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Finance 2020: Designing a Finance function to meet new demands

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CFOs in all industries are under pressure to provide insights to help boards and leadership teams make better decisions. How do they—and their Finance teams—need to change to meet rising expectations? What will the impact be on the Finance organization and its information, systems, processes and controls? Finance 2020 explores possible futures for operational, business and specialized finance.

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Finance 2020: Designing a Finance function to meet new demands

  1. 1. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020
  2. 2. CFOs are under increasing pressure to provide strategic insights that enable leadership and boards to make better, more informed decisions. But the traditional finance function isn’t well-equipped to deliver this. Companies need to rethink and reimagine their Finance function if it’s to deliver what businesses need in the years to come. What will the future of Finance look like? RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020
  3. 3. Many forces have the potential to transform Finance Analytics Other forces Talent Cloud computing Mobile Business process management FINANCE RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020
  4. 4. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 How we see the future of Finance How Finance delivers value W hat enables Finan ce FINANCE STRATEGY BUSINESS FINANCE ORGANIZATION & PEOPLE PROCESS & POLICY INFORMATION & SYSTEMS OPERATIONAL FINANCE SPECIALIZED FINANCE
  5. 5. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 Rise of the finance factory • Transactional finances moved to centralized shared services “factories” • Cloud-based apps and mobile devices are used to perform transactions, while highly standardized, simplified, workflow-enabled business processes handle the rest OPERATIONAL FINANCE
  6. 6. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 OPERATIONAL FINANCE(cont'd) • Continuous close process, thanks to visual close management tools, integrated sub-ledgers, journal workflows, reconciliation tools and automated consolidation, FX, allocation and intercompany transfers • Finance teams simulate pre-close results to support continuous MD&A development • Automated controls, intelligent process monitoring keep watch over performance and minimize rework
  7. 7. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 Analytics drives better insights, forecasts, decisions • Investments in data governance, management and analytics prove their value: Finance routinely delivers data-driven insights that improve business decision-making BUSINESS FINANCE
  8. 8. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 BUSINESS FINANCE(cont'd) • Integrated planning models and sophisticated analytics tools enable rapid scenario planning, cost modelling, risk simulation • Finance can quickly model impact of changes in key business inputs (e.g., commodity prices, energy costs) to determine business impact.
  9. 9. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 Firms invest in building their own technical experts • Tax, risk, treasury and other specialized finance processes housed in virtual centres of excellence – though the specialists themselves are embedded in the business SPECIALIZED FINANCE
  10. 10. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 • Specialists’ performance measured by the value they help the business create – or the risks they help contain or avoid • Companies invest in training and developing their finance specialists, ensuring they have the training, technical development and job rotations needed to learn the business inside and out. SPECIALIZED FINANCE(cont'd)
  11. 11. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 SPECIALIZED FINANCE(cont'd) “Czars” take centre stage As companies build up their specialized finance resources, new roles emerge: • The cash czar brings an unmatched understanding of how cash flows into, through and out of the business. Responsible for planning, forecasting and managing cash, working capital and liquidity, the cash czars make the tough decisions when needed.
  12. 12. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 • The risk czar must understand the many risks that could force the company to rethink its strategy. The czar keeps a keen eye on currency, FX, competitive, demographic, environmental, regulatory risks and quickly determines their impact on the business. • The chief economist – often the CFO themselves – scans the landscape to monitor macroeconomic events and interpret what they could mean to the company. SPECIALIZED FINANCE(cont'd)
  13. 13. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 Finance seeks new skill-sets • Finance’s talent needs have changed. Knowing the business matters as much as knowing accounting rules – if not more. • New roles become increasingly important, as Finance brings in business process consultants, business analysts and specialized technical experts. ORGANIZATION AND PEOPLE
  14. 14. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 • Scarce talent means firms focus on training and developing the people they need in-house. Rotations through the business units become the norm in building a new generation of Finance leaders. • Soft skills become more and more important. Companies prize those with outstanding consulting, negotiation and influencing skills – as well as those who can turn data-driven insights into actionable advice. ORGANIZATION AND PEOPLE(cont'd)
  15. 15. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 Embracing mobile and the cloud • Integrated ERP systems will still be the backbone of companies’ financial systems – but mobile devices and cloud computing will transform everything else. • Cloud-based apps provide companies with highly scalable, rapidly deployable and continually updated services. INFORMATION AND SYSTEMS
  16. 16. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 INFORMATION AND SYSTEMS(cont'd) • Ubiquitous mobile devices seamlessly integrate with finance systems through simplified, single-purpose, self-serve apps for common transactions. Automated workflows streamline approvals and other processes. • Highly graphic visualization tools become a common way of interacting with finance data, rendering the humble spreadsheet obsolete. • Managers and decision-makers receive alerts on project statuses and budget variances automatically.
  17. 17. cont'd RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 Continual, automated vigilance • Investments in workflows, process automation and analytics greatly enhances companies’ ability to monitor controls, manage risk and improve governance overall. • Policies and procedures are managed centrally, with new regulations, controls, and technical conventions pushed out quickly and easily via the cloud. PROCESS AND POLICIES
  18. 18. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 • In finance factories, companies deploy new process management and process analytics to monitor process automation, service levels, activity, event durations, manual touch rates and first-time-right benchmarks. • Governance, risk and controls solutions now feature intelligent monitoring tools and compliance alerts. These solutions continuously monitor controls and provide proactive detection and reporting of exceptions, defects and compliance or policy breaches. PROCESS AND POLICIES(cont'd)PROCESS AND POLICIES(cont'd)
  19. 19. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 CFOs need to move quickly to jumpstart evolution of their finance team
  20. 20. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 Start with a vision. Where do you want Finance to be in the next 3-5 years? What do you want Finance to deliver? How do you want Finance to work with the rest of the business? What are the gaps between the current and future state? NEXT STEPS 1
  21. 21. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 NEXT STEPS Break it down. Take that vision and consider what it means in terms of operational finance, business finance, strategic finance, organization and people, information and systems, and policies and processes. Here too, look at the current state and consider what needs to happen to reach the future state. 2
  22. 22. RETHINKING THE ROLE AND DESIGN OF THE FINANCE FUNCTIONFINANCE2020 NEXT STEPS Create a blueprint. Now, identify the investments you’ll need to make to bring about the future state. Think about the policies and processes that need to change. The organizational structures that need to be created or taken apart. Consider your talent mix to ensure you have the right people – and the development programs to help them fulfill Finance’s new role. 3
  23. 23. Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services. Deloitte LLP, an Ontario limited liability partnership, is the Canadian member firm of Deloitte Touche Tohmatsu Limited. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. © Deloitte LLP and affiliated entities.

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