For most enterprises, finance and accounting is a back-office function, often relegated to a dusty corner and best hidden away from customers (and sometimes even colleagues). The idea that finance and accounting can be a source of growth or operational excellence may prompt skepticism or surprise. Operational excellence ensures the most efficient and effective use of time, energy and resources. Growth tends to be associated with sales and marketing efforts. So where do the accountants and financial analysts fit? How does tracking the numbers inside and outside the company contribute to growth or operational excellence? In reality, every business function can contribute to the pursuit of operational excellence and growth. It simply requires the right skills, focus, and discipline within the function to generate the kind of high-performance results that build respect for a function, no matter where it sits on the organizational chart.
Finance & Accounting Deconstructed
Despite often being thought of as a single function, finance and accounting are two distinct disciplines. Accounting looks in the rearview mirror to track past performance, while finance looks forward, planning, budgeting and forecasting future growth. If accounting is the scoreboard, keeping track of the hits, runs, and errors in a game, finance is your game strategy. It helps you make data-driven assumptions about how the game might unfold, depending on lots of different variables. Accounting allows you to battle test your thinking based on past performance.
How to Leverage Finance & Accounting to Support Business Strategy
Startups use incredibly simple financial systems, but as a company expands, accounting for growth becomes more complex. When a business moves beyond a single product line, it requires greater transparency than a consolidated view of company performance provides. Consider what happens when a manufacturer adds a second production line or an apparel retailer expands its line of merchandise. To understand whether the expansion is successful, you need to set up a more sophisticated cost accounting system to identify the margins for each individual product line. Proper accounting helps isolate specifics and identify true markers of performance, offering clarity as a business grows.
Finance & Accounting Professionals Can Do More than Track the Numbers
Most growing businesses look to contingent finance and accounting professionals to supplement internal staff for special or recurring needs, such as monthly closings, audit compliance, tax filings or managing budgets and projections. They can add value in many other ways that business owners may not realize. They can provide the hard data needed to validate decisions and refine business strategy. They can help you answer questions like these:
- Are you making good or bad decisions?
- Do you know where to focus?
- How do you uncover the blind spots before they trip you up?
When you are unsure about your next steps, you don’t have to go it alone. You can look to finance and accounting professionals who have navigated similar situations in the past. They can offer a wealth of knowledge, both based on their own experience and what is resident and shareable within their team.
How to Make the Best Use of F&A Professionals
The first step in leveraging F&A consulting resources is to understand your goals. Work with an F&A staffing partner to ensure the resources you request are the right ones to address your needs. Don’t get caught up in job titles that may be confusing or misaligned to your needs. Maybe there is a more scalable or more affordable solution based on different stages of growth. The focus of your growth strategy (e.g., product line or geographic expansion vs. M&A) will guide what roles are needed.
Does Every Business Need a CFO?
Not necessarily. Start with the fundamentals and evaluate from the bottom up. Ask yourself: Are we doing the simple things well, e.g., paying our bills, banking our money, producing monthly statements? Once you have a solid foundation with reliable data, reviewed on a timely basis, then you can start talking about bringing in a senior-level person. Be sure you understand the role of a CFO. Some think the CFO is responsible for managing the relationship with the bank. Some think a controller can wear the CFO hat. Neither is necessarily true.
As a business owner, you need full visibility into key performance indicators, but if your business is in early-stage growth, you may not need a full-time CFO. You may need a fractional CFO for a few hours a month to help with strategy, raise new capital in the next round of funding or decide where to invest for growth. To promote best practices and empower your team to contribute in a strategic manner, you could tap an experienced F&A executive to counsel you for a few hours a month. That may be all you need as you start your journey of growth.
Rely on Finance & Accounting Professionals to Help You Grow Your Business
Growth doesn’t happen randomly. Inspiration may help launch a business, but the pursuit of profitable growth requires data more than instinct. The finance and accounting function can be a strategic contributor to business growth by enabling data-driven decisions. Data provides the guardrails to ensure you don’t miss the big opportunities. You may have started out handling everything yourself, including finance and accounting, but when you are ready to grow your business, the do-it-yourself route will often hold you back. That’s when it is wise to turn to finance and accounting professionals with the specialized expertise to help you move the ball forward, ensuring operational excellence and a data-based plan for growth.
When you need help, look to a partner like Sayva to provide the specialized resources required to execute the plan and ensure project goals are achieved.
Contact us today and let us help you succeed with your next strategic growth initiative.