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The rapid development of disruptive technologies in recent years has sparked an explosion in start-up activity.
Thanks to the favourable investment climate we witnessed in the past few years, there is a trend of rapidly developing businesses, which are expected to continue to grow to meet consumer needs and to realise investor expectations.
During these high growth stages, businesses tend to prioritise revenue-generating activities, such as product development, marketing and sales. This skewed focus results in limited investment in the support functions. To successfully grow a business, support functions - in particular the finance department - need to scale alongside the rest of the business. In this blog, we will be introducing a few of the challenges finance departments face and what a good finance ecosystem looks like.
The critical role of finance
The finance department should be considered a key enabler in a business’ growth, as it’s responsible for managing liquidity, generating information to support decision making, procuring and paying vendors, tracking inflows of funds, planning, analysing business trends, etc.
The finance department is therefore a critical function and plays a vital role in providing management with access to the latest data on company performance so they can make informed business decisions based on accurate information. Furthermore, this department should sit at the centre of every business and can provide a real value-add, if set up efficiently.
In practice, we’re seeing the importance of the finance department is repeatedly overlooked, leading to significant issues with scaling the business.
Key challenges facing finance departments
The following are what we perceive to be the key challenges facing finance departments at present:
Organisations where these challenges aren’t being actively addressed will struggle with accuracy and efficiency and with managing costs. These issues will increase exponentially as the business grows; especially as a company is preparing for – or once it has completed – a funding round or an exit strategy. These challenges, which weigh heavily on the finance department, could hinder or delay the success of the strategy.
Ingredients for a successful finance department
Organisations can solve these challenges by addressing them at the source with an operating model that includes:
A purpose-built finance ecosystem, which implements the above aspects and addresses the challenges at their source will enable the finance department to add value to the company, whilst also curtailing cost increases as the organisation grows, due to increased efficiency and automation. The earlier the foundations for this finance ecosystem are built, the better.
22.02.23
Geraldine Bouckaert, Senior Manager, Be | Shaping the Future
07.03.23
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