Finance 2020

Day-to-day transactional finance—from payables, receivables and invoices to treasury transfers, journals, capital expenditures and the close cycle—are managed centrally in shared services centres or “finance factories.” The finance factory handles core finance processes, and connects to finance centres of excellence and outsourcing partners in a hub-and-spoke model.

There’s no paper, anywhere. Employees use cloud-based apps on mobile devices to transact their business, and highly standardized, simplified, workflow-enabled business processes handle the rest. Automated controls and intelligent process monitoring and analytics keep watch over core, extended and outsourced process performance, exceptions and service levels to help minimize rework. Finance managers receive event-driven, real-time updates thanks to new integration tools and advances in in-memory processing.

The close process is continuous, if not yet real-time. A daily soft close is the new norm, made possible by visual close management tools, integrated sub-ledgers, daily time capture, journal workflows, reconciliation tools, as well as automation of consolidation, foreign exchange, allocation and intercompany transfers. Finance teams now simulate pre-close results and can support the continuous development of the MD&A throughout the close process.

Investments in data governance, management and analytics have proven their value. CFOs and their teams now readily deliver data-driven insights that enable business leaders to make smarter decisions.

Finance teams use integrated planning models and sophisticated analytics tools for rapid scenario-based planning, cost modelling and risk simulations. Forecast cycle times are far shorter, with same-day turnaround the norm. New tools allow Finance to quickly model the impact of changes in key business risks and inputs, from energy and commodity prices to interest rates, labour costs, competitive changes and more. And because the company’s strategic plan, budgets, forecasts, capital expenditure and workforce plans are all tightly integrated, Finance can better advise leadership on the broader implications of business environment changes—and identify key decisions that need to be made.

It’s not just the C-suite that reaps the benefits of Finance’s new capabilities. Now Finance leaders are embedded in the business units themselves, providing data-driven business and analytics insights to their counterparts in sales, marketing, IT, HR, supply chain and manufacturing.

With operational processes now managed in a centralized shared services “finance factory,” organizations’ more specialized finance processes—such as tax, risk, treasury and compliance—are now housed in virtual centres of excellence. The specialists themselves are actually embedded into the business itself, the better to provide their unique insight and advice.

These finance specialists are measured and evaluated in terms of the value they help the business create—and the risk they help it contain or avoid. Their importance has spurred firms to make considerable investments in specialists’ career paths, training and technical development, while carefully planned rotations ensure they gain an in-depth understanding of the business.

New roles have emerged. “Cash czars,” indispensible during the 2008 financial crisis, are now found in most organizations. The cash czar has an unmatched understanding of how cash flows into, through and out of the business. They’re responsible for planning, forecasting and managing cash, working capital and liquidity—and for making the tough decisions when they’re needed.

The “risk czar,” or chief risk officer at some organizations, is charged with understanding the risks that could force the business to rethink its strategy. Deeply specialized, the risk czar monitors the gamut of risks facing the organization—currency, foreign exchange, competitive, demographic, environmental, regulatory and more—and determines their potential impact.

CFOs are also increasingly asked to serve as chief economist, too—scanning the wider landscape to monitor larger macroeconomic events and interpreting what they could mean to the business.