Is Your Finance Function Healthy?

Evaluate People, Processes, and Systems to Drive Growth

Feeling pressured by the uncertainty of the economy? You’re not alone. Questions about inflation, interest rates, and market dynamics have contributed to unpredictable financial impacts for companies in every industry. To keep your growth strategy on track, you’ll need a rock solid financial strategy that can absorb market fluctuations and pivot quickly when necessary. 

Given the importance of the finance function to the success of your company, it’s essential to conduct regular financial health checks that evaluate effectiveness, value creation, and leadership. 

Here’s what you need to know.

What Should You Look For?

Just as you go to the doctor for an annual physical to ensure your personal health and wellbeing, your finance function also needs a periodic “checkup” to make sure everything is functioning at its full potential.

The goal of these financial health checks is three-fold:

  • Ensure AlignmentFinancially healthy companies prioritize strong cohesion among executive, finance, and operations departments. Leaders in all these areas must be aligned not only on strategy, but also on goals and ground-level execution.
  • Evaluate Data ManagementMaking good decisions starts with having quality, current data. Without the right data, you won’t know what’s happening in your business or how to make the best decisions for the future. You need good systems in place to capture data in an efficient, repeatable way, a good reporting structure to visualize the data, and strategic metrics to inform the decision-making process.
  • Provide Strategic SupportIf there are areas of your finance function that aren’t optimal, you need to identify them so you can mitigate risk and bridge gaps. Crucial areas to consider include talent, technology, systems, processes, and leadership.

How Does Your Finance Function Measure Up?

A growth-oriented finance department is more than just a glorified accounting office. The finance function should add value through accurate forecasting and predictive analytics, data-based decision making, risk management, and performance analysis. Value creation across these areas can be evaluated in three dimensions: people, processes, and systems.

Here are the critical questions you should ask in each of these dimensions to ensure the health of your finance department:

  • People
    Starting with the CFO and flowing through to ground-level accountants, your finance team should bring together the right blend of leadership, functional skills, strategic vision, and experience. Ask these questions to see where you may have gaps:

    • What is your talent strategy?
      Many founder-led companies benefit from an agile workforce strategy that incorporates alternative talent sources such as outsourcing, an interim CFO, or gig workers. These can be excellent, cost-effective ways to add needed skills to your team when you don’t have the budget to fill every role with a full-time hire.
    • Do you have strong financial leadership?
      Successful entrepreneurs place high priority on having the vision and strategic leadership of an experienced CFO right from the start. In 2019, a Pitchbook survey found that nearly three-quarters (71%) of startup unicorns had experienced CFOs leading the charge. If you don’t have the budget for a full-time CFO, consider hiring an interim or outsourcing.
    • Do you have the right people on your team?
      The best teams are composed of people who work well together in addition to having the needed skills. As you hire, consider soft skills and cultural fit alongside your skills-based requirements.
  • Processes
    Manual or non-standard processes introduce potential for error, inefficiency, and time lags. Evaluate your processes to ensure that information is accessible and integrated across your organization.

    • Are processes standardized, automated, and documented?
      As you grow, you will need more sophisticated processes for capturing data, managing cash flow, handling billing and month-end close activities, and other key financial processes. Standardizing and automating your processes improves efficiency and productivity for teams. Documenting those processes and cross-training eliminates single points of failure and knowledge silos.
    • Is data easy to access?
      Can your team members find the data they need quickly and easily? Do you have effective reporting processes that make it easy to monitor key metrics? Break down data silos by implementing a single system of record so that all teams can collaborate effectively.
    • Do you have strong predictive strategies in place to support accurate forecasting?
      If you have taken care of the first two points, you will be well-positioned for accurate predictive strategies. Your CFO should conduct forecasts every quarter so you can quickly identify changes, benchmark performance, and build financial confidence.
  • Systems
    Evaluate technology systems to determine whether your current technology still serves you effectively.

    • How can you optimize current systems?
      New technology isn’t always the answer. Sometimes it is more effective to optimize your existing systems by improving operational efficiency and utilizing features already available to you.
    • Where are the gaps and friction points?
      Look for areas where current processes prevent you from achieving the productivity and efficiency you need. This often happens when you are ready to scale your business and your current technology or tools can no longer provide the volume, speed, or quality of data you need.
    • Is it time to upgrade your ERP?
      If you are still using manual tools and processes or if your ERP isn’t sophisticated enough to help you scale, it may be time to upgrade.

Fast Track Healthy Business Financials

Regular financial health checks provide essential information to support strategic growth, even when the economy is uncertain. If you have questions or need guidance during this process, Atlantix Partners can help!

As hands-on advisors, our financial health check uses a predefined checklist, scoring methodology, financial models, and report templates to provide a comprehensive assessment of your finance function. We take a tailored approach to quickly understand the existing team structure, responsibilities, processes, liquidity, internal controls, financial reporting and technology. With these results, our team develops a practical and actionable plan that identifies potential gaps and steps for improvements.

Contact us today to get started! 

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