Why Finance Should Forget About the Financials
Anders Liu-Lindberg
Leading advisor to senior Finance and FP&A leaders on creating impact through business partnering | Interim | VP Finance | Business Finance
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Traditionally, Finance is about reporting. Finance Functions are relied on to produce and deliver reports detailing the organization's performance within a defined time period, and as determined by specific metrics.
But reporting is, by definition, all about history. The numbers that Finance Functions are reporting cannot be altered - much as some CEOs might wish otherwise. This puts the Finance Function in an invidious position: how can it create value when all it's doing is looking back?
Value is created tomorrow, not yesterday
As we explored in a previous article in this series, the Finance Function has traditionally been seen as a cost to be minimized. For many business leaders, Finance is an overhead - it's something that needs to be covered in order for the 'real' work to be done. That work has traditionally been the preserve of other Functions, with Finance never getting the opportunity to prove its true worth beyond generating reports.
Reporting is, of course, a hugely important priority for any business. Without knowing where we've been, we can't decide where we're heading. But in modern, forward-thinking businesses, there is a growing understanding that Finance has far, far more to offer than this.
We now know that digital transformation can free up the Finance Function to move further up the value chain within its organization, by passing the legwork involved in technical accounting tasks over to automated software. In the time that is won back in this way, Finance professionals can begin to take more strategic, wide-ranging, and fully embedded roles within their businesses.
There is a pressing need for this transformation to take place, not only for businesses but also for Finance professionals. We must encourage a shift in mindset within and about the Finance Function: away from a cost center to becoming a profit driver, and now focusing not only on the past but, most importantly, on the future.
Finance needs to think ahead
We might say that the mindset needs to shift away from data and outputs and towards outcomes. Finance Functions are very good at collecting information. Now, there is a growing imperative (and opportunity) for the role of Finance to expand beyond that point, translating that information into insight and ultimately action.
Finance should have a presence across many functions within the organization and should be prepared to work on an inter-departmental, inter-disciplinary basis. Personal relationships, leadership, and collaborative working are the watchwords in this new paradigm - and this requires a mindset shift of its own. In Finance Function 4.0, we need to think of ourselves more as business partners than as number generators. Our role is to drive meaningful change within organizations, armed with the data and insight that we are already so good at gathering.
Do this today
As we can see, the shift towards Finance Function 4.0 requires several shifts in our mindset, all of which are happening at once.
The first is amongst Finance professionals themselves, away from a focus on reporting and towards a focus on value creation.
The second is amongst business leaders and their perception of the Finance Function, away from being an overhead whose sole purpose is to provide data, to a profit driver worthy of investment.
And the final shift affects us all. It requires us to think of the Finance Function in the context of strategic goals rather than back-office support. By leveraging digital transformation, and by making sure that every stakeholder understands the potential that is yet to be unleashed within Finance, we can prove our position as a key driving force behind business success.
Today, take a few minutes to think about the way you think of your role as a Finance professional. How much time do you spend number crunching, and how much time do you invest in relationship building and insight generation? And, crucially, what can you do today to put yourself in a better position to transition into the landscape of the new Finance Function?
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This was the third article in my new series "The Mindset For The Future of Finance". You can read previous articles below.
If you want to learn more about one of the key roles of the future "finance business partner" you can check out my recent series "The personality of a business partner" below.
If you want to hear from other business partners talking about their career journey and energize them about business partnering, check out some of the interviews below.
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To learn more about how to become a business partner you can read my ten-article series "Becoming a business partner" below.
If you want to become a better business partner, consider taking our online course "Business Partnering Explained - Value Creation Unlocked" to get a better handle on the role. It's accredited for 5.5 CPD hours.
You can read a lot more articles about FP&A, Business Partnering, and Finance Transformation below. It all start's with “Introducing The Finance Transformation Nine Box” where you set the ambition for your transformation. You should join the Finance Business Partner Forum, which is part of the Business Partnering Institute's online community. We will continue to discuss this topic and click here to follow me on Twitter.
All Successful Business Partners Are "Leaders" (the last article in the series about our new capability model)
Should We Keep Talking About Business Partnering? (part of a 17-article series where we deep-dive on the WHY, WHAT, and HOW of business partnering by putting it on a formula)
Everyone Can Adopt A Business Partnering Mindset (part of a six-article series about FP&A Business Partnering)
From Business Partner To Working Within The Business (part of an article series where I interview finance professionals about their careers in FP&A and Business Partnering)
Is Your Product Optimized For Value Creation? (part of a toolbox series where we look at what tools FP&A professionals should leverage to drive value creation)
How Business Partners Turn Analysis To Insight (part of case study series where I interview business partners about how they drive value creation using real cases)
Anders Liu-Lindberg is the co-founder, COO (Chief Operating Officer), and CMO (Chief Marketing Officer) at the Business Partnering Institute and owner of the largest group dedicated to Finance Business Partnering on LinkedIn with close to 10,000 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a long-time Finance Blogger on LinkedIn with 60.000+ followers and 130.000+ subscribers to my blog.
MR Quant Modelling & Analytics at FSRM EY LLP, CQF Alumnus
3yNice article Anders Liu-Lindberg. I am hopeful that this series would motivate us finance professionals sitting in different corners of the world, to question the status quo and put in the extra effort. Indulgence with digital transformation & growing computing capabilities will be our enablers in this cause. These will help us achieve results which we could showcase to the leadership/stakeholders and then expect a paradigm shift in their mindset.
Accomplished Professional with two decades of chronical success in driving Order to Cash, Corporate Treasury Solutions, Consolidation, Taxation, Audit, Record to Report, Financial Planning, Budgeting, Transitions
3yThanks for sharing
I spoke with the dean of a prestigious school of accounting. When he became dean he assembled the faculty and told them that they had the wrong students in the program. Likewise you have the wrong personalities in finance and accounting.
Great article Anders Liu-Lindberg. For finance to add more value it needs to be forward looking but at the same time to strategise on where to go it’s also important to gauge where we stand. In fact I think a mix of where to go (future) and where we stand (present) and how we got here (past) are all important finance functions though finance mostly focuses on past for now which as you rightly said needs to change.
Helping Finance Managers of ‘busy’ SMEs improve profits | Turnaround 'busy' loss-makers | Improve profits of the already profitable | A proven step-by-step process | 90-day projects | Training & Coaching throughout |
3yAgreed: Driving forward - by depending on looking ONLY through the rear view mirror is both unsafe - and unlikely to get us where we want to go. 🤨