5 key issues facing financial management today
Transformation is accelerating in every function of all organizations. However, pressure is increasing on the finance department as the source of decision-making on key strategic and financial investments.
Finance faces its own challenges, both in terms of supporting enterprise priorities and optimizing productivity.
With pressure coming from every side, determining the correct areas of focus can be difficult. A recent report by The Hackett Group has highlighted multiple issues and areas of priority for finance leaders in the coming year.
In this blog, we will discuss 5 of the key issues you face in financial management, both in unlocking value for the organization and improving finance’s ability to provide key strategic advice and partnership to other departments.
1. Taking the position of a strategic advisor
Hackett highlights the increasing need for realistic scenario planning has led finance teams to work closely with others in the C-suite to offer insight that informs agile strategy – from the allocation of resources to the execution of plans.
The need for strategic advice from finance is only set to grow as organizations face increasingly turbulent markets and loot to the CFO to lead the way with a coherent and data-led strategy.
Of course, the role of being informed by data is key and the single source of truth that ERP provides across key functions is unrivaled when it comes to forming strategy.
CFOs should also focus on digital solutions that help reduce the level of manual, administrative, and data consolidation tasks, so this time can be repurposed for analyzing financial data and using this to form strategy.
Predicting the financial needs of tomorrow is increasingly difficult, it requires organizations to be capable of rapidly reassessing their financial plans, budgets, and allocated resources, making strategic pivots on a month-to-month or even weekly basis.
This shift towards constant and rapid change means finance departments are under pressure to shift from traditional forecasting approaches.
They must adopt more flexible rolling forecasts and scenario plans that create the flexibility necessary to realign the priorities on the fly. It remains true that legacy systems will struggle to reach this agility level, but digital and Cloud-based ERP and financial management tools could help.
Greater collaboration of finance with other key functions through ERP and financial management systems will ensure that all functions operate with the same single source of truth, and can update their plans, based on data, as soon as the strategy is agreed upon, rather than creating a manual workload.
Click to read Office of the CFO (Gated)
3. Leveraging digital solutions
Digitization is the order of the day and in many cases, that means replacing legacy systems that stand in the way of flexibility and integration.
The need for improved capabilities like up-to-the-minute data analytics has already seen a projected increase in Cloud adoption in areas such as enterprise performance management, where almost 45% of such deployments, according to Dresner, are now entirely Cloud-based.
By leveraging solutions such as integrated ERP and FP&A platforms, an entire organization can rely on a single source of truth that allows for better planning processes and more accurate storytelling when reporting operations and performance to senior stakeholders.
Importantly, CFOs must recognize the inefficiency of Excel, its inability to handle process-based tasks, its practical limits in a digital world, and its failure to keep up with trends such as AI and automation.
CFOs must also hear out their end users, those in their office who use their financial management systems every day, ultimately your tech stack will affect their productivity when doing work.
4. CFOs must re-evaluate their talent strategies and needs
With the rapid advancement of data science and its role in financial management systems, new skill sets (from cyber security experts to data analysts) have reassessed the importance of reskilling and upskilling to underpin transformation efforts in finance and the wider organization.
This new focus on talent management will require finance to collaborate with HR, combining knowledge bases and data to come up with strong long-term strategies to attract necessary talent as well as retain current talent.
With an increased need to forecast and strategize, the CFO must ensure that key financial talent isn’t being asked to do more than is currently possible with the tools at their disposal. Strategy can never be realized or even formed properly without adequate tools and capabilities to make this possible and realistic.
“Gartner research shows that five digital competencies are key and applicable to back-, middle- and front-office finance work. They are technological literacy, digital translation, digital learning and development, digital bias management, and digital ambition”.
5. Leveraging new financial technologies
According to Gartner, “workflow automation remains key [as a digitalization initiative]. Process automation has brought speed, efficiency, and cost optimization to finance. Given these benefits, the use of robotic process automation (RPA), the de facto automation choice for finance teams, has grown exponentially”.
The Hackett Group attributes the successful transformation of the finance function to the broader implementation of automation and cognitive tools, even AI, much of which sets the pace of tech implementation for the rest of the organization.
The future of financial management systems may hinge on automation as it shows an ability to reduce administrative, manual, and data consolidation tasks greatly, having a large effect on a financial functions’ ability to focus on creating agile strategy and identify opportunities for continued growth.
Unit4 ERP Financial Management System from Unit4 Video on Vimeo.
How can Unit4 help you tackle these trends?
Unit4 creates enterprise technology designed to create new ways of working for your teams. Our ERP Financial Management solutions deliver control and visibility across the whole record-to-report cycle, within a single integrated ERP platform.
Unit4 Financials by Coda helps transform financial accounting, billing, procurement, and asset management – with a dedicated, standalone, best-in-class solution. Suited to large organizations whose operations may require complex accounting configurations or processing of varied transaction volumes, with interoperability across multiple channels.
Our FP&A solution helps finance teams with advanced reporting capabilities, and intuitive dashboards, both of which can analyzed productively when automation can reduce manual workloads.
Make a bigger impact with people-centric software solutions, with industry-leading Enterprise Resource Planning (ERP), Human Capital Management (HCM), Financial Management, and Financial Planning & Analysis (FP&A) solutions.
Consult our product pages to find out more about how these solutions can help you or to talk to sales.
FAQs
What is the most challenging aspect of financial management?
The key challenges finance professionals face include the following:
- Technology replacing some of the traditional accounting functions
- The need to learn new skills
- Including the importance of developing soft skills
- The need to provide real-time data to aid financial decision-making
Monitoring and managing risk is a critical challenge for finance departments, and you should always be on the lookout for possible gaps in security. The most challenging aspect of financial management in today's economic climate is the increasingly strategic role CFOs must play to help the C-suite plan for organizational growth.
What is the most common cause of financial management problems?
Financial management issues can include unexpected expenses, too much debt, lack of savings, bad credit, overspending, or lack of financial planning and budgeting. In any of these situations, organizations need to earn more, reduce debt, or change the way they spend. It all boils down to adequate financial planning and analysis based on accurate data so appropriate decisions can be made.
