“A common theme among successful companies is that the CFO is empowered to work cross-functionally and become the central figure in the organization. To achieve this, the CFO must be supported and work in close collaboration with a strategic FP&A team, which is focused on creating a path to guide the company towards its future goals, rather than discussing its past.”
Jorge LLuch COO at Abacum
The finance department continues to experience rapid change as the role of finance, FP&A and the CFO has changed over the last several years. Today, the role is much more focused on being a strategic business partner and driving value for the business.
As finance and FP&A looks forward to 2024 a number of key priorities have been identified:
- M&A Activity – Many companies are exploring M&A Activity as a way to grow especially when many acquisitions in the private market have lower valuations.
- Implementation of AI within Finance – Finance leaders are continuing to explore how they can utilize AI to automate processes and gain greater insights through technology.
- Renewed emphasis on automation – In addition to AI, there are more ways than ever to leverage technology for managing the sheer amount of data companies are creating. Data only continues to grow while old technology and manual processes are struggling to keep up.
- Renewed emphasis on Strategic Business Partnering
- Stronger relationship between CFOs and other C-Level Peers.
The above list of priorities was developed after reviewing several articles and what finance leaders shared with the Association of Finance Professionals (AFP). As I review the list I see the key to reaching new heights in 2024 primarily falls into two areas:
- Technology – Leverage technology to transform the finance department to be more automated and efficient with its process.
- Strategic Business Partnering – Finance must be a strategic business partner to support M&A Activity, to strengthen relationships with other departments and to truly move the business forward.
Given the importance of business partnering the rest of the article will focus on what Business Partnering entails and how finance can be a better business partner with the rest of the organisation.
What is Business Partnering
“Finance has to be a partner to the business with the help of data. It’s all about questioning whether the decisions made by the company are making sense both internally and externally.”
Gerardo Adame, CFO Verdant Robotics
Finance Business Partnership is what CEOs and business leaders want from their finance team. It’s not enough to just be good with Excel or numbers – it requires working closely with the business and being involved in strategic decision-making.
I once came into a business that didn’t like finance, and it was a long, hard road to change how the business viewed finance. I knew we had a lot of work when one business leader told me this was their first company where they liked Legal more than Finance.
After a few years of implementing many of the strategies we will discuss, I had gained the trust of the business and was viewed as a true Finance Business Partner. One might wonder, how you could be sure the business trusted you?
- The General Manager once told me, I not only reported on the P&L, but I helped shape the P&L. Then, he told the new finance hire he wanted her help shaping and influencing the P&L in a positive manner.
- The product and sales team asked for my thoughts on how & why we should price the product. Not only had they asked for my thoughts as a finance professional, but because they valued my knowledge of the business.
The best way to tell if you are valued as a Finance Business Partner is by asking yourself, do my business partners want me in the room? Do they value my voice when making important decisions?
If the answer is yes, then you are fulfilling the role of Business Partner – and not just being an old-fashion finance professional.
Trust is at the core of any great relationship
“Trust is the glue of life. It’s the most essential ingredient in effective communication. It’s the foundational principle that holds all relationships.”
Stephen R Covey, Author 7 Habits of Highly Effective People
Building relationships with the business starts with establishing trust. In his book ‘The Speed of Trust’, Stepehn M.R. Covey shares four concepts that are necessary to establish credibility. These four concepts relate to individual finance professionals and teams as a whole: integrity; intent; capabilities; and delivering results.
- Integrity – The first concept is integrity. This is foundational to establishing trust. One must maintain high ethical standards, be transparent and forthright with the business and always be true to oneself.
- Intent – Building trust requires having the right intent. When it comes to being a business partner, this means putting the needs of the business above your own. If you want to get promoted, focus on the business needs, not your need to be promoted. Others will notice and the level of trust will increase.
- Capabilities – Individuals and teams must have the skills to execute the job. If you’re not capable of performing the job, people will come to distrust you – and they won’t come to you when they need help. It’s important to assess the capabilities of your team, including yourself, and develop plans to address any gaps.
