It would be no exaggeration to say that the finance department is at the heart of a business. With responsibilities such as paying salaries, processing invoices from suppliers, ensuring clients make their payments, settling bills for rent and utilities, and making room in the budget for investments; it is no wonder that this is the case.
However, there is a shift nowadays when it comes to the areas of expertise a finance team should have. When asked, most CFO’s will tell you that, it would be not uncommon for their department to have a more strategic role in a business. A finance team is expected to drive a business forward and provide essential data to the CEO when making strategic decisions.
Recent research conducted by Accenture supports these findings and shows that 77% of CFOs believe it is within their own remit to drive operational transformation across a business. Also, more than eight in ten (81%) make it a priority to identify and target new areas of investment that can bring value to a business.
With such an importance placed on finance, creating a finance team that is well balanced and works in harmony is essential to the long-term success of a business. This is easier said than done. Due to the nature of the job, finance attracts people that are used to working alone, in their own bubble, focusing on what they have to do and nothing else.
However, with the right mindset, you can overcome these barriers. So, let’s have a look and see what you can do to have a highly functioning finance team in your company.
What Does the Modern Finance Team Do?
In order to understand what the needs of a finance team are, we thought it best to first discuss what the modern finance team actually does. As mentioned previously, the activities a finance department is now involved in are diverse and include the following:
- This involves all the day-to-day transactional accounting such as raising and chasing invoices, staying on top of paying bills, and reconciling bank statements.
- Advising and sourcing longer-term financing
- Depending on the size of the business, your team will advise if financing through a bank or a private lender debt is more convenient.
- Securing funding for company projects
- As a business grows, the finance team might be given greater importance when it comes to strategy and the direction of a company. In such cases, if investments from angel investors or venture capitalists are needed, the finance department will be instrumental in preparing the documentation required for presentations to these outside investors.
As we can see, the duties of a finance team are as complex as they come. This makes understanding their needs even more important. Only by doing so, will you be able to have a well-functioning finance department. Let’s see what you can do to understand your finance team better and make their job easier.
Stay Clear From Manual Processes
In the digital era we live in today, it is imperative for the success of your business that your finance team is up-to-date with the latest technological developments.
The objective here is to make sure that every manual process that can be automated, is. While complex software handles the iterative part of the job, your finance team can make use of detailed data and analytics to make more insightful and strategy-oriented recommendations.
Education and keeping up with the times should be the status quo in your finance department.
Make It Clear Who Does What
In order for a finance team to function smoothly, you need to draw clear lines of responsibility. Each member of your finance department should know what the other person is doing. Done correctly, a clear delimitation of job roles can:
- Help promote a sense of purpose for each individual
- Act as a morale booster and enthusiasm within your finance team
- Reduce any possible doubling up on work amongst team members
Keep in mind that when you are creating these roles, you shouldn’t make them siloed. Interaction and communication within the team should be encouraged. The idea here is that once everyone is clear about their own job role and clear with what the others are doing, they should feel comfortable with knowing who to approach when they have a particular problem they cannot solve.
Who knows, once people start talking to each other, and swap perspectives and feedback, new avenues for business growth can be discovered. This aside, having people talking to each other and being supportive of one another does wonders for fostering teamwork.
Knowledge Sharing Is a Must
When it comes to a finance department, the abundance of technical knowledge can be a cause for concern rather than an advantage. The old saying “knowledge is power” certainly rings true when it comes to the world of finance. For this reason, certain people from a finance team can choose not to share their knowledge, and guard it instead.
Hence, it is increasingly important for you, as a manager, to make sure that the knowledge within your team is transferable and transferred. You need to closely monitor it to make sure that the team dynamic does not change whenever a new person joins or someone leaves.
One way to make sure this doesn’t happen is to employ the group development model designed by psychologist Bruce Tuckman in the 1960s — forming, storming, norming, and performing. Let’s have a look at a breakdown of this framework:
- Forming & Storming
- In these two stages, your focus is on finding ways to bring people together and prevent people from fighting for dominance. As a way to foster a collaborative environment, you need to get the team together outside of work on a regular basis. Doing this will allow people to bond and get to know each other.
- This step is a natural progression from the forming and storming stages. As conflicts disappear and people know each other better, they’ll understand what each of them brings to the table. Your finance team members will know where their strengths lie and understand their roles better. It is at this stage that natural leaders can emerge within your team. Make sure they are well-positioned in order for the department to function properly.
- This stage is all about getting your finance team to perform well together. Ideally, when you get to this stage you will have a team that shares knowledge, team members have confidence in each other’s skills, and individuals can work together as well as autonomously. Make sure to mix things up a bit from time to time so that complacency doesn’t creep in.
Solution Based Thinking Should Be Encouraged
Identifying and pointing out problems is all well and good. However, a finance team shouldn’t just raise questions with regard to erroneous processes or calculations. A culture of identifying and providing solutions to issues needs to be encouraged.
When it comes to your finance team, you need to implement a present solutions approach. If people come over to you just to raise issues and expect to be told what to do, then you’ll have an ineffective finance department on your hands.
Instead, you should encourage your finance team to come up with their own solutions to problems, and be prepared to discuss how they came about that resolution and what can be done to implement it. Adopting such an approach will encourage creative thinking and a feeling of ownership within the team.
Ready to Inspire Your Finance Team?
As a CFO or CEO wanting to run their finance team effectively, you first need to be aware of their needs and what they need from you in order to understand their role within the business. Simple steps such as making it clear who does what or just encouraging proactivity when it comes to solving problems can go a long way to having an effective finance department.
This can be one of those easier said than done cases. If this sounds like what’s happening in your business, then it’s good news for you. We are ready to help out with our extensive knowledge in team training and insights-based research.
Why not get in touch with us today and let’s see how we can shape up your finance team?