Factors Influencing Change in the Finance Department
The adoption of cloud technologies and integrations along with evolving payment technologies is forcing finance departments to rethink their infrastructure and processes. Take for example the increasing prevalence of mobile payments and other digital payment methods – to secure market share and meet the demands of customers, businesses are quickly moving to adopt these practices which come with both new challenges and new opportunities for finance departments.
Advancements in Technology and Automation
Technological advancements have drastically changed the way data analytics and finance teams can operate. With the emergence of remarkable business intelligence platforms, the collection, processing, and analysis of large datasets has become more efficient and streamlined. The availability of real-time data, which can be accessed from anywhere at anytime is making it easier for finance teams to monitor KPIs and respond with data-driven and informed decisions. Automation technology is also driving change in the finance department and AR Automation by helping to alleviate resource constraints while reducing repetitive manual work and error rates. This is freeing up the finance team for more high-value, forward looking business strategy – which is ultimately increasing the scope of work for the finance team.
Cost Management as a Strategic Measure
Traditionally cost management was used as a defensive measure in response to a problem. When a company was in trouble, they would lay off employees and shutter facilities. In the finance departments of today, leveraging cost management as a strategic measure is becoming necessary. Instead of being a reaction to a problem, cost management hones in on reducing inefficiencies and in turn the money saved is used to drive growth. Some finance departments are employing digital technologies like artificial intelligence and machine learning to help with forecasting and budgeting. This enables them to better understand their cost structures, so they can devise effective strategies. Leveraging cost management well requires collaboration from the finance team with all levels of an organization.
Changing Role of the CFO
The role of the CFO has undergone significant changes in recent years. Modern CFOs are now expected to play a strategic role within their organization, in addition to their traditional responsibilities of financial reporting, accounting, and compliance. With technological advancements and access to massive amounts of data, CFOs are now positioned to be drivers of digital transformation in their organizations. This expanded role requires the modern CFO to have a more diversified skillset. They need to understand how much to invest in technology and new talent and they need to make sure the business strategy and digital-analytics strategy aligns. The modern CFO works closely with the C-suite to identify growth opportunities and to effectively allocate resources.
Globalization and Expanding into New Markets
Globalization has many strategic advantages for a business, including increased revenue streams, broader reach and access to new suppliers. However, globalization is another key driver of change in finance department structures. As companies expand globally, finance departments face significant complexities in managing local and international laws, regulations and financial reporting requirements. They must also navigate currency fluctuations and develop strategies to mitigate financial risk. This requires more diversified skills and talent on the finance team.
Regulatory and Compliance Requirements
Regulatory and compliance requirements are crucial factors that can impact the structure of the finance department. Companies must comply with the growing number of regulations and laws, which can vary by industry and jurisdiction. Finance departments must keep up-to-date on all changes and implement appropriate controls and accurate reporting. Failure to comply with regulations can result in significant financial and reputational damage for a business. As a result, finance departments must ensure that they have the necessary resources, processes and systems in place to meet these requirements.
Bottom Line
Technological advancements, globalization and ever-changing compliance requirements are among the factors influencing the structure of finance departments today. With automation streamlining workflows and providing valuable real-time data insights, the modern finance team can assume their role as a strategic partner in their organization.
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