A survey by SAP and Oxford Economics looks at six practices that boost business performance and efficiency, as well as governance, risk and compliance (GRC) effectiveness across the company.
The study asked 1,500 financial executives – 11.5 per cent of whom were categorised as financial leaders – in different countries what they think are the qualities needed to excel in finance. The answers suggested that the following qualities were key to financial leadership:
- having strong influence beyond the finance function;
- driving strategic growth initiatives;
- Improve efficiency with automation;
- being very effective at core finance processes;
- collaborating regularly with business units across the entire company; and
- working closely with the GRC team and excelling at handling regulatory change.
The stats that show financial leadership
Some of the survey's results gave specific examples of how financial leaders perceive their organisation's performance and their priorities, compared to the non-leader financial executives.
- 83 per cent of respondents at companies where revenues rose by more than 5 per cent over the past year say their finance function’s influence and visibility has increased across their organization, compared with 79 per cent at those with 0.1–5 per cent growth and just 70 per cent of companies with falling or stagnant revenues.
- 73 per cent of respondents from companies with 5.1–10 per cent profit margin growth rate themselves very effective at core accounting and closing, compared with 40 per cent of those from companies with 0–5 per cent profit growth.
- 40 per cent of the respondents in the leader category reported market share growth over the past year, compared with 21 per cent of non-leaders.
- Companies with 5.1–10 per cent revenue growth are twice as likely as slower-growing companies to strongly agree that automation improves finance function efficiency.
- Companies with profit margin growth of 5.1–10 per cent over the past year are more than twice as likely as less profitable companies to rate themselves “very effective” at T&E management.
- Only 40 per cent of respondents rate their organization’s GRC function as very effective. The percentage climbs to 57 per cent among finance leaders.
How to be a financial leader
The report also identified several 'calls to action' to suggest how financial executives can actively bring about change and show leadership within their organisations:
- Identify where more insight and influence from the finance function could boost corporate performance.
- Find the pain points in finance’s core business performance processes, such as accounting, closing, T&E management, and other basics. Prioritize fixing the areas where improvement would have the biggest impact on results.
- Engage with leaders across the enterprise to foster a culture of collaboration. Discuss how training programs, new tech platforms, and “tone at the top” could promote better cooperation between finance and all other parts of the organization.
- Work with IT to build a business plan for innovating the finance function without disrupting daily activities. A flexible approach can minimize business interruptions while improving efficiency.
- Consider where automation and emerging technologies can enhance efficiency in core transactional activities by relieving staff of manual, repetitive tasks.
- Leverage big data analytics to convert the massive volumes of expense information the finance function receives into actionable insights.
- Encourage collaboration between the finance and risk management functions by ensuring they can easily share standardized data and reporting.
- Ensure that the business systems supporting finance and risk management can talk to each other. Consider where integration could make the two functions more effective.
- Align finance and risk management leadership in taking necessary precautions to safeguard the organization against cyber crime.
- Diagnose whether your finance data is usable, timely, accurate, and relevant, so it can inform intelligent decision-making across the enterprise.
- Educate yourself on next-generation innovations such as artificial intelligence, blockchain, and the Internet of Things that have the potential to transform the finance function’s effectiveness and strategic influence.
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