3 Factors that Drive the Future of Your Finance Team
As your business grows, understanding how your finance team will evolve over your business journey is a key to financial success. Unfortunately, this is challenging for many business owners who are experts at what they do, but have limited experience running a finance team.
In this video and blog post, we explore the factors and constraints that shape the evolution and ultimately the future success of your finance team.
Factors Driving the Future of Your Finance Team
In business, your finance team plays a pivotal role. They're your financial compass, helping guide you towards success. But as your business evolves, your finance team does too. Understanding this evolution can make or break your financial success, so it's essential for long-term stability.
The Ever-Evolving Finance Team
Firstly, two critical components determine your finance team's evolution: transaction complexity and volume. Here's how these factors shape your team's journey, based on which stage of the journey your business is currently at.
1. The Basic Stage: The Starting Point
In the beginning, your finance team is simple. Transactions are straightforward, and volume is manageable. Basic accounting tools will do the job. This is the foundational stage where accuracy and timeliness lay the groundwork for future financial stability.
2. The Growth Stage: Scaling Up
As your business expands, so do complexities and volumes. You need a more sophisticated finance team, possibly incorporating specialised software (ERP, or an Enterprise Resource Planning system) such as MYOB Exo. The competency, capacity, and cost must align with this growth. It's a pivotal stage where financial prowess can either accelerate your ascent or impede progress.
3. The Optimisation Stage: Achieving Efficiency
With growth comes the need for efficiency. At this stage, you'll have mastered complexity and volume. Now, focus on refining processes and reducing costs. Your finance team should be a well-oiled machine, delivering high-value insights with minimal overhead.
4. The Strategic Stage: Beyond Operations
At the highest level of evolution, your finance team isn't just crunching numbers; they're shaping your business strategy. They're the architects of your financial future, providing insights that lead to smart, strategic decisions.
Constraints That Shape The Evolution of Your Finance Team
At its core, your finance team has one overarching goal: to provide accurate and timely information so business owners and leaders can make informed decisions, confidently and quickly. As your compass, your finance team ensures that every financial aspect of your business is in order.
But as your business evolves through the above stages, the constraints on your finance team also grow. We call these the three Cs.
The first C is competency. Consider the competence not only of your finance team members, but also of the software or ERP you use for financial and operational tasks. The competency factor extends beyond individuals to encompass your software's capabilities. If you're asking for something from that system that it can't handle, this may pose challenges.
Key takeaway: Your team's abilities matter, but so does the competency of your financial software. It must keep up with your team's needs.
The second C is capacity. How much work do you have for the people who are available to work within your finance team? If you have a team member who has has 12 hours' worth of work to complete in just eight hours, you're going to run into problems.
Key takeaway: Workload matters. If your team is overwhelmed or underutilised, your financial operations will suffer.
The third C is cost. What is the cost associated with your finance team? You could be getting a lot of competency and capacity, but if your business isn't at the stage to afford that investment, there will be issues.
Key takeaway: Balancing competency and capacity is crucial, but it must be cost-effective. Overspending on a finance team that exceeds your business's needs is counterproductive.
Understanding the components and limitations that shape the evolution of your finance team is critical. Remember, it's not just about where you are today; it's about where you want to be tomorrow. By recognising the constraints, leveraging influential factors, and adapting your finance team accordingly, you can ensure that your financial journey is smooth, profitable, and well-informed.