Finance and Accounting Transformation Factors outline the factors that make F&A re-engineering and re-architecting a strategic imperative. Finance and Accounting Transformation is no longer an option, but has become an inevitable consequence dynamic markets, the advent of digital solutions, regulatory mandates, and need for finance and accounting to be at the vanguard of insight-driven strategic decision-making. New regulations and laws combined with the demands of the current economic climate are causing CFOs to shift their focus. Finance departments are having to laser-target their attention toward multiple operations simultaneously, including toward:
- Managing cash flow
- Accuracy and regulatory transparency
- Driving business performance
- Improving customer experience
- Working capital efficiency
There are a variety of finance and accounting transformation factors accelerating the need for this shift in focus, making it all the more important that effective finance and accounting transformation practices be developed. Let’s take a quick look at four of these factors.
Finance and Accounting Transformation Factors
Companies are often asking their finance workers to deliver more work than possible. They want them to not only perform their regular day-to-day job duties but to also move forward on the path of transformation at the same time. In doing this, the outcome is typically not sustainable in a positive manner and leads to a negative impact on all financial operations. Some organizations will even endure an untimely turnover of the pertinent key resources that are needed to uphold their organizational structure.
There are a variety of internal and external factors driving the need for this shift in focus, making it all the more important that effective finance and accounting transformation practices be developed.
When a company is on the fast track to growth, it can be incredibly difficult to meet the increasing demand for the products/services it is selling; this leads to a greater need of raw materials, and unfortunately, it often means producing a higher quantity of products in a short amount of time. And not only do raw materials need to be increased and products manufactured in a shorter time span, but marketing and distribution efforts must be improved as well. To meet these goals, funds have to be increased, which means working capital must be better managed and appropriately invested.
Today’s technology is enabling insight-driven decisions to be contemplated and implemented like never before. When new ideas are put into action, this often requires much internal reconsideration and transformation, especially in relation to the financial department as funds must be allocated to bring the idea to life. Examples of expenses that must be covered include the design and manufacturing of a new product, hiring new talent, and carrying out new branding strategies.
Regulations and Compliance Burdens
As new laws and legislation are implemented, this transforms operational practices and increases the need for finance and accounting transformation. Regardless of the industry, a company is operating in, new laws and regulatory burdens greatly impact its social responsibility. When laws and regulatory standards are not met, this can lead to large fines and penalties, both of which have a major negative on financial operations.
Once you know the factors which are triggers for change, you can include them in the finance transformation business case and roadmap.
One way to identify the driver is by benchmarking with your peer group on key finance KPIs.
What other finance and accounting transformation factors made you embark on a finance transformation?