A new survey by KPMG reveals a major shift in the way companies run their financial risk management processes. Responses from over 440 chief financial officers and other senior finance executives indicate the prominence of more integrated finance strategies than ever before.
The single most important factor in successful financial management, according to 44% of respondents, is talent management. Yet managing staff was also deemed the most difficult process to improve. More than half of CFOs are looking to refine their people-related procedures of retaining staff and increasing technical knowledge across the company.
These are changes that start from the top down with well-trained managers and the fostering of a supportive, challenging environment in which growth and skill improvement is within reach of every employee.
Several companies surveyed already reported improvements in these areas. 49% of senior finance executives are confident their communication with the board of directors is effective, compared to just 40% four years ago. There was also a 10% increase in CFOs feeling capable of contributing to the company’s long-term business strategy, or at least recognising the value of such alignment. Half the respondents believe that supporting business strategy will give the finance team greater opportunity to add value.
Commenting on the patterns of the survey, KPMG’s global head of financial management Martyn van Wensveen said the most forward-thinking finance teams integrated business strategy, planning and control procedures, management reporting systems and analytical tools in their plans. In many cases, this means investing in data collection services that can generate insightful reports with clear action points.
While finance executives were more reserved about spending money on efficiency measures in 2011, 25% more respondents now say their organisations are willing to invest in finance function improvements. High-performing companies – defined as those with more than 10% growth in revenue in the past three years – were most willing to spend money. 37% of high performers actively plan to invest more in enterprise resource planning tools and business analytic techniques that can improve forecasts, predict risk and highlight trends and opportunities.
For SMEs looking to enjoy similar growth, perhaps the first step should be regular meetings between finance and management teams.