What Do Finance Professionals Do as Key Business Partners?
Companies large and small need to be adaptable to be successful. External pressures like recession fears, inflation and energy price instability all have driven higher demands from financial departments.
With more demands comes higher expectations for finance teams to drive performance throughout the organization.
A mechanism that mitigates such business uncertainties is by having finance professionals work side by side with divisional units and departments, serving as key finance business partners.
What Do Finance Professionals Do as Key Business Partners?
- Drive successful partnerships with divisional units and departments
- Optimize employee productivity by reworking KPIs
- Reduce risk and volatility for your business
1. Finance