Paula Downey Jones, CFO, SmartDebit
Business partnering has been a buzz word in the Finance profession for many years now, but what does it mean in practice for SMEs and how can you transform a Finance function from a back-office role to a genuine business partner?
The role of Finance is evolving. Although the foundations of transactional bookkeeping will always be required, today’s Finance leaders and their teams have a much larger part to play in shaping strategy and improving commercial decision making. Achieving this by working alongside other departments and teams is often referred to as ‘business partnering’.
From my own experience as CFO of a growing Fintech company, financial business partnering has been critical in driving profitable growth, and over the last five years we have moved the Finance function from a bookkeeping service to a strategic business partner. I often see the test of how we are viewed by the rest of the business as how the business refers to us. If we are referred to as an Accounts team and advised about decisions after the event then we are not contributing enough to the strategic focus of the company. Success is being invited to comment and contribute to all major decisions before they happen. I also prefer us to be referred to as a Finance team as this label comes with recognition of the level we operate at.
When transforming a Finance function it is important not to lose sight of the basic operations. Invoicing and credit control, paying suppliers on time, paying employees on time and good cash flow management must work well and accurately, as without this we simply do not have credibility and cracks will appear in the financial management. Robust financial controls that are communicated and understood across the whole organisation are also essential for ensuring one of the key roles of Finance – that of safeguarding the assets – is achieved. The key to implementing and maintaining successful financial controls is gaining the buy-in from all areas of the business. To achieve this, a deep understanding of why the controls are needed is required to avoid simply being seen as a layer of bureaucracy. The media is littered with examples of what can go wrong when financial controls don’t work, and sharing these examples can help communicate the necessity for them, along with the very important and visible buy-in from top management.
Once the fundamental operations are in place, it is the role of Finance to provide a fit-for-purpose accounting system that, alongside the financial controls discussed above, ensures that data is accurate, timely and relevant. This data is the foundation needed to provide support to make good decisions, and once there is confidence in the accuracy and accessibility of financial data, the real business partnering can begin.
The first step towards business partnering is to produce concise, relevant and timely management accounts. In order to ensure these accounts are seen as valuable, and read on a regular basis, they should balance the need for transparency with keeping the information to a minimum so not to overburden the reader. Consider who the audience are and what their focus is, or should be. The three financial statements (Profit and Loss Account, Balance Sheet and Cashflow) are good for transparency and financial control, so these statements should be shared with the Board of Directors. However, it is also worth considering a one page dashboard showing key metrics and summaries which is dynamic and can be used as a quick snapshot. This gives the Finance team the opportunity to highlight key issues that are pertinent at that time.
Once the routine operations, controls and management reporting are in place, analysis and targeted reviews can start to add value. The management accounts are a great starting place to identify areas for improvement and can be used to instigate more in-depth reviews. For example, the management accounts could identify a declining profit margin in a particular area that could then prompt further reviews which, in turn, could drive operational decisions or changes to how a product is being managed.
The central role that Finance has within an organisation puts it in a unique position to identify potential, or real, issues that may not be visible to others in the business and this is where Finance can really start to add value. It is the demonstration of value-add here that can encourage the rest of the business to involve Finance in key decisions, which in turn has an improvement on the outcome. It’s a bit of a ‘chicken and egg’ situation, in that often we find we have to prove our worth before being invited in to show our worth more regularly, and this is particularly true when we are working in organisations which have only seen Finance as a back office function until now.
Financial education is hugely important for everyone in the organisation to ensure buy-in at all levels. In practical terms, this means supporting managers who are new to financial information to be able to fully understand what they are seeing, and how they can then interpret and challenge that information to ensure the best decisions are being made. It also means communicating to new starters about Finance policies such as the Expense policy or the Purchase to Pay policy. It maybe helpful for Finance to have a slot on induction programmes to guide new starters through this, and also to share the role that Finance has in creating value-add within the company at the very first opportunity so that the team is remembered when it counts.
