Efficient financial management requires not only deep knowledge in the field of economics and accounting. It also requires the ability to think strategically, understand the main aspects of business, industry and processes occurring at the enterprise, constantly scanning the competitive landscape and external factors for their impact on the company's business. All these are not new theses: they are written about a lot and often, these are the basics, the formula for success of any financial manager.
In the era of change, the emphasis shifts somewhat: finances play the main role in ensuring the financial stability of the company, preventing the collapse of the organization, ensuring its sustainability, which will allow not only to survive what is happening, but will also become a catalyst for its subsequent growth.
1. Clear and coordinated teamwork with representatives of business functions to solve operational and tactical (medium-term) tasks. Finance is the place where all financial and most non-financial information about the company's operations flows. Finance should ensure that the business quickly receives information to make decisions in the moment in response to sometimes hourly changes in the external environment. At the same time, finance will act as an arbitrator who must determine that the decisions made are the most correct from the point of view of the entire organization.
2. Strict control over expenses. Change requires the development and adoption of quick, clear, sometimes unpopular measures to ensure funding for those innovations and solutions that will help ensure the growth of the organization. One of such measures is strict control over expenses. The simplest solution to the problem is to cut costs equally for all structural units in the company. Will this help find the necessary funds - of course, will it ensure the long-term sustainability of the company - is a question. And here finance will play the role of an arbiter in deciding where to cut costs, and in which areas of business development this cannot be done at all or to the extent that will be applied to all the others. For example, investments in the development of new technologies or human capital or expenses that directly affect operational activities can be excluded from the list of cuts.
4. Working with the balance. There is an expression: "Problems in business come from the balance." Slow turnover of accounts receivable, inventory, availability of spare parts fit for use, equipment for which has been decommissioned - these are examples of those frozen financial resources that the company actually has, but does not understand how to use them or does not know about their existence. And here is work for a business partner from finance. Proactive work of a credit controller, understanding the risks of working with a particular buyer for collecting accounts receivable, the ability to segment buyers by the risk of "overdue" - these are some of the factors that can increase the turnover of settlements with buyers, and therefore accelerate the cash flow to the company. Work to improve the efficiency of inventory use, withdrawal from circulation and search for possible ways to sell unused inventory, such as spare parts, can also help in the short term.
5. Development of systems. To successfully implement the tools described above, you need an appropriate system for collecting and analyzing data, you need speed. If you see the results for the reporting month at the end of the next, during a period of change this is very slow. If in order to obtain the necessary data from the accounting reports for making management decisions, they need to be significantly processed - this is a lack of transparency and a decrease in the speed of business management. Systems must be configured in such a way that the necessary information is obtained at the moment with one click of a button.
A clear and understandable system of accounting of primary data with built-in control elements is the contribution of finance to the process of effective enterprise management both at the stage of development and implementation of enterprise management systems, and in subsequent periods. This implies both the timeliness of accounting documents, and the standardization of entering information into the system, the necessary level of detail of data for entering into the system, effectively built processes within the financial function.
7. Planning issues. The company's strategy should be at the center of all business decisions. It combines the company's long-term goals with operational indicators of success, and should also include such key aspects as liquidity planning and management, investment portfolio optimization, including long-term capital expenditure planning and investments in innovation. The strategy should answer several basic questions:
What goals are important for sustainable growth?
What financial metrics will signal the success achieved?
What risks need to be taken into account, and how can they be dealt with?
It is important to always see the bigger picture behind the numbers. Yes, planning and forecasting are the basis, but they should not be turned into a static document. The key to successful business management is flexibility in planning. When developing a strategy, it is important to ask yourself not only "where are we going", but also "what could go wrong".
When developing a strategy, it is always worth calculating "what if?" scenarios in case of crisis situations in order to assess the possible scale of deviations from the given development trajectory. For example, calculating "points of no return", upon reaching which the business must decide whether to continue the project or abandon its implementation, work out alternative scenarios and options for exiting projects. The economy and the market are changeable, so there should always be an alternative option - this is what will save you in a difficult period.
Building effective teamwork, quick response to changes in the economy and competitive environment, developing a culture of transparency and placing the right emphasis on the main "pillars" of the enterprise's work (people, systems, resources) are the key elements of success. In an era of change, it is extremely important that the financial function is not afraid to take on the role of a leader in making business decisions that will help the company not only survive the changes, but also strengthen its position for further growth.
