From Cost Cutter to Growth Driver - How to Transform Your Finance Function

Rachel Greenway
Last updated on July 04, 2023

Too often, finance is associated with activities like cost-cutting or spend policing. But what if this function could be the engine of growth that powers your business?

Across the business world, almost every part of the org chart has undergone some sort of digital transformation. Indeed, the tech renaissance race is on. Companies are re-skilling and re-tooling at a rapid rate to usher in a more agile and efficient era.

But if there’s one function that’s dragging its heels slightly, it's finance. 

While marketing, sales and product have embraced the advent of new SaaS tools and swifter processes, finance transformation has been slow going. 

Smart finance leaders, on the other hand, are the ones investing in efficiencies and future-proofing systems. More than this, they’re prioritising growth-driving over cost-cutting to transform the finance function into a value building department. So when the growth spurt strikes, they’re ready.

Let’s have a look at how finance leaders can reshape the finance function to drive even more value for their businesses.

What do we mean by ‘Finance transformation’?

Finance transformation. Likely, these words conjure up lots of complexities (plus lots of throwing technology at your problems until they go away). 

In reality, finance transformation is much more about making the right, holistic changes that involve processes, systems and culture. Think of it like a balancing act between spending resources on new solutions while developing more modern ways of working. 

In other words, finance digital transformation can’t be achieved solely through technology. The changes you implement must translate into positive impact for the stakeholders involved while helping the department better align with the overall mission, vision and culture of the company.

Finally, finance transformation thrives on a spirit of continuous improvement. It’s all about embracing a growth mindset while leaving room for radical yet strategic disruption when the time is right. 

The benefits of finance digital transformation

So what are some of the benefits digital transformation has within the finance function?

For one, the overall impact on team members and employees. Employees should feel better heard and enjoy greater transparency when it comes to things like how their pay works, while staff should no longer feel stressed or overworked.

On the subject of overwork, if your team is bogged down by back-office tasks that are repetitive and low-value, they’ll have little time to focus their attention on higher-value tasks. 

We’ve already seen positive trends around rectifying this balance; for instance, one study by McKinsey found that finance leaders already spend 19 % more of their time on ‘value-added activities’. But by letting a little technology do more of the heavy lifting, you won’t just be freeing up more time, you’ll also be able to lower costs through streamlining headcount. 

A big part of finance transformation (as we’ll be learning shortly) comes down to the gains you can make by collating better data. A strong transformation program should allow you to glean greater insights into your business this way.

Finally, a sound transformation program can lower your security and compliance risks that leave your business liable to costly fines.

Digital transformation and the finance function

Transitioning from cost-cutting to value-driving with transformation  

Automate what can be automated

You probably already recognise that finance automation is a no-brainer. It can help your team work through tasks more swiftly while building greater autonomy. More likely, it’s a case of figuring out which areas and activities you should automate first. 

The answer is that it all depends on your business and its priorities. Some areas, like accounts payable and payments, for instance, maybe more urgent to streamline than other workflows. But over the longer term, you’ll want to streamline any kind of task that is manual, repetitive and that your team deals with on a frequent basis (in fact, here are 7 finance workflows ripe for automation). 

Let data do the talking

From revenue and billings to expenses like salaries and benefits, there’s a lot of data for finance teams to be gathering and analysing. The beauty of this is that your team is perfectly placed to harness the power of this data to contribute to more effective growth strategies.  

Whether it's leveraging advanced analytics and financial modelling or starting simply by automating data gathering, taking ownership of your company’s data can help you spot key trends earlier and nail future forecasting. 

By embracing data tracking and analytics as an integral part of your strategy, finance leaders can transform the finance function from a blunt cost slasher into a sharper, value-driving machine. 

Forge strategic alliances

Perhaps one of the best ways for finance to shift from a cost-centric to a growth-oriented mindset is by better prioritising strategic partnerships with other business units. Let’s face it: when it comes to the future, collaboration is key. It’s also one of the most underrated ways to unlock opportunities for future growth, investment and innovation. 

By collaborating more closely with sales & marketing on revenue forecasts or HR on salary benchmarking, finance leaders can gain deeper insights into the company's overall strategic objectives and align financial planning accordingly.

Get agile with financial planning 

Gone are the days when the annual budget reigned supreme. Today’s business environment is much more ‘VUCA’ (volatile, uncertain, complex and ambiguous). The road to becoming a true growth driver is paved with financial planning that’s much more responsive and agile. 

Finance teams should be engaging in more frequent budget reviews, and continuous forecasting and be prepared to adjust resource allocation based on real-time data and market conditions. The goal is to respond rapidly to changing circumstances so you can seize growth opportunities before they vanish.

Innovate through investment 

Let’s put it this way: a decades-old payroll system might sound ‘retro’ in-a-cool-kind-of-way. But if it’s failing to keep up with modern-day business demands, that’s a different story.

When it comes to making wise investments for the future, Finance as a department can have a crucial impact on the course your business takes. Of course, replacing old legacy finance systems is a brilliant place to start. But innovation through investment can reach well beyond just the finance function. By adopting a more open and engaged mindset, finance leaders can help identify all kinds of high potential projects that could transform their business. 

Moreover, they can support other business units in sorting the wheat from the chaff by ensuring resources are allocated appropriately and that ROI is properly tracked. 

Enhance risk management 

Last, but certainly not least, no modern finance team can ignore the significant risks data breaches and attacks pose to their organisation’s sustainable growth. The digital age has made ensuring security and compliance imperative rather than a ‘nice-to-have’. 

This is yet another area when finance can take ownership of, and provide accurate risk assessments that can be factored into strategic decision-making. A proactive approach to risk management can enable finance functions to strike a balance between risk-taking and risk mitigation, creating an environment conducive to growth and value creation.

Looking forward: the future of Finance

Looking to the future of Finance, we can see the effects of the initial wave of transformation extending further.

Once transactional functions have experienced automation, it follows that other areas may as well. From FP&A and capital structuring to tax planning, controllership and risk management, there are many other more strategic aspects of finance that could benefit from advances in computing power and machine learning.

There will also likely be redistributions of work and skills. While some areas of work might become more complex (say, reporting) other areas, like back-office activity, will probably shrink. There will also be a need for more specialty and understanding of data, IT systems, and software development. An EY Banking survey revealed 78% of CFOs would up their recruiting of finance professionals with technology and data-related skills.     

For now, it’s important to remember that the finance function is no longer confined to limiting labels like ‘cost-cutting’. This is a function that has much more potential to be a powerful and influential growth driver for the business. By embracing strategic partnerships, leveraging data, adopting agile planning methods and championing innovation, it can become a catalyst for growth and value creation.

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