GROWTH AND PROFITABILITYOptimizing the Finance Function for Small and Emerging Businesses phần 3 ppt

Areas of Impact

Integrating the finance function into the organization means streamlining the

process of generating knowledge for all aspects of the organization. What aspects

of the organization will be touched by the finance function? If the finance function

is strategized properly, no part of the organization will be denied access to the valu￾able cache of data it manages. Making decisions and setting policies for the or￾ganization will cut across all business functions, not the least of which are human

resources, marketing, product development, manufacturing, and advertising.

Whether access is assured over the Internet via ASPs or through outsourcing

arrangements, all aspects of the organization must expect and demand a stake in

the finance function.

STRENGTH AND SCALABILITY

The finance function must be considered a living organism that grows, changes,

and evolves with the business. It must be strong enough to support the organiza￾tion’s needs while being dynamic and scalable in its structure and functionality.

This means it will embrace new technologies, concepts, and needs when and where

it is appropriate. Although being flexible and attentive to the needs of data cus￾tomers, the finance function must maintain the integrity of data and reporting

standards—which means ensuring that the organization is complying with exter￾nal rules and regulations and that the data fairly reflects the state of the company.

Maintaining Integrity

The role of the finance function is more than that of keeper of the organization’s

financial data. The finance function also serves as the organization’s conscience on

matters of reporting and interpreting data. The solid finance function is positioned

to interpret the needs of the financial data customers, whether internal or external.

The value in this role is to ensure the organization does not misuse or misinterpret

financial data, willfully or otherwise.

The small and emerging business has a responsibility to represent itself hon￾estly to external stakeholders. This means interpreting rules and laws of disclosure

and preparing documents and disclosures honestly for shareholders, debt holders,

regulators, and tax authorities. It is up to the finance function to communicate the

need for integrity in interpreting financial data. Doing this may pose the biggest

challenge for the finance function, especially if business owners/management are

under pressure to meet certain expectations of the external community.

The finance function also must evaluate the integrity and viability of financial

data when interpreting results for management (internal reporting). Doing so may

mean using data to ensure the interests of the entire organization are winning out

40 FINANCE FUNCTION DEFINED

over those of individuals. For example, if the sales organization is awarded com￾missions for making sales rather than serving customers, it is the finance function

that is positioned to discover this. If salespeople are motivated to make sales, then

that is what they will do. However, satisfied customers yield repeat sales in the

long run; if salespeople are not following up on sales, ensuring that customers are

satisfied with the purchase experience (from point of sale to delivery of products

and services), the whole company loses. The finance function is positioned to rec￾ognize red flags in situations like these. Sales revenue that is written off as bad debt

or that which erodes with excessive purchase returns could be symptoms of an ill￾conceived commission system. Statistics on purchasing activity and cash collec￾tions from customers also may provide insight. If commissions instead are based

on cash collections from customers or direct customer feedback/surveys, the or￾ganization is sure to cultivate long-term customers and preserve a steady revenue

base into the extended future.

Scalability

The small and emerging business is in a constant state of change. Because it is

evolving and shifting, information needs will shift as well. The finance function

must be equipped to deal with changing needs, whether the informational require￾ments are for internal or external data customers. The success of the finance func￾tion in accommodating shifting needs lies in its scalability. Scalability in this

context refers to the capacity to handle new users, new functionality requirements,

or new peripheral applications. Scalability translates to both the concrete and soft

components of the finance function.

Scalability hinges on the use of powerful, expandable platforms, from a con￾crete component (infrastructure) standpoint. How well do servers handle multiple

applications? How well do core applications interface with other applications?

How easily can processes have additional tasks worked into them? Can processes

be reworked, reordered, or overhauled quickly without degrading the desired end

result? How easily are processes translated to new users? Will an upward spike in

the user population degrade the effectiveness of the overall process? The key to be￾ing able to react to new requirements in a changing business environment lies in

part with the malleability of processes in the finance function.

Scalability means embracing innovations in technology and thought. A strong

finance function will incorporate technology upgrades when necessary. Not only

must current technology be factored into the equation, but future technology as

well. Success here hinges on the progressive nature of management and its will￾ingness to embrace change. Staying on top of server and E-technology may not be

enough. It is predicted that a number of new technological innovations will have a

drastic impact on the finance function in coming years. These technologies will re￾define the way concrete components (infrastructure) and soft components of the fi￾nance function are defined. Finance strategies will have to adopt these innovative

STRENGTH AND SCALABILITY 41