Feb 2 2021
Step 4: Go from Reactive to Proactive
Virtually all finance teams would say that it is better to be proactive than reactive. A clear example recently was having to urgently react to the new normal. Forward-thinking teams not only seek to anticipate issues before they become a problem, but aim to be able to rapidly react to adapting their processes and procedures, such as having to facilitate a distributed working environment.
As we find ourselves working in more agile ways, it becomes necessary to re-examine the finance function as part of the overall need to adapt the way we work. It is now necessary to become more strategic by adopting more contemporary solutions that offer real time operational insights, benefits, and future proofing finance processes.
A proactive financial strategy is iterative at its core. Unnecessary manual, administrative and repetitive low value tasks are a risk, not just causing costly errors such as missed credits or duplicate payments, but they limit operations and the ability to become proactive.
Traditional finance departments cannot monitor process execution, anomalies, errors and other KPIs effectively. Process transparency is essential to creating a proactive finance team. Automation, real time transaction management, and reporting enables organizations to prioritize. This means using data-in-motion (intelligent automation) for continuous improvements and proactive activity. Deep-dive transaction analysis enables a full and complete understanding of the broader financial landscape, rather than simply applying a temperature check at key points in the financial year.
Data-driven is the new operating model for the business and for the finance function.
The journey to becoming data-driven has no destination or end; it is a voyage of continuous improvement in a business world where challenges and technology are constantly evolving. A proactive strategy allows you to eliminate problems before they happen, anticipate changes, and even plan for the unexpected. It also allows you to achieve far more accurate reporting and horizon planning.
Better Decision Making
By 2022, more than half of new business systems will incorporate analytics that use real-time contextual data to improve decisions - Gartner
There are many reasons for using a data-driven finance function as the new operating model. Finance leaders must continuously report metrics around cash flow, stock control, inventory turnover, etc. Real-time forecasting on sales revenues or propensity to pay analysis blend and combine traditional financial controls with more complex factors such as new accounting rules or compliance regulation. In addition to using data to achieve better operational improvement opportunities, it is important for finance leaders to realize that being data driven helps them significantly on a personal level, enabling them to identify problems faster, spot anomalies in financial transactions quicker and drive the strategic direction of the business through working on and with the business (rather than in the business).
More about this topic and the four steps to overcome new challenges and make the business more competitive is contained in this CFO Guide. Download the complete guide on transformation.