30 Mar

Streamline your Finance and Accounting with the Right Operating Model


Finance and accounting are going through a sea change thanks to advancement in technology and increased the desire for change as expressed by all stakeholders. The field of finance and accounting consumes a huge chunk of time and resources for any company and it literally pays to handle the things in the most optimal fashion.

Operating model is fundamentally a blueprint, but in reality, it is much more than that. It is a dynamic roadmap that dictates how an organization will function taking into account all the various components within it. These components could be the processes, people, technology and so on. An operating model ensures that the various components work in synergy towards achieving the larger goals of the system which in this case is the finance and accounting domains assisting the organization to achieve its larger business goals.

Chief Financial Officers the world over is confounded by the twin challenges of reducing costs while at the same time helping to augment the revenues of the enterprise on a continuous basis. Thus CFOs would earnestly like to know whether their financial books are in the right order so that insights can be derived from it either by man or machine, at any given time. There is also a need to provide the right information and high-quality analytical inputs to the right departments so that the goals of the company are consistently realized.

The various decisions in an organization need to be viewed from the financial angle in order to make it viable and sustainable in the long run. The various benefits of outsourcing a certain process or department to an outside entity have to be viewed in a holistic manner by constructing a detailed financial operating model and taking the decision on the basis of the model’s sound prediction and analysis. Are there any ways in which costs can be reduced by sharing the resources, streamlining processes to weed out redundancies, making better use of existing employees and so on, are some of the pertinent questions that a rightly designed operational model will successfully attempt to answer.

Technology today plays a very vital role in the finance and accounting space regardless of the business enterprise type. Today with the incessant proliferation of technology and the advent of cloud-based services and the inevitable ascent of big data, it pays to make an informed decision all the more. The Key Performance Indicators for whatever technologies that will be deployed by the organization will have to be considered and diligently compared side by side. When outsourcing will be done to a competent partner then the Service Level Agreement will have to be given special emphasis and has to be signed only after proper due diligence best practices have been adhered to.

The various governing and regulatory bodies in the financial and accounting fields expect strict adherence to the principles and diktats laid down by them from time to time. Thus it needs a lot of critical resources and the wherewithal to know the intricate details and the various implications of any decisions being made by the company in the wider scope of things. Having the right personnel with the right set of skills cannot be emphasized enough for total regulatory compliance and business prosperity.

Finance and Accounting at a Crossroads

The way finance departments are being viewed needs to have a shift of paradigm from company top echelons in order to meet increased customer demands and for staying ahead of the competition. Technology can be harnessed at a much deeper level and processes and systems can be reengineered keeping in mind the changing dynamics of a new world order where the future can only get more challenging and at the same time full of opportunities.

The role of Big Data in today’s world of information overload is just too significant to ignore. A lot of big data analytics software are available that can help to shed more light on hitherto unexplored ways of handling and managing data. This combined with the power of predictive analytics can help to gain surprising new insights that can at once cut costs, improve sales and streamline the entire organization and steer it towards heightened customer-centricity and market leadership positions.

Today risk management is also another hot domain that financial departments are hugely concerned about. When it comes to financial risk management there are a lot of different types of risks that need to be handled. These risks could be one of operational risk, market risk, credit risk, liquidity risk and the list goes on. Thus it needs a solid domain knowledge on part of the personnel managing these risk factors and mitigating any untoward repercussion for the entire organization. More often than not due to the poor availability of trained manpower, in-house more and more companies are outsourcing risk management to partners who have proficiency and decades of experience in this arena.

Thus the onus falls rightly on the Chief Financial Officer of the organization to set the ball rolling and help the business. The right use of human skills, advanced technology, and agile methodologies can help to transform even organizations that have been stuck in a rut into highly valuable, forward-looking and nimble organizations that are ready take the next challenge. Transformational operating models, by removing all complexities and uncertainties, can help to align the finance and accounting domains of the organization with strategic goals of the business enterprise at large for overall well-being and success.

Original Post at medium.com