Finance- The complete support function

“Finance takes too long to process bills. Finance needs all kinds of approvals for every small thing. Finance is a bureaucratic function. Finance works only on month end”.

This seems to be a standard set of comments made by most people about the finance department of their organization. Not grossly untrue though. But what needs to be appreciated is that, it is the financial figures that give credibility to business decisions, be it producing a new product, entering a new market or divesting a segment of the business. Finance is the life-blood of an organization, the master key providing access to all resources required for running business activities. It is the powerhouse of the organization. And with such power comes immense responsibility. And responsibility commands care. Care to ensure that accuracy is maintained, controls are in place and risks minimized.  Such care might be viewed as unnecessary delay by all others, while the so-called delay might be owing to a purchase order not being clear on the terms and conditions, or the approval policy not being followed, or supporting documents being unavailable.  Finance is a complete support function, it not only supports the other functions, but needs the support of all the other functions to operate smoothly.

Years back, one of the most famous management gurus Lee Iacocca referred to finance managers as Bean-Counters who look at the expense part of business with a rather pessimistic view. But, the ambit of finance has changed and enlarged so much over time. Finance persons are no longer bean-counters or score keepers who nonchalantly report historical figures and keep warning the management that the forecast or timelines would not be met. They are now players with strong business focus, active and highly engaged business partners who support the growth of business.

The traditional functions of finance still remain though, accounting being a primary one. They need to ensure that all invoices are generated, all vouchers entered, all journals made and all the numbers add up. They need to police the process and ensure that both preventive and detective controls are in place. They mitigate risks, plan and manage taxes, advise on better resource management and generate information that can be used by all for better decision making.

But the corporate of this century demands much more from its finance than all of this. Technology has given us ERP, which has automated the accounting process tremendously. So, finance persons need not spend days of drudgery in reconciling the books with data from various sources. Shared services, propelled by leaps in communication technology, is steadily gaining popularity. When all similar activities are pooled together in a single geographical location, a lot of synergy can be obtained. Largely freed from transactional processing by automation, standard procedures and uniform processes, the finance officer can now afford to add lots of value to the innovative, strategic and operational aspects of the business. Equipped with a good understanding of the numbers, the key finance personnel can provide the business with insight and understanding, when facing new challenges and opportunities to really beat the competition.

But as already mentioned, finance needs to be supported so as to be able to support. Dodging rules, faking urgency and ad hoc methods adopted by any person or department, deter finance in its role of safeguarding the company’s assets and creating value. And the inevitable and the notorious “delay” occurs, for in finance like in surgery, callousness is not an option.