Why Finance shouldn’t be a background activity in your business

Understanding the Shift in Financial Responsibilities

Finance is often seen as a back office function, one that operates behind the scenes and has little impact on the overall success of a company. However, this couldn’t be further from the truth. In fact, finance is a critical aspect of any business and should never be relegated to the background. In this blog post, we will discuss why the finance function should never be considered a background activity, and why accountancy services are essential for the growth and sustainability of a company.

The landscape of financial duties within a business has been thoroughly reshaped by the growing complexity of the commercial world. No longer are these responsibilities confined to the realms of simple accounting and bookkeeping tasks. The modern finance role has morphed into a multifaceted juggernaut encompassing strategic planning, risk management, ensuring regulatory compliance and fostering clear communication. All of these elements are vital cogs in the machinery of business success. 

The expansion and evolution of these duties signal that finance should no longer be brushed aside as a sideline activity. Instead, it’s high time it was recognised for its true value and given the prominence it rightly deserves.

The Role of Finance in Decision-Making

Delving into the core of strategic business choices, whether it’s launching an innovative product, tapping into unexplored markets, or making significant investments, you’ll find finance playing a pivotal role. Why, you ask? These are decisions with profound financial implications and their successful execution hinges on a comprehensive understanding of these financial dimensions. 

The contribution of a robust finance function can’t be overstated here – it brings forth the required financial intelligence, insights and in-depth analysis that act as invaluable aids in steering decision-making. This preventative approach can help avert expensive missteps and curtail potential risks. Hence, the integral function of finance in decision-making further emphasises its indispensable nature in the business arena, and underlines why it shouldn’t be resigned to the background.

Mitigating Financial Risks and Ensuring Compliance

The epoch we are in places companies under intense regulatory oversight with potentially damaging outcomes for financial mismanagement. Safeguarding compliance with regulations, avoiding any legal trouble, and circumventing any pitfalls that come with financial mismanagement is a task for the finance function. This is far from being a passive role conducted in the shadows. Quite the contrary, it requires a hands-on finance team that cooperates and integrates seamlessly with other sectors within the business. It’s all about implementing solid controls to keep fraud at bay and mitigating any financial mismanagement risks. Therefore, finance isn’t just a silent function; it’s a frontline defender against potential threats to the organisation.

Finance as a Value Creator

Financial management isn’t simply a cost-cutting affair. It’s about making a measurable difference by adding substantial value to the business. This entails smart allocation of resources, spearheading efficiency drives, and pinpointing and capitalising on growth avenues. 

A proactive finance function that collaborates closely with various business sectors has the potential to shape potent strategies. These strategies are geared towards fuelling profitability and bolstering shareholder value. Therefore, it is critical to recognise the finance function not as a peripheral task, but a mainstay in the commercial landscape that actively contributes to value creation.

The Importance of Financial Communication

It is impossible to underestimate the vital role that financial communication plays in the success and growth of any organisation. The finance department is often the heart of this communication, relaying crucial financial information to a host of key stakeholders. These can include management teams, employees, shareholders and others who have a vested interest in the company.

Think of financial communication as a bridge that connects everyone within an organisation. It brings a clear understanding of the financial health, performance, and direction of the company. These can often be complex matters, but when communicated effectively, they make sense to everyone involved.

Financial communication is also about ensuring accountability within an organisation. It promotes responsible decision-making, based on accurate and timely financial data. This prevents missteps and errors that could potentially harm the business. It also encourages everyone in the organisation to take ownership of their decisions and actions, contributing to the overall success of the company.

In conclusion, financial communication is a critical function of the finance department that goes far beyond sharing numbers and figures. It involves building trust, fostering accountability, and facilitating informed decision-making, all of which contribute to the overall success of the organisation. Therefore, any successful organisation needs to ensure that their financial communication is clear, timely, and transparent.

If you want to know how Practical Accounting offer much more than just finance team support, contact our team today for a chat.

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