The Finance Team is as important as the numbers they report

Strong financial performance is key for any business’ future success and growth. The operational health, sustainability and strategic potential of the finance function itself is key to supporting and delivering this. We find that it is often overlooked, blamed for underperformance or lack of information, and frequently under invested in.

The demands on the finance team, juggling regular reporting, cash management, statutory requirements and requests from the board and shareholders is only ever increasing.

To truly unlock value and drive successful outcomes, investors and management teams must look beyond the numbers and embrace improvement and efficiencies in the team.

Why invest in the Finance Function

As noted by one PE Portfolio Director, “Of our assets that underperformed, it is not a coincidence that they all had poor quality finance functions”

Most business’ focus on the outputs from the finance function rather than the performance of the function itself. However, a strong finance function can work with the business to add value providing it is suitably structured, operates effectively and has the right people with the right skills, experience and tools. It is also essential that the finance function can flex as required to meet the changing demands of the business.

Having confidence in the accuracy and completeness of any financial report, starts with having trust in the team who prepared it. Confidence in the numbers allows the CFO to focus on actions and decisions rather than simply “challenging the numbers.”

In our experience, the vast majority of CFO’s know their finance function. They know it’s strengths, it’s weaknesses and where they would like to invest and improve it. This is not the reason finance functions are sometimes slow to improve. It is the relentless cycle of routine activity with the addition of adhoc requests and projects that prevents a CFO from taking a critical look at their function and developing a plan to address it.

The case for external review of a Finance Function

“The Finance function review gave us the space to consider where we needed to focus”

As noted above, it is unlikely that the finance function itself will have the luxury of time to undertake self-review. They may also be frustrated that they can’t meet the needs and

demands of the stakeholders, especially where expectations are not aligned with the resources available.

Any hint of a “review” is likely to cause concerns within the team, especially the time the review will require and the potential for being ‘blamed’ for shortfalls and issues. Correctly positioned however, the use of an impartial third party can be hugely beneficial. This approach can support the finance team in articulating and identifying improvements themselves, but also demonstrate that the business is listening to them, values their input, and is willing to invest time and money to support them.

In our experience, despite initial concerns, every finance team we have engaged with has been supportive of the review. We often find that by listening to the team, and encouraging frank conversations, more issues can be uncovered and solutions proposed that address their “niggles” and “frustrations”. This can lead to positive engagement and re-energise a team under pressure.

The review also provides an opportunity to understand what other finance functions are doing, and seeing that “they are not alone”

When to undertake a review?

A review can be valuable at any point in the life cycle of a business to ensure the finance team is fit for purpose. Key points for a review are typically:

• Pre-Acquisition – identifies challenges and opportunities ahead of completion to inform potential activity and investment in the 100 day plan and beyond,
• Integration – following periods of rapid growth, a review can assist in accelerating integration by highlighting differences in approach, best practices, and potential efficiencies,
• Value Creation – ensures alignment to shareholder priorities, expectations and requirements, and can support the investment or equity story for any future transactions.

How Swan Partners Can Help

Our team includes people who have actually worked within finance functions and understand the challenges and also what good looks like. We have significant experience across a range of industries and can bring a wealth of knowledge and ideas to help your team maximise their value to the rest of the business.

We understand how precious time is. We have designed a fit for purpose, evidence based, holistic review of the finance function that can be undertaken with minimal disruption to your team. This Finance Function Review (FFR) considers all key finance activities and processes; from accounting and controls, reporting, budgeting and forecasting, through to roles and responsibilities and systems; capturing strengths, weaknesses, and areas for improvement.

The review can be tailored to your needs and can focus on key areas as well as take account of the relevant industry. The work is commonly completed within 3 weeks and focusses on providing clear, pragmatic actions for consideration to elevate the finance function as a true business partner.

Following the review, we work with management to prioritise the actions, considering time, cost, impact and ease of execution. From there, a detailed task based milestone plan can be produced which takes into account business as usual activity, is task based, identifies owners and sets out realistic timescales. This approach significantly strengthens the certainty of execution.

Conclusion

An effective finance function that delivers accurate, timely information to the business is critical. A third party review can help ensure that the finance function is not just fit for today, but ready to support growth, integration, and value creation in and for the future. For management and stakeholders seeking to maximise value realisation and minimise risk, reviewing and investing in your finance team is not just best practice, it is a strategic imperative.