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Business|Finances
How is the Role of Finance Professionals Changing With Times?
In the wake of unprecedented changes due to sudden eruption of COVID-19 pandemic, disruptions in technology, diverse workforce and other factors, the role of the finance function is expanding. It is far more than crunching the numbers. This article discusses the change in the role of the finance function, the expectations from it with the changing times, and the factors causing such changes.
Those days are over when the role and skills of finance professionals are limited to bookkeeping and financial reporting. There are enormous changes in the finance function. Now, the CFO is expected to be involved in strategic decision making and help the CEO achieve the objectives of the organization.As an example, since Dhivya Suryadevara became CFO in General Motors and partnered with Mary Barra, CEO in General Motors, she has played an instrumental role in advising Mary and translating her strategies into realities. She has played an integral role in some key deals GM has made over the past few years which includes $2.25 billion investment in GM Cruise by Japanese tech giant SoftBank Group Corp, as mentioned by GM in a statement (Economic Times).
Traditional FinanceNext-Gen FinanceOutputFinancial ReportingDecision MakingRoleCustodianAnalystWorkMundaneVariedTechnology adoptionTraditionalSavvyOpportunitiesLimitedUnlocked
If compared to earlier times, the finance division used to execute only the routine operational activities and was limited to reporting. Now, it is expected to advise the management and help them make important decisions. The analysts have to keep themselves updated about the innovations in the field.For instance, the COSO (Committee of Sponsoring Organizations) 2004 version focused on how the risk management of each organization was implemented at the entity level, while the revised 2017 version was more focused on the fundamental activities that organizations should engage in as part of ERM (Enterprise Risk Management) practice.The updated version highlights the importance of considering risk in both the strategy-setting process and in driving performance (PWC report). The analysts are expected to be well aware of such latest updates.
In earlier times, the role of the finance division was of a custodian, but it has changed with time. Presently, the finance division is expected to take more responsibilities and play the role of an analyst. It needs to analyze the actual results and compare the same with the projections and forecasts.Now, the role demands to multi-task, provide the outcome to research that is rational and well-timed. The migration of role has intensified in the recent past. At present, the analytical side of finance is emphasized. A financial analyst is expected to align himself with the company’s targets, provide inputs to minimize costs and enhance financial performance.
The traditional finance work was monotonous, and most of the time resources were engaged in tick and tie activities. But now it is more on the analytical side. The role of FP&A (Financial Planning and Analysis) analysts is becoming more important. They are result-oriented, problem solvers and play the role of evaluating investment opportunities which can maximize the profits, identifying the products which are the key contributors in profit margin and examining the cost-effectiveness of all the divisions of the company.
Compared with managing financial tasks manually, handling accounting and finance tasks in the computerized environment has numerous advantages. Using technology such as Tally.ERP 9, the work can be performed faster and promptly. Financial reports can be generated accurately and instantly. It also reduces the potential of human errors. As a result, the deliverable is more reliable, effective and assist in decision making.
Particularly at present and in future, there are enormous opportunities in the field of finance. Introduction of new laws e.g. Sarbanes Oxley Act, Foreign Corrupt Practices Act, Goods and Services Tax Act etc. has created enormous opportunities for finance professionals. There are diverse career options available in the field. Hard work and willingness to learn can help reach your apex.
In the past, accountants and bookkeeping professionals use pen, ledger and a desk calculator. Even small errors while computing data could cause serious trouble such as tax penalties and board disciplines, which could also terribly harm the professional reputation.They have specialized processing tools and software that aid in computing data. Use of these tools and software has reduced the potential errors to a large extent. Now, the accounting and audit professions have also gradually been started to get automated, so this is the time to seriously think about the technologies.Finance professionals are expected to learn to keep themselves up-to-date as the work they are doing today is getting computerized. They should keep themselves abreast with the latest tools and techniques viz, Analytics, Machine Learning, Robotics, Blockchain and Artificial Learning.
The world is becoming a Global Village. If anything happens in one part of the world, it has its consequences everywhere. Financial globalization has several benefits including FDIs (Foreign Direct Investments), Technological Innovation, Economies of Scale. As a result, companies can avail the best and most efficient technologies, services and material at the most competitive price and hence optimize the cost. It stimulates the development of the financial sector. Financial markets generate financial alternatives for borrowers and investors.
Working in organizations has started to change. Diversity has confirmed to boost innovation and financial results. Today’s leaders know that their companies derive multiple advantages from hiring, developing and retaining a diverse workforce. The members of different teams see things differently and generate innovative ideas.Workplace diversity enhances creativity as employees from diverse backgrounds brings unique and diverse solutions. Also, diversity helps to enhance the goodwill of the organization because the workforce reflects the footprints where the entity is located.
There is a plethora of regulation changes in the last couple of decades across the world. It has its threats as well as opportunities. When a new Act is introduced, it supersedes the older Act and professionals having experience in the older Act had to build their understanding about the new laws from the very beginning. On the opportunities side, fresh roles, new jobs are created that can be served from anywhere.For instance, the introduction of the Sarbanes Oxley Act, 2002 has provided numerous opportunities across the world in the field of Internal Audit, Risk Management, Governance and Compliances.
In essence, the role of finance functions is getting wider and difficult, but exciting. CFOs are expected to have broader experience with flexibility. During changing times, they will have new challenges, and with the right attitude, they can surely add more value to the business.