The final piece of the business partnering jigsaw is Finance driving the development of the organisation’s strategy. There is a natural flow from the annual budgeting towards strategic evolution and, as the co-ordinators of the annual budget, Finance are in a key position to also help drive the development of the company’s strategy. As we all know, the budget should be the outcome of the organisation’s strategic planning cycle, but very often it works the other way round with budgets written that can then dictate the plans due to budget constraints. This piece of the Finance functional jigsaw sits at the top of the chain, as for some organisations with a limited experience of Finance value-add, having Finance drive the development of strategy can be hard to accept. However, as Finance evolves within an organisation and it is seen as a value-adding function it becomes easier to facilitate this strategy development. A one day meeting with the whole leadership team at the beginning of the budgeting season can focus minds and either result in tweaking of the current strategy or a complete overhaul. This pre-budgeting session is important to allow the leadership team to agree and align themselves on the strategy which will then flow down throughout the organisation, and from this the budget will follow.
By working with other functions, supporting each other and driving strategy, there will be many resulting benefits. Quite often, there will be far greater empathy and lower levels of frustration. The increased level of involvement by Finance across the organisation adds interest and value, and Finance teams have far greater awareness of what is happening across the organisation which means further value can be added, and so the cycle continues perpetually. Being able to predict more and be increasingly proactive in problem solving, rather than being reactive and fighting fires, is obviously hugely satisfying. Training and mentoring colleagues within a Finance team or in other departments are massively rewarding, and ultimately help the whole organisation to deliver higher value activities, while also helping the development of both the trainer and trainee.
Paula Downey Jones FCMA is the CFO of SmartDebit, the UK’s leading Direct Debit service provider. She has over 25 years’ experience across a wide range of business scenarios including grass roots start up to finance restructuring/rescue to blue chip global expansion.
Research exposes the £68.8 billion opportunity for UK retailers
- Modelling shows increasing the proportion of online sales by 5 percentage points would have significantly boosted retailers’ revenues during the first lockdown
- 72% of Brits want retailers who started an online service during the pandemic to continue operating it full time
New data released today by global payments platform Adyen, outlines the economic gains that could be accessed by getting more UK retailers online.
Economic modelling conducted by Cebr for Adyen indicates that if the retail sector increased the proportion of turnover stemming from online channels by 5 percentage points, £68.8 billion would have been added to the economy during the first lockdown.
While retail turnover stemming from online sales has grown significantly during 2020 – from 19% to 28%, there is still considerable room for growth.
Myles Dawson, UK Managing Director of Adyen comments: “The UK retail sector is facing an incredibly tough quarter, so creating the link between physical stores and online channels is more important than ever. With the festive period approaching and many shoppers unable, or uncomfortable leaving their homes, establishing and maintaining a positive online experience is a billion-pound opportunity for retailers.”
The research of 2,000 UK consumers found that 31% are less likely to shop in physical stores now because of positive experiences shopping online during the pandemic. Furthermore, 72% of these consumers want retailers who started an online service during the pandemic to continue operating it in the long term.
However, making the process of shopping online as frictionless as possible will be key to unlocking the opportunity presented by online channels. 70% of Brits say that when shopping online, the ease of use is as important as the quality of the product, and 72% won’t shop with a retailer whose website or app is difficult to navigate.
Myles Dawson concludes: “Many retailers did amazing things during the pandemic in terms of adapting and creating new experiences – it’s a testimony to their agility that 57% of Brits said their expectations of the retail sector has improved during the pandemic. The challenge now is to consistently meet these expectations going forward. With local lockdowns in place, online channels will be key to serving many consumers in the short term. However, retailers need to see the shift to unified commerce as a long-term trend. The sooner they can demonstrate agility and jump on board, the longer they’ll reap the rewards.”
2 Research conducted by Opinium Research LLP
Want to serve your customers better? An effective online strategy is what financial institutions need
By Anna Willems, Marketing Director, Mention
A strong online presence matters.
