Collisions between the Finance Department and… well, everyone, are the stuff of legends. In most companies, business teams are as likely to voluntarily ask Finance for help as a Russian citizen would ask the KGB for help. Instead, teams develop strategies to keep finance at arms length as long as possible.
Accounting professionals in the United States have recognized for some time the value of offering what many refer to as “high level” services to their clients. For the accounting professional and the client business, consulting regarding strategy and growth represented value for both parties – guidance for the business client and profitable service for the accountant. However, as the economy began to decline and businesses tightened their belts, accounting professionals around the world recognized the opportunity and the need to return to focusing more on client operations and not simply on strategy and growth.
Would you want to go to work where Finance is known as “Bean Counters” or where they are known as “Partners in the Business?” As subjective as those answers are, they speak volumes about how the Finance function is perceived in an organization.
How confident are you that the work you do makes your company more valuable? That should be a key question for a CFO. Since I came to this publishing enterprise in 2007, I’ve often heard opinions voiced (even by some finance chiefs) that CFO work does not, many cases, really add value.
Now think about this. Regardless of your own level of self-confidence, how confident is the rest of the company that you’re adding value?
You might ask, “Why should I care?” Well, you should, I think. If nothing else, other viewpoints may contribute to greater self-awareness. But as it turns out, in many respects finance’s view of itself may not be all that different from everyone else’s.
According to a recent survey by industry research and benchmarking firm, APQC, top performers’ cost of finance is almost three times lower than bottom performers.
View key benchmarks and findings below.
Raymond Panko, a professor of IT Management at the University of Hawaii, wrote that “90 percent of all spreadsheets with more than 150 rows … contained errors.” Over the years, there have been some spectacular cases of spreadsheet errors causing serious issues. A few examples of such cases were mentioned in a paper about spreadsheet risks by Philip Bewig:
- A missing minus sign once caused Fidelity’s Magellan Fund to overstate projected earnings by $2.6 billion.
- Falsely linked spreadsheets permitted $700 million in fraud at Allied Irish Bank.
- Voting officials reported instances of spreadsheet irregularities occurring in New Mexico and South Africa.
How we can mitigate human error as a part of spreadsheet risk?
What your clients care about is how they’re doing, and if they’re on the right path. Are you helping them understand that, or are you just the guy who works with the numbers to make sure they’re accurate?
(This is second in a series of articles addressing best practices towards improving the finance function.) What is the #1 issue that’s getting in the way of Finance delivering game-changing decision support… of Finance consistently being called in when executives are making important decisions… of Finance being regarded as having the utmost competency? EPM Channel…
According to survey results, Finance believes that they are capable of “game changing” levels of decision support while Non-Finance respondents were far less likely to agree.
While Finance is getting a seat at the table, they can clearly be delivering more value once they get to that table.