The finance function of a fast-growing company must be able to overcome a whole range of challenges:
- It must be able to support entrepreneurial decision-making. This requires a strategic financial management system that has various control tools at its disposal that it can use as appropriate to the situation.
- It must also be able to provide a set of figures that meets the increased requirements for budgeting, cash flow planning and liquidity management.
- Finally, the finance department must be able to create and maintain confidence among investors. Regular reporting based on the figures is essential for this, which explains the latter and provides it with formulated action plans.
Scale-up companies can no longer leave the finance function to an external tax consultant who takes care of the accounting - however well the collaboration may have worked in the past. Instead, they need to set up a functioning finance department. But how can such a project be implemented?
I advise my customers to proceed as follows:
1. Determine the current status of your finance department
Analysis of the current status should form the start of all considerations. This typically focuses on the following questions:
- Is your accounting handled by a tax advisor and - if so - how is the collaboration structured?
- Do you already have some financial functions in the company that you can build on?
- What does your IT landscape look like? Do your systems offer a financial solution that you could use?
Depending on the maturity of your organization, you may want to ask different questions or add to them. In any case, you should take the analysis far enough to give further planning a clear direction.
2. Create an organizational chart of the future finance function.
When planning the organizational structure of the future finance function, these three questions are particularly important:
- Which organizational units do you want to set up?
- How do you want to distribute tasks in the future?
- How should communication between these units take place?
Clarifying these questions is particularly importantin view of the skills shortage . Because not all functions and roles that might be necessary can be filled with sufficiently qualified personnel. The digitalization of central processes offers a way out: with clever planning of the organizational structure, the right people and the automation of the corresponding processes can compensate for the shortage. But this requires well thought-out and forward-looking planning of the future finance area.
3. Implement efficient interfaces to other functions.
Unclearly defined interfaces between the finance function and other parts of the company such as purchasing or sales lead to problems and additional work. Therefore, make sure that the relevant processes are designed as end-to-end processes and are clearly described. This can lead to changes in the company. After all, it may well be that the existing structures stand in the way of better interfaces. But you should not simply accept this: Processes should not be adapted to structures, but vice versa.
In any case, you should make the functions affected by changes stakeholders and develop the processes together with them.
4. Fill your most important functions top-down.
There is also a shortage of specialists in finance. Filling vacancies and finding employees is therefore not easy. That's why it's best to take a top-down approach when selecting staff and fill the most important roles first. But this will usually not be the CFO, because the CFO usually takes the longest to fill. Therefore, start with the next management level right away. Which function and role you should focus on first depends on the situation your company is currently in.
Consider carefully which skills you need first in the current situation: What skills do you need to build and what roles do you need to have so that the finance team can shape the process itself.
5. Always keep digitalization in mind when filling positions.
Your long-term goal should be "Finance in real time", which amounts to a good integration of goods flow and value flow - and represents a major change for many companies. Implementing this change is also the responsibility of your ERP provider.
It also affects the structure of the finance department. When filling vacancies, you should always keep digitalization in mind. The candidates you speak to should already have practical experience with digital projects. The decisive factor here is the mindset.
6. Communicate your goals openly and clearly.
Your plans will inevitably have an impact on various positions in the company - especially if you already have individual finance functions in the company. This is another reason why it is important to openly and clearly communicate the goals associated with setting up the finance department at the earliest possible stage of planning and to involve all those affected in the process in good time. In particular, you should discuss with your tax advisor at an early stage how you can bring accounting in-house. The question here is not "if", but "when".
After all, you have at least one strong ally on the way to your goal. This is your auditor.
7. Put together an experienced finance team.
Transformation needs experienced management that makes resilient decisions: If you manage to build an intelligent finance team that not only brings experience to the table, but also works together, you have the basis for a successful transformation.
On the way there, you can fill individual roles on a temporary basis until you have found suitable managers and employees. In some cases, it may be worthwhile bringing in external sparring partners to discuss certain projects.