Having a strong online presence, that involves social media is now a crucial part of all business strategies. Whether they are retail brands, sports teams, libraries or even restaurants, most companies are investing more and more in developing their digital brand image and online presence – financial institutions are no exception.
When it comes to market trends and innovation, financial institutions are first on the line. After all, we — people and companies — trust them to manage our money to the best of their abilities. And even more so than any other market, we demand secure, trustworthy, fast and user-friendly services.
Reaching such high expectations is not a given. To this point, banks and other financial institutions have no other choice but to have a perfect understanding of their market, their audience, and their needs. What they need to get there is a fail-proof online strategy.
Gaining a deep understanding of your market
One of the best things about using social media to learn about your audience is that people give unsolicited opinions. They speak their mind and share their thoughts candidly.
This is the key to help any business to learn about themselves. They get to analyze their audience’s challenges and aspirations without having to ask them directly or serve them time-consuming surveys and polls.
UK-based Asto, a company that is part of the Santander Group, is committed to helping small businesses have access to financial and non-financial tools. Asto was looking for something that could help them discover what their target audience was talking about and find opportunities to add to the conversation. Mention enabled Asto to keep on top of reviews and customer comments, which has helped us provide a better service for our customers.
Which platform suits your offering the best?
There’s no point choosing to create campaigns on TikTok if your customers don’t use it – you need to think about who they are and work back from there.
You do this by automating the process using a social listening tool. A social listening tool will help you to view your market as a whole and identify where the key conversations are happening — and, therefore, where you should be. What’s more, you will never miss any relevant mention of your institutions, products, services, or competitors.
Handling a crisis
Financial institutions need to watch carefully for negative press – social media is the first place people will go to if they feel they’re not getting the service they need. In theory, rogue employees or unhappy clients can post anything they like online to try and hurt your brand. And if their messages gain traction, you’ve gone from one person saying bad things, to thousands.
That’s why listening needs to be part of any crisis management plan. Now, sometimes, there are crises you cannot prevent. And those usually hit pretty hard.
Power of influencers
For an influencer marketing campaign to work for your financial institution, partnering with nano content creators may well be the best way to go. They’re ability to play a part in how they shape your brand story can make a huge difference when it comes to engagement and reason to believe in your service.
Many financial institutions are already leveraging influencer marketing. It’s an efficient strategy to: Build trust and gain credibility, reach out to new audiences and share engaging stories.
The online review conundrum
94% of consumers check online reviews before they decide to buy something or subscribe to a service. They need what we call social proof. It says that the more people say they use your service, the more it will look like a good service. In short, you need to show how happy people are using your service. But not all online reviews are positive.
Having said that, we find that financial institutions shouldn’t ignore negative reviews. Instead, embrace them as an opportunity to rebuild trust in your brand. Less delicately put, take the bull by the horns and turn them to your advantage. Always respond to relevant complaints (and as fast as possible). Take responsibility for what happened. Be helpful.
And ignore trolls.
Learn from the competition
Over the last two decades, a marketer’s daily life has greatly evolved. Most importantly, we now can measure everything we do, including the consequences of our actions on our business. Having said that, you can’t evaluate how well you’re doing without comparing against
Truth is that 77% of businesses rely on listening to keep an eye on their competitors. What this means is that 4 in 5 of your direct competitors are likely watching each and every single step you take. And you should do the same.
Setting the trend
From staying up to date with the latest industry trends and innovations, to keeping an eye on the competitors’ newest services, to being the first to know of potential brand crises – tracking relevant online conversations lets marketing and communication professionals working for financial institutions to stay one step ahead in an industry that is leading change and innovation.
Why the Boom is Long Overdue (and Here to Stay)
By Roger James Hamilton, CEO, Genius Group
Virtually every aspect of our lives has been taken over by tech, so why is it that our schools, that are educating the business leaders of tomorrow, are still operating in much the same format as they did 100 years ago?
