What to do if your finance team aren’t effective

A finance team covers many levels, from the solus business owner maintaining their own finances, right up to a full team of finance professionals employed to keep the bookkeeping up to date, to prepare management accounts, forecasts and cashflows, perform credit control and supplier payments etc.

But how do you know if what you or the finance team is working effectively and delivering the insights and understanding the business needs?

To start with you need to understand what it means to be ineffective, which could be several things:

• Management information not received on time
• Poor debtor days = cashflow difficulties
• Upset suppliers for non-payment
• Admin burden on the operations team
• Lack of transparency of cashflow
• Lack of information full stop
• Poor communication internally/externally
• Late annual accounts
• Lack of insight to understand how the business is doing (e.g. What do we do well? What is not making us money? Is this a good customer?)

Once you have created a list of issues the next step is always to find the root of the problem.
At Farnell Clarke we have worked with many businesses who have identified one or many of these issues. Many have tried to address the issue without working out what the real root cause was and so problems persist. In our experience once you have identified the root cause of an issue you can then start to properly address it. This is usually through changing processes, software and potentially people.

When we review financial effectiveness, we will always try to advise on improvements, and we have a “show rather than tell” approach. It is inefficient for us to be correcting the same issues and it also means the data the business is working from will not ever be correct which helps no one. A key part of this is advising on the correct financial apps and software that clients could and should be using for their specific sector.

When you start the process of identifying root causes it often leads to a full review of the current setup. The benefit of working with an external experienced financial outsourcing partner can really help. Often that can take the form of one-off project to change systems and provide training or to outsource the whole finance function.

Usually this occurs when someone in the team resigns, or new management is bought in with fresh eyes taking the opportunity to restructure. Other times it could be where the business has grown and where the owner of the business has done the finances to date, they are starting to become swamped and struggling to keep up to date with finances.

Outsourcing part or all of your finance function is a decision that cannot be taken lightly but in many cases the benefits of doing so our huge. Often this is done in conjunction with a much smaller internal finance function freeing a CFO to focus on providing a more informed view of the finances and using those insights to dive business improvements and performance.

If you have found that your current finance team are not effective for your business requirements, contact us and let us help you build systems and process that actually delivers, working with your current team. We could even fulfil all your requirements and deliver a full finance service.

Why not read one of our outsource finance case studies to see how we work with other businesses who have faced similar challenges and now are reaping the benefits of outsourcing their finance team.