Editor’s note: This is a companion piece to the story 5 Ways to Upgrade Your Finance Team. 

What should you do if your CEO doesn’t like the quality of company reports? Maybe the reporting isn’t timely or lacks the right numbers. Maybe it doesn’t tell a story about the progress that has been made or how you will achieve higher revenues. 

If your lawn is green, you don’t think about it. But if your grass starts to turn brown, you start asking questions.

In any case, you have already started the prep work for upgrading the finance department. You better understand where your team fits within the five buckets: people, process, technology, culture, and governance.

Now, it’s time to start a three-part process with overlapping stages to execute the strategy. This system can take three to nine months depending on your needs.

1. Stabilization

This part of the process is mission-critical.

Stabilization is about making sure people know what they should be doing, what they need to do is being done correctly, and when these actions need to be done so reports and analysis are readily available for timely review. Let’s say you make a sale and send the invoice. Was the sale recorded in a timely manner so that various stakeholders along the process could track, forecast, and report sales, profitability, and cash flow? These actions need to be documented and verified.

The company is working hard at selling goods and/or services, however, it may be inefficient at reconciling goods or services sold with billing, accounts receivables, and cash receipts. It all may work, but having timely processes, data flow, and reports is important to manage the business. 

If your finance department is sending out invoices late due to antiquated manual processes, cash flows could bottleneck from purchase order fulfillment all the way to collections of accounts receivables. Are some of your customers still sending manual checks? Given the trend towards a hybrid working environment, if your team is only in the office once a week, incoming checks may sit uncashed for an entire week. Time is money. 

To establish an acceptable level of cash flow confidence, you must ask questions pertaining to resources, processes, and technology.

Resources

• Are the resources capable (e.g., skills, integrity, training) of assuring that the cash flows are being compiled, reconciled, and reported completely, accurately, and timely?
• Do the resources have the capacity to carry out the processes and controls?

Processes

• Is the process coordinated (e.g., information handoff points) from stakeholder to stakeholder along the operational flow so that each stakeholder is receiving what they need?
• Is the stakeholder passing data to the next stakeholder based on what that person needs compared to what the prior stakeholder believes the next needs?
• Are there information gaps that are filled with reasonable assumptions? 

Technology

• Does the current technology limit the resources and influence processes (e.g., manual, paper-based, spreadsheet-based processes), but in a way that it functions with the basic controls, reviews, and process integrity, be it not the most efficient?
• Are there technology capabilities available that would improve the process and control flow that drives efficiency, and cost-effectiveness and allows resources to perform more value-added activities?

2. Transform

Transformation, the second phase of strengthening a finance team, can begin once deficiencies and opportunities are identified while the stabilization phase is still in flight.

During this time, resources can be presented and moved toward a better team-based cross-functionally coordinated approach. Processes can be retooled to remove unnecessary steps, so they provide each stakeholder with the necessary data needed to perform their function efficiently, effectively, and timelier.

In addition, technology can be enhanced to incorporate capabilities that are available, but not being utilized. Manual processes can be automated to save time, money, and improve controls.

In an earlier example discussed in the stabilization phase, several factors could cause your company to fall behind your competition, including uncoordinated processes, a lack of innovation, and technology that does not leverage automation. 

For example, to speed up cash receipts, you could ask your customers to electronically debit your company’s bank account (e.g., ACH, wire transfer). Not only would you turn receivables into cash quicker, but there would also be less processing time for your finance and treasury teams. Embracing technology, such as utilizing AI functionality, will help the finance department with forecasting, which would yield better case management, analysis, and decision-making.

Leveraging technology may lead to an analysis of personnel and training, which are important variables in the equation.

3. Transition

The third and final stage in strengthening the finance department centers on transition. At this point, the finance operating platform is functioning, any significant deficiencies should be remediated, and the road map to the target operating model has been prepared. If you are working with a third-party partner or an in-house committee, there will come a time when oversight of the program needs to be handed over to the permanent team members so they can carry on. Then, going forward, the finance team is set up for success. 

In some cases where new skills are required, the upgraded program could include existing resources and new ones.

Retraining and, in some cases, recruiting resources that embrace change can continually enhance the process flow and controls to meet the changing business demands. Having technical skills is the minimum standard. CFOs who possess a forward-thinking attitude without fear of challenging the status quo of how their finance teams operate set the framework for efficiency and productivity. 

Tim Jung, CPA/MBA, is a director at CFO Consulting Partners and has held leadership positions in the U.S., Europe, and Asia for complex global banking businesses, as well as nonprofit and for-profit organizations.