The global pandemic put digital learning in the spotlight and an Edtech boom has ensued, with companies like Coursera, Quizlet and Udemy seeing unicorn style growth. And the market is not slowing down. The education technology (Edtech) boom will continue.
Resilience and Growth
Unicorns are defined by rapid growth. Traditionally, these companies are not overly concerned with early profitability, long-term sustainability or value creation as much as with putting their competitors out of business.
But something different is going on in the Edtech market. The unicorn has lost its appeal. When learning platform Quizlet achieved unicorn status this year, CEO Matthew Glotzbach was keen to play down the moniker reserved for start-ups valued at $1 billion or more, preferring to liken his company to a camel.
Unlike unicorns, camels are real, hardworking beasts. Respected for their adaptability to various climates, resilience, and abilities to survive for long periods without sustenance. These are all traits much better suited to weather the economic storms created by the pandemic.
Despite their considerable abilities to adapt to challenging conditions, the climate is looking particularly sunny for camels within the Edtech market. In fact, all creatures great and small have the potential to capitalise on unprecedented growth in this sector.
The nature of education makes it a traditionally slow-moving area, which renders it unattractive to some investors. Yet, the coronavirus outbreak and subsequent surge in remote learning this year triggered a flurry of uptake in e-learning platforms.
We’ve seen the adoption rate for new technologies be accelerated by events like this before. For example, the SARS crisis of 2003 contributed to the boom in China’s ecommerce industry, as quarantines lead consumers to shop online. Of course, this market trend did not slow down once quarantine restrictions were lifted. Ever since, global online sales have risen exponentially. The same is set to happen in the Edtech market.
Providing a Solution
As with ecommerce in 2003, the demand for Edtech in 2020 was already there. It has been there for years. For the past decade at least, there has been a notable need in recruitment for qualified talent in data science, coding and digital. Edtech can bridge the skills gap, not only within formal education but also for adult learners upskilling and reskilling for today’s digital world.
Similarly, the financial crash of 2008 had the effect of fast-tracking the rise of the gig economy, requiring millions more to learn entrepreneurial skills. The idea of a job for life is now a distant memory. The Edtech sector can deliver the tools to equip students of all ages with the skills necessary for creating their own opportunities, as well as exchanging knowledge and collaborating in a digital economy.
Rising unemployment, as well as competition for jobs and government furlough schemes has seen interest in digital learning courses for adults also soar during the past few months. Figures show that the corporate e-learning market is set to increase by as much as $3.09 billion between 2020 and 2024.
The Edtech boom kickstarted by the pandemic is just the beginning in a paradigm shift in how we view education and work.
Over the next 10 years, with the rise of artificial intelligence, automated technology, and augmented reality, traditional, manual and customer service based roles will diminish and there will be less need for a large workforce when computers and machines can do the role equally well.
The need for a truly 21st century education system that reflects the needs of the job market is long overdue. Edtech companies are offering solutions to many of these issues that have troubled the economy for the past decade or more.
A Different Animal
Enter the zebra (back to our animal analogies). These types of Edtech businesses will be the ones to watch within the sector. With zebra companies, there’s a sense of community and collaboration, rather than competition. They understand that there’s room for more than one superstar in a market. Zebras are herd animals after all. The zebra believes that competition is healthy for everyone involved—something to watch and use for motivation and growth. It closely observes consumer trends and continually strives to solve new and developing problems for those consumers.
For zebra companies, profit margin is vital because it is necessary for steady growth and sustainability. Revenues hover between $5M and $50M, it serves customers within a specific niche, requires annual growth capital of $100K to $1M, and generally has more than four streams of revenue.
Zebras are both black with white stripes and white with black stripes – they have a fluidity in their approach and are camouflaged at the same time. This creates a double bottom line: Zebras want to conduct real business, by solving a pressing problem in a sustainable way, whilst reacting to contemporary challenges. This too could be said of the Edtech industry as a whole.
Research exposes the £68.8 billion opportunity for UK retailers
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