Optimising financial processes

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How leading finance functions are redefining excellence


PwC’s Global Finance Benchmark Report 2015 is the latest in a series of reports for finance leaders and is an excellent combination of a status update on the changes in the role, performance, governance, structure and mandate for the finance function and a rapid benchmarking tool with insights to help support the drive towards world class finance.

As ever, in the benchmarking data, we see a marked difference between ‘the best’ and ‘the rest’ in terms of efficiency of finance with leaders operating at 40% lower cost. Obviously, economies of scale tend to flatter the larger organisations but the trend remains clear even across comparable sizes. Interestingly, leaders spend 20% more time (of a lower total) on analysis versus data gathering. Other research indicates that leaders tend to conduct greater ‘problem focused’ analysis as opposed to the more obvious focus on ‘clean’ answers.

“Leading finance functions continue to drive waste and inefficiency out of their processes, leverage technology and sourcing in innovative ways, and are more aligned with internal customer priorities and overall business outcomes”.

The benchmarking tool provided with this PwC report (link below) offers a useful ready reckoner for the cost of finance by industry, company revenue and number of operating units. The benchmark is provided both by cost as a percentage of revenue and as average number of Finance FTEs per $bn of revenue. FTE averages are split by activities related to Insight, Control & Efficiency. Insight and control functions illustrate the focus on effectiveness as well as efficiency.

Finance processes can all be classified in this way to assist in benchmarking;

  • Business Insight
    • Strategy & planning
    • Budgeting & forecasting
    • Business analysis
    • Performance improvement projects
    • Tax planning
  • Transactional Efficiency
    • Accounts payable
    • Travel and expenses
    • Credit management
    • Customer billing
    • Accounts receivable
    • General accounting
    • Financial/external reporting
  • Compliance and Control
    • Treasury
    • Process controls and compliance
    • Tax accounting and compliance
    • Internal audit

There is a debate in my mind as to whether ‘management reporting’ is a transactional efficiency activity or business insight focussed. I would suspect that your own answer to this is the most telling factor.

The benchmarking data provided in the report and associated benchmarking tool is much more granular, and therefore more useful, than is typically available in these reports.

The report targets eight differentiating focus areas and emerging challenges that help finance leaders assess and develop their own organisations. Assess where your capabilities are already leading and identify the key areas to improve;

  1. Setting the standard for excellence –  in terms of lower costs, faster response and more effective use of resources
  2. Cross-functional transformation – the value created by Global Business Services and end-to-end process transformation led by the new breed of Global Process Owners
  3. A step up in business partnering – often cited as a key driver in improved performance, there is growing realisation that this skillset is required to genuinely support he business with finance insight and advice
  4. Reaping the potential of Lean finance – taking a lead from manufacturing industries, a systematic focus on eliminating waste and error and focussing on activities that provide the most value
  5. Leading edge people management – changing mind-sets and behaviours are key to increasing productivity, and to implementing and sustaining effective change
  6. Applying technology that delivers business benefits and reduced costs – the art of managing return on investment and benefits realisation and the impact of data governance, data quality and effective adoption. Data accuracy is rated as the single biggest contributor to technology supporting finance’s business insight needs. Better data increases overall productivity.
  7. Turning management information into real competitive advantage – effective data analysis for real insights that drive key decisions that make a real difference to the business. Is there a risk that others could take over finance’s role as the owner of analytics and performance?
  8. Navigating through a new business landscape – rapid changes to markets and customer behaviours both threaten survival and stimulate evolution in business and the finance function itself

In terms of ‘redefining excellence’ we need to ask some further questions;

  • How do we measure ‘excellence’ and what are the practicalities in achieving this state?
  • Can we do this without costly, structural change?
  • What are the strategies, tactics and techniques?

The webcast entitled “Practicalities in Delivering World Class Finance” explores this further here.

To download the full PwC report and to benchmark yourself against the 2015 Survey respondents, click here.

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