Growing businesses tend to rely on the financial advice of financial leaders, so what happens when they are unable to keep up with the fast-paced business world?
A recent study by the Association of Chartered Certified Accountants (ACCA) suggests that finance leaders need to become more intimate with the inner workings of day-to-day business in order to avoid becoming static.
Finance leaders need to act like business partners
The paper published by the ACCA titled Building the finance function in growing businesses, says that finance chiefs must start acting like business partners that have a clear understanding of how businesses carry out their day-to-day work. This is in order to provide businesses with as much accurate information as possible, allowing them to make informed decisions and gauge the impact of those decisions.
As part of the paper, the SME Global Forum also says that much of the discussion regarding business growth assumes that growth is a potential option for businesses, when the reality is somewhat different.
Senior policy advisor at ACCA, Charlotte Chung, said: “There is a lot that separates the finance function of a static business from one geared for growth. The SME Global Forum has looked at what makes a company grow in detail and a key starting point is the notion that growth is not something businesses can dip in and out of at will; it requires constant management and analysis using timely and accurate data.
“Without this, rapid growth can be scuppered by what might seem to be very simple risks, such as overlooking loyal customers.
“The underlying theme in unlocking a business so that it is fertile for growth is the pivotal role of the finance function. Finance leaders must start acting as business partners – getting their hands dirty and being more intimate with the day-to-day workings of the business.
Finance leaders should be information hun for SMEs
“CFOs and FDs of growing businesses must become the central information hub for the business – consolidating, synthesising and disseminating information to where it is required, be it to meet new regulatory and compliance targets, scan their environment for funding or business opportunities or make the case for new activities such as exporting.”
The ACCA Global SME Forum makes key recommendations for businesses on developing an environmental conductive to growth. Recommendation in the Building the finance function in growing businesses, Include:
Chung adds: “Across the world, there is a major policy focus on supporting SMEs, but merely encouraging more SMEs to form will not deliver the desired outcomes; enterprise policies have to be accompanied by efforts to understand and support the sustainability and growth of business.
“Growth has many challenges; and a large portion of young SMEs fail to grow because of a lack of appropriate and timely support, including in-house resources.
“ACCA’s own research, Driving SME growth through an evolving finance function, shows the importance of an evolving finance function and its symbiotic relationship with the growth of a business, from its informal setting-up of processes and systems onwards.”
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