The
21st CENTURY FINANCE FUNCTION - A PERSPECTIVE.
The role of the finance
function has changed dramatically over the last 100 years and this is reflected
in the stated objectives of every corporate organisation, which include:
·
The development of strategic thinking,
decision-making and strategic analysis and management skills to develop the
organization’s mission and objectives and carry out strategic analysis and
decision-making.
·
To understand the relationship between
financial planning, forecasting, and budgeting and the integration of the
strategic management process with the budgeting cycle.
The role of 21st century
finance function deals with some of the key financial skills and challenges:
·
Cost analysis
·
Continuous improvement of cost assignment
·
Budgeting, management control, and performance
evaluation
But to operate an effective
planning and control system finance professionals can no longer work “in a
vacuum” relying purely on financial and accounting skills; the course also
addresses other skills and some key issues:
·
The relationship between vision and business
strategy
·
Defining strategic and operational
objectives
·
Selecting targets for advanced performance
measurement
·
The evolving role of the chief finance
officer - CFO and the finance team.
The
Chief Financial Officer of the 21st Century
Today’s CFO is under
greater internal and external scrutiny than ever before. CFOs face never ending pressure to cut costs,
grow revenue and maintain control; given the current economic uncertainty,
increased regulatory requirements and closer investor scrutiny there is no sign
of this pressure abating. Today’s CFOs
are expected to play four diverse and challenging roles. The two traditional roles are:
·
Steward: preserving the asset of the
organization by minimizing risk and getting the books right, and
·
Operator: running a tight finance operation
that is efficient and effective
In the highly competitive
world of the 21st century it’s increasingly important for CFOs to
also carry out two other key roles within the organization:
·
Strategist: helping to shape overall
strategy and direction, and
·
Catalyst: instilling a financial approach
and mind set throughout the organization to help other parts of the business
perform better.
These four varied roles
make a CFO’s job more complex and demanding than ever.
Steward
Accounting control, risk
management and asset preservation are the province of the steward. The steward must ensure company compliance
with financial reporting and control requirements, a role which, since the
advent of International Financial reporting Standards - IFRS framework has
become increasingly demanding.
Information quality and control rationalization are top priorities for
the steward.
Operator
Efficiency and service
levels are the main areas of focus for the operator. The operator must balance cost and service
levels in delivering on the finance organization’s responsibities, adapting the
finance operating model as necessary.
Talent management, off shoring and shared service decisions are some of
the key issues to be addressed.
Strategist
The strategist is focused
on defining the future of the company to enhance business performance and
shareholder value; key responsibilities of the strategist CFO are
·
To provide a financial perspective on
innovation and profitable growth
·
To develop the financial perspective to
improve risk-awareness, strategic decision-making and performance management
integration
·
To translate the expectations of the capital
markets into internal business priorities, key performance measures and results
indicators.
Catalyst
The catalyst is an agent
for change, focused on establishing a value attitude throughout the
organization. The catalyst gains business alignment to identify, evaluate and
execute strategies, and serves as a business partner to other decision makers
including SBU managers, the chief information officer, and sales and marketing
leaders. The catalyst establishes a
structure of enterprise accountability for results, drives enterprise execution
and gains acceptance from business management as the organization’s catalyst.
Jerome C. Njoku ACA, AMNIM.
FINANCE DEPT.
