Identifying key areas where finance can provide value

The most successful finance functions add significant value throughout a company’s life cycle and make decisions that maximize shareholder value. This requires finance to increase shareholder wealth by paying dividends and growing the company’s share price. However, your company’s purpose may include responsibilities towards your customers, workforce and society. Businesses must strike a balance between risk and reward, whilst being willing to make tough choices when necessary.

Balancing short-term earnings versus long-term investment is essential towards ensuring the stability and growth of any company. Whilst it will always be tempting to take actions that boost short-term financial performance, these can often lead to long-term problems down the road and need to be balanced against your leadership duties to act as robust custodians of the business. It is essential to take a more holistic approach when making decisions during pressurized situations and there are often compromises available that allow both needs to be satisfied concurrently.

Finance should dedicate time towards addressing each component of The GrowCFO CREATING VALUE Model to benefit from any easy wins and to deliver the core elements of your business strategy:

To create value effectively, finance needs to build trusted relationships with the wider business and regularly collaborate with different teams to form bridges between each department. It must be able to generate the additional value that can only be achieved when all departments are working together harmoniously.

There are numerous opportunities across each of the CREATING VALUE themes:

• Capital: Turn your strategy into a financial plan to ensure that each department has the necessary capital allocations to deliver their strategic objectives.
• Revenue growth: There are numerous ways to help drive organic revenue growth such as reviewing pricing strategies, benchmarking products and negotiating with key customers.
• Efficiencies: Increase volume, complexity and headcount often creates inefficiencies that you can address through group-wide policies, technology and operational restructuring.
• Analysis: Share insights that would otherwise be hidden in data to help identify trends, assess risks and opportunities, and make better-informed decisions.
• Training: Provide courses, webinars and financial handbooks to non-finance teams and share your expertise regarding process excellence, data analysis and risk management.
• Implementing strategy: Document strategic objectives, assign periodic targets to each milestone, allocate tasks to business owners, and integrate data feeds to track performance.
• New markets: Assess the size, risks and opportunities associated with target markets. Set up new statutory entities, create employment contracts and negotiate with distributors.
• Growing profits: Identify profit improvement opportunities and terminate loss-making activities. Research suggests that 30 percent of each company’s business is unprofitable.
• Value chain analysis: Understand your value chain activities to identify areas where cost savings can be achieved or where additional revenue can be generated.
• Acquisitions & disposals: Identify, evaluate and deliver acquisitions or disposals. Lead the deal processes, create funding mechanisms, realize deal synergies, and carve out disposals.
• Leadership: Create a productive and positive work environment for your finance team, align the entire workforce to deliver your financial goals, and represent your business externally.
• Utilizing assets: Encourage each department to make optimal use of your organization’s assets and maximize the returns from your company’s biggest investments.
• Exit readiness: Plan early for any targeted trade sale, private equity buyout or public listing. For example, by building virtual data rooms, resolving issues and shaping the financial story.

To deliver these, finance leaders will need to free up valuable time by delegating their lower impact activities to more junior team members. Regularly spending time on creating value helps finance leaders to become a vital part of a company’s leadership team and provides huge benefits to an organization.