Unit4
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Beyond FP&A: The Finance Manager as a Sparring Partner

Posted by  Stéphane Bonutto

Traditional FP&A activities are becoming increasingly standardised and automated. Transactional accounting and reporting tasks are more frequently performed by shared service centres. As part of the digital revolution, this trend is likely to accelerate in the near future.

To cope with these trends, finance managers should take over the role of sparring partner in their organisation. This role requires:

  • Direct involvement in the business;
  • New soft skills; and
  • Smart management of the company’s reporting lines.

The benefit of being a sparring partner is greater personal development.

Direct involvement in the business

With today’s powerful analytical tools, finance can perform high-quality analysis quickly. There is therefore more time available to improve forecast quality, research the reasons behind variances, and to do work that eliminates the root causes of the variances.

Finance can also use the liberated time to perform value-add tasks and to support other departments more intensively. This can include:

  • The assessment of product pricing and sales strategy with the sales department;
  • The development of measures that reduce cost and improve productivity with the purchasing and production departments,
  • The creation of an enterprise resource planning (ERP) system with the IT department.

The finance manager should also become more heavily involved in the strategic business orientation of the company, e.g. investment, expansion, mergers and acquisitions. This means developing ideas with the general manager rather than simply evaluating alternatives. As a result, the finance manager will become more accountable for the company results and will share more responsibility for the business with the general manager.

New profile requirements

In order to take more of a driving role in the organisation, the finance manager must understand the business deeper than before. This means being interested not only in the financial results, but also in the products, its customers, production and technology. The finance manager must have the ability to assess the actual company situation, the risks and the development opportunities available.

They should also act as an integrator among the other managers in the company. Meaning they will bring the relevant leaders together to address specific issues, facilitate certain discussions and, if necessary, escalate a topic to top management for a final decision.

To perform their new role successfully, the finance manager must sustain conflicts within the organisation. They should share the same opinion as the general manager on company strategy so that a working relationship on the same level can be reached between the two parties.

Smart management of reporting lines

Establishing a good working relationship between the finance and general manager requires smart management of the reporting lines in the business organisation and the finance team. This is especially important for companies that are organised in a matrix fashion.

A local hierarchical (“solid”) line between the general manager and finance manager can be symbolic for the affiliation in the business organisation. It can however generate a risk of dependency and weaken the authority of finance. A strong backup from corporate finance is necessary to balance powers.

A local “dotted” line between the two can foster a peer-type relationship and strengthen the power of finance. The risk is the business feels less involved. Directly linking part of the finance manager’s compensation to business results can help mitigate this risk.

In both cases, it is the responsibility of the finance manager to act in a loyal way towards both the business and the finance function. It is also their responsibility to agree priorities between both parties.

Greater personal development

In this new world, the finance manager can expand their technical expertise beyond just the finance area into other business functions. They are no longer simply the “number officer”, but a leader actively involved in the company management.

As a sparring partner, the finance manager becomes the second company leader to the general manager, and should receive the associated delegation of authority. This way thee finance manager can ensure business continuity, which is beneficial to the whole organisation.

Finally, the new definition of finance management strengthens the role of finance within business management and provides a higher prestige to the finance management function.

 

Stéphane Bonutto

Stéphane Bonutto has worked in various multinational companies such as Schott Glas and Adam Opel AG in Germany, Switzerland and Italy where he was responsible for commercial finance / pricing and manufacturing finance. He then moved to Oerlikon Balzers to work as Head of Finance / CFO for Germany and then for Europe. 

During his career, Stéphane designed and implemented Finance Planning & Analysis tools to drive the performance of the organizations. He also has worked on processes and organizational capability to bring his finance teams to the next level.