What is the role of the finance department today?

The digitalization of companies impacts the finance function. What is the role of the finance department today? The finance department is first and foremost at the heart of the company. But beyond its administrative role, it has become the key player to whom all operational departments turn thanks to its mastery of data. In a globalized world and faced with the demands of profitability, the finance function continues to evolve. To help companies transform and remain competitive, the finance department is equipping itself with ever more powerful IT tools, and is taking on the role of technology prescriber.

Historical role of the finance department: to ensure compliance with accounting and financial standards and strategic planning processes

The role of the Finance department often boils down to monitoring costs, supervising accounting and creating reports, which are not always used to draw up concrete action plans.

Among the traditional missions of the finance department are:

• Compliance with accounting and financial standards and consolidation of financial data
• Ensuring the proper execution of strategic planning processes
• Company profitability through its ability to maximize profits
• The company’s solvency, based on its ability to repay loans and debts
• Good management of the company’s cash flow
• Coordination of all the financial players involved in the company: suppliers, legal and administrative councils, tax departments…

But the role of the Finance department is not limited to keeping the company’s accounts. Its influence goes far beyond and now impacts all corporate functions.

A business partner for all company functions

Modern finance has begun its digital transformation, and now works with every department in the company: human resources, marketing and sales, information systems, purchasing and production.

Finance is now service-oriented. It works closely with other departments as a strategic partner:

• Human resources to validate the overall human resources budget and by cost center (recruitment, remuneration, training, compensation & benefits, etc.).
• Information systems management, to define the needs and resources required to optimize information and management systems, and oversee the implementation of management tools such as ERP
• Communication to guarantee the reliability of financial information
• Marketing and sales to monitor margins, profitability by product line and the marketing budget
• Trade to define and monitor credit policy and business results
• Purchasing, with centralized ordering and support in negotiating with suppliers
• General services for negotiation and cost reduction

Production to analyze acquisition and production costs But beyond the operational aspect, the finance department plays a major role in supporting management in its decision-making.

A strategic partner to CEOs and the Board of Directors

Headed by the Chief Financial Officer (CFO), the finance department supports the company’s senior management in making management decisions and presenting financial statements.

Given the vast amount of information that a company must produce and make available to the public, the Finance department selects, consolidates, analyzes and presents financial data in order to :

• Draw up the company’s budget and plan, in line with the strategic choices made by shareholders and senior management.
• Report on the financial situation to General Management, the Council, supervisory authorities and auditors, in compliance with legal requirements.
• Provide profitability and financial risk simulations as a decision-making aid for major investment projects

However, this role of supporting management bodies is not simply a matter of financial reporting.

CFOs can also provide informed insight into strategic issues to improve corporate profitability and drive shareholder value.

To this end, the Finance Department is involved in :

• Optimize the management of capital sources and their use, with a view to profitability and risk control
• Ensuring relations with fund providers, whether shareholders, banks or the financial market
• Manage strategic projects: external growth, mergers, asset disposals, change management, etc.

Is the finance department becoming a technology prescriber?

Over time, the finance department has positioned itself as a partner to all the company’s players, from operations to management, to help better analyze value creation and support growth.

Add to this the growing impact of data and its ever-increasing volume, and you’ll better understand why finance departments are pushing the implementation of financial solutions that are better adapted to their challenges and more efficient thanks to technology.

A study by Oracle and Accenture shows that CFOs have become prescribers of new technologies.

Two salient points emerge from this study:

• Cloud technologies are very useful for budgeting, planning and forecasting
• The need for sophisticated analytics, modern applications and collaborative tools using social, mobile and cloud technologies to fulfill their strategic mission

Also read about the digital transformation of finance functions

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• Electronic invoicing reform: what you need to know
• What is the role of the finance department today?
• 5 obstacles to the digital transformation of finance functions
• Improve financial processes with automation and RPA
• What changes does dematerialisation bring to the finance function?
• The finance function, an actor of change in the digital transformation of the company
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• Better managing talent to overcome the obstacles to digital transformation in the finance function
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• Advanced financial analysis to improve decision support
• Identify the business processes in the finance function that would benefit most from digitization
• Security at the heart of the company's financial transformation
• From a Finance IS to a Finance Data System
• What are the key challenges facing finance managers today?
• What are the key regulatory issues for CFOs in 2023?
• Digitization of the finance function: what should we expect in the future?
• Finance management: what technological tools are available to CFOs?