- Deliver Results – Last but not least, you must deliver results. As finance professionals, we are responsible for helping the business be accountable for the results they deliver. This requires having tough conversations and working with the business to ensure the results we deliver are high quality.
These four concepts will help improve the level of trust between you and the business. In addition to these concepts, many specific strategies exist for becoming a better business partner. Below are ten strategies that can be implemented today to improve your ability to be a great business partner.
Strategies for becoming a better business partner
As finance professionals, the following guidance will make you a better business partner:
- Learn the business – It’s not enough to understand and be good at finance. You need to understand the business. This allows you to actively contribute to discussions about business challenges and opportunities.
a) Ask for a demo of your company’s product
b) Listen to your customer support team’s calls
c) Spend a day with your sales team watching them sell to the customer
d) Read industry trade magazines and the financial reports of competitors
e) Talk with the heads of departments and ask them about the business
- Understand needs from senior leadership’s perspective – Put yourself in the shoes of senior leadership. Ask yourself what needs they have, and what role you play in achieving them. Finance is in a unique position to see the entire company – when you see it from your leaders’ perspective, you’re better positioned to be strategic.
- Bring your positive, authentic self – Negativity breeds negativity. It is important that you be positive and be yourself. Never try to be someone else; the business needs you to be your authentic self.
- Focus on the big picture – As finance professionals, we’re always in the weeds analyzing data. It’s important that we pull ourselves out of the weeds to see the big picture.
- Be transparent with your business partners – Always be transparent with the business. Don’t hold back bad news hoping it will go away. Don’t surprise your leaders by sharing bad information with them in front of a group.
- Ask the right questions early – As finance professionals, it’s important that we work closely with the business to understand if a new initiative makes sense from a financial perspective. In order to make this evaluation, we need to ask the right questions early. Sometimes these may be tough questions – but it’s better than having a project fail.
- Act like a business owner – Treat the business you support as if they were your own business. Regularly ask yourself, how would I act if it was my money?
- Become a better data storyteller – Finance can be great at analysis, spending most of our time analyzing the data, but then failing to impact the business because the presentation is lacking.
Spend time working on your storytelling skills. Effective data storytelling requires data, visuals, and narratives. Focus on creating visuals that enhance the story and then back it up with a well thought-out narrative.
- Learn to be an influencer – Understand how your business partners think and operate. Many good ideas have died because finance was unable to influence the decision-making process. Learning how to sell your ideas is crucial, and this requires practice.
- Put your business partner’s needs first and go above and beyond – Make sure you’re focused on being a team and putting the needs of the business above your own. Finance is a support function. We have a responsibility to provide support to the business, and this starts with making life easier for our business partners. Make sure you understand the pain points they have, and when applicable, help solve them.
Successful Business Partnering is Critic
Businesses today are expected to be able to change and adapt at a pace never seen before as the level of uncertainty in the world is at an all-time high. Combine this with the fact that many investor backed (VC, PE) companies are in a critical year of “grow or die” and it becomes clear that “Finance Business Partnership” is critical to success.
Finance cannot just be behind a spreadsheet. They need to be at the front, providing the business with insights and strategic recommendations on important areas, such as:
- The Path to Profitability
- How to Accelerate Growth
- M&A Activities
- Fundraising & Cash Runway
With a strong finance team focused on being a great business partner and value-driver, companies are much more likely to deliver on key priorities in 2024 and beyond. Many studies have shown that companies that implement best-in-class finance and FP&A grow faster than their peers. At the core of best-in-class FP&A is great business partnering.
Finance – and in particular FP&A – is in a great position to help businesses deliver on their 2024 goals. However, if finance hopes to become the strategic value creators the business needs, they need to focus on becoming strategic business partners.
Learning to develop trust and implementing these 10 strategies will increase your ability to be great business partners. Being great business partners helps you deliver on the priorities of the CFO and the broader finance organization. Let’s all make 2024 the best year yet – by committing to being the best business partners we can be.