Among recent trends, there’s a movement towards adopting an effective service-oriented approach within organizations. The essence of this approach can be summed up in a simple slogan: outsource what can be done more effectively that way, while internal departments should focus on their economics and adopt a customer-oriented competitive approach, considering market conditions and external competitors.
If an internal function like legal or recruitment lacks customer focus and performs poorly, internal clients may seek external specialists for the same services, leaving internal teams idle. To assess employee performance adequately, tools such as basic financial dashboards with efficiency metrics, departmental and team income and cost comparisons against market benchmarks, along with customer satisfaction indicators, are essential. This includes developing methodologies for calculations, data collection, interpretation from various sources, process automation, and engaging with end consumers, who are also internal clients of the financial department, and evaluate the services provided. Customer orientation and marketability of obtained services are paramount.
The tasks outlined above undoubtedly fall within the purview of the CFO and their team, presenting a new challenge for the profession. It’s crucial to not only realign oneself but also to transform the work and mindset of teams (if not done already) and assist the entire company in this transformation. This underscores the pivotal role of the CFO, the primary responsibility of the financial planning and analysis manager, and the key function of financial business partners.
From Accountant to Business Partner
What does the modern approach to financial management entail? It’s a system-building endeavor where every process within a company, every business initiative, should contribute to achieving its strategic goals, both quantitatively and qualitatively. While financial management is often perceived as solely quantitative, focused on numbers, in reality it goes beyond that.
Modern financial management primarily revolves around setting and achieving strategic business goals, emphasizing a select few critical quantitative and qualitative objectives, and adapting plans flexibly to rapidly changing external factors and competitive landscapes. It delves much deeper into business processes compared to traditional «accounting» financial management.
The conventional financial department typically comprises accounting, finance and treasury. In modern companies, these departments are augmented by automation and financial system support, along with financial coordinators handling month-end closures with client-contractors, monitoring accounts receivable, and managing client credit limits. Moreover, financial directors have expanded responsibilities encompassing shareholder and investor relations, corporate governance (often incorporating the ESG agenda or «Environmental, Social, and Governance»), legal services, compliance control, risk management, and HR document flow.
A recent trend has emerged: service departments are supplying businesses with functional experts – internal business partners – who are incentivized by the company’s overall performance, possess a deep understanding of operations, and aid employees in commercial departments with issues related to the corresponding internal service (or external if outsourcing is involved), be it HR, logistics, finance, legal affairs, and more, tailored to the industry.