appeared first on Blog | Vena Voice | Vena Solutions.
