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Strategycorner is now expanding its content to include posts about General Management, Financial Management, Finance Transformation, Marketing and HR Management. Posts will be published in English or Spanish.

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Jesús Peral
Executive MBA IE Business School, Madrid,Spain

Master in Strategic Management
IDE-CESEM Business School, Madrid, Spain

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domingo, 3 de mayo de 2015

How to build a world-class finance organization

The role of finance organization historically has focused on oversight and control and paying less attention to increasing the effectiveness of its operating divisions.

However there were a lot of dramatic changes in the business environment driving finance organizations to reevaluate this role. The increased competition emerging from a global market has put pressure on finance organization to find new ways to reduce administrative costs, add value and provide a competitive advantage. At the same time the advantages in information technology have made it possible for finance function to shift from a paper-driven, labor intensive clerical role, to newly consultative roles as strategist, analyst and business partner.

Based on the above, the question would be, how could we create the so-called world class finance organization? In this post I would like to share my view based on my extensive experience in the finance function.

A world class finance organization can be best defined in terms of the business outcomes it generates, for example, improved business analysis, innovative solutions to business problems, reduced operating costs and improved overall business performance. At this point it is important to stress the relevance of what I call the “shared vision”. This shared vision includes the mission, a vision for the future, core values, goals and strategies which will lead to make the finance organization a value creating, customer focused partner in business results.

To achieve this position it is indispensable to be focused on some critical success factors, goals and best practices that are instrumental to attain the vision and create value.

The critical success factors should include:

·         Leadership/culture

·         Organization/customers

·         Technology/processes

·         People/talent

The goals have to be clear and achievable, for example:

·         Make the financial management a priority across the organization

·         Redefine the role of finance function

·         Provide meaningful information for the decision making process

·         Build a team that delivers results

The best practices are more difficult to find but are critical to achieve the vision and excellence, just to mention:

·         Build a foundation of control and accountability

·         Use training to change the culture and engage line managers

·         Assess the finance organization´s current role in meeting the mission and objectives

·         Maximize the efficiency of the daily accounting activities

·         Organize finance to add value

·         Develop systems that support the partnership between finance and operations

·         Reengineer the processes in line with new technology

·         Translate financial data into meaningful information

·         Develop a finance team with the right mix of skills and competencies

·         Build a finance organization that attracts and retains talent

The conclusion is very straightforward, we can achieve the excellence in the finance function in our new challenging and demanding role but it is crucial the CFO mindset is changed and focused on facilitating the above-mentioned elements to support the “shared vision”.

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