Fast-growing companies benefit from integrated finance approach

The struggle of fast-growing companies: compliance and non-communication

The extent to which the finance function grows along with the company depends on the company's type and size. Its level of maturity - the cycle in which the company finds itself - also plays a part. Large companies usually have a finance function with a great deal of IT and data analysis expertise. This makes it easier for them to implement necessary changes. 

Others don't have access to that expertise and are a bit in between, such as fast-growing scale-ups that have benefited from the recent pandemic. What we’re seeing here is that the finance function can’t  keep up with the company's growth spurt. Finance staff will be asked, for example, to deliver reports that comply with laws and regulations, whilst at the same time having to provide insights and data for key decision-making regarding value creation. If you normally have three employees doing the bookkeeping, you won't be adequately prepared. You'll then be faced with a choice: will you use the finance function for value creation or for compliance and meeting all of those requirements? A company that wants to create value will also need to be compliant. So it has to be both.

Apart from the dilemma of value creation versus compliance, communications between departments may also be a potential bottleneck. It remains difficult to get people from different disciplines to work together. You're in fact dealing with different cultures and ways of thinking. It often starts at the drawing board when IT sets up systems without asking Finance for input, even though Finance is best placed to explain what the business requires. The upshot is that staff usually have to make manual adjustments afterwards, to make reports suitable for use across the business. What I see in practice, is that this situation affects their motivation to use the system in the first place. This could have been prevented by getting the right people on board from the very start. Which only goes to illustrate the company's struggle. Hiring new people with the right skills is an option, but also a costly investment. On the other hand, you cannot simply ask accountants to develop a software system.

Integrated Finance as a Managed Service: the solution for a fast-growing company

A company facing these challenges can be assisted by an integrated approach such as Integrated Finance as a Managed Service. In practice, this service is sometimes referred to as a subscription model, because the client buys certain services. But I see it rather as a comprehensive service that helps the client from start to finish in setting up and running a finance function. The ultimate goal is that after a certain period (usually a year), the staff can take over and run the system themselves again. Envisage a well-coordinated team of specialists with a clear division of tasks, as well as the addition of smart technology to the work process. Examples include an ERP system that provides the right data for compliant reporting and the availability of easily accessible cloud solutions that the client can access in any place and at any time. 

Another important part of Integrated Finance as a Managed Service is that certain work processes are standardised. Specialists are provided to perform the input work, just until the company can take over again. The time saved allows the finance function to take on the above advisory role.

Getting cold feet and letting go of control

An integrated finance approach can be a solution for companies that are rapidly outgrowing their size. At the same time, I'm seeing that companies find the transformation itself a very anxious step as well. Employees become insecure because high demands are placed on them. Adopting a different way of working, for example. But in the end, it will also benefit them a lot. They'll  acquire new knowledge and develop new skills, cutting back on administrative tasks and freeing up more time to advise the business. Using the right systems, such as ERP, will also save time and provide effective information. The business can use these insights to create value for the organisation on a strategic level.

Management may get cold feet about a transformation such as Integrated Finance as a Managed Service. That's understandable because this is a major transformation in which management has to let go of a lot of control. However, the pandemic has inadvertently helped to reduce levels of control by management. Employees have had to perform most of their work from home and so their managers could no longer supervise them directly. My overall impression is that companies are embracing cloud solutions more quickly because of  home working. It's as if their mindset has also changed with the circumstances. Businesses will simply have to. Technological developments are coming at them at high speed. Embracing  these changes - if necessary with external support - would then be the best advice.