Strategic finance supports a company’s growth and long-term vision rather than taking a more limited tactical approach. This blog post explores how it can elevate the role of the CFO and finance team. It pinpoints a common barrier to this change of perspective -- slow manual processes that cause overwhelming workloads. The post also explains how digitizing workflow comes into play to free up time for CFOs and their teams.
Table of Contents- What is strategic finance?
- The finance function as a business partner
- The role of data analysis in moving the business forward
- Which financial processes can you automate?
- Fostering financial efficiency with DocuWare
What is strategic finance?
Strategic finance defines which actions the company should take. While financial planning and analysis (FP&A), which falls under the strategic finance umbrella, determines how to implement them.
The practice aims to boost profitability over time. It involves identifying new opportunities, cost reduction and better risk management. In public companies, strategic finance seeks to increase shareholder value. The strategic finance approach also consolidates data across the business and uses it as a basis for fueling expansion.
It’s proactive and goes beyond simply providing information to the C-level about a company’s current status. It evaluates the implications of proposed plans of action for everything from introducing new products to capital investments, and mergers and acquisitions. It also leverages financial data and uses it to identify and address risks in every area of the business.
The finance function as a business partner
In this context, a CFO's role is that of strategist, advocate for intelligent automation technology, and a significant contributor to improving business performance. CFOs and finance directors and managers work alongside most other departments to determine the resources they need and establish budgets from the ground up. So, they have a 360-degree view of the company’s overall operations.
Members of the finance department are often the first to spot weaknesses and a lack of adequate planning. Therefore, they can help chart the next steps in the company’s course by:
- Overseeing the automation of accounting processes
- Merging fragmented data from multiple teams and software platforms.
- Developing plans based on up-to-date data and real-time analysis
- Leveraging financial modeling and scenario creation that anticipates future changes in the business environment
The role of data analysis in moving the business forward
Under this model, financial decisions are data driven and forward-looking. As a result, monetary goals are in sync with overall business objectives. It involves continuously assessing economic conditions and taking steps to reduce their potential negative impact. So, the finance department becomes a source of innovative ideas and solutions rather than solely an operational expense.
Finance managers are analysts and data hounds, so working with large datasets is second nature. They are have the expertise to collect, aggregate, and compare data from different teams and business software. Then they can use their knowledge of profit and loss trends and other financial measurements to assess opportunity versus risk. From the data analysis perspective, finance departments are key to achieving business goals.
Which financial processes can you automate?
Document management speeds up FP&A tasks like budgeting, forecasting and reporting on key performance indicators. These are some of the processes that benefit most from digitization.
1. Accounts payable and invoicing
Accounts payable (AP) automation allows businesses to predict financial outcomes more accurately. AP staff is better able to identify invoice processing bottlenecks, focus on high-value accounts that need attention and monitoring cash flow.
Gain real-time insight into your financial picture by integrating information from accounts payable, accounts receivable and other departments directly into an Enterprise Resource Planning (ERP) system. Digital processes offer a clearer picture of where the business stands financially and so the finance team can respond with increased speed and agility.
2. Budgeting
While financial statements show expenditures for a given year, a more in-depth analysis is required to understand the underlying data. Digital document management provides transparency, which enables executives to review previous expenditures and payroll data to make informed decisions about concerns like whether to add staff or changing suppliers and other service providers.
3. Contract management
A typical contract workflow is started by a department manager. Then it’s routed to finance and the legal department. With automated workflow the original of the approved contract is stored in a central database. Then it is sent to the parties involved who use a secure, electronic signature to sign the document. Email notifications and reminders can be scheduled along the way to ensure that processes are completed within a specific period. The signed contract is routed back to the company to execute it.
Some contracts need to be managed continuously throughout their lifespan. This type of agreement will undergo many changes over time. Without the version control digital workflow offers, this is a recipe for disaster. By using document management, your company can cut down on time spent drafting and reviewing contract updates.
4. Audits
You don’t want your team to spend weeks or months compiling files to prepare for an audit. In a paper-based system, employees pull individual files and documents from a filing cabinet and make photocopies. This puts stress on staff and the extra time they spend answering the auditors’ questions keeps them from fulfilling their daily responsibilities.
An electronic document management system helps save enormous amounts of time and effort. Documents are organized in a secure system that makes it easy to quickly share the required files with auditors. It takes the pain out of the process by making sure you never lose or misfile invoices or supporting documents. Instant access prepares your team to respond quickly to any question auditors ask. So, they can spend their time on their own daily work.
5. Forecasting
For example, instead of manually inputting expense reports or profit and loss reports, there is time to focus on analyzing expense trends that might drive new initiatives. Rather than processing invoices one-by one there is time to spend on improving vendor engagement.
To create an accurate financial plan, CFO's need access to go beyond the financial statements of your company. While financial statements show expenditures for a given year, a more in-depth analysis is required to understand the underlying data. Digital document management provides transparency that enables informed decision-making.
Fostering financial efficiency with DocuWare
Technology is continuously redefining how a successful business operates. In this era of digital transformation, companies that embrace it will be positioned to seize emerging opportunities and preserve their competitive edge.
Today’s finance leaders need both business acumen and a thorough understanding of the role of technology. DocuWare can digitize your finance operation alleviating the burden of manual work. Then the finance team can eliminate time spent on routine tasks and use it for work that contributes to profitability.
It speeds up routine processes that range from accounts payable to expense reports and tracking cash flow. With the productivity gains offered by digital document management and insight gained through implementing strategic finance, CFOs and their strategic finance teams can play a central role in shaping the future of their companies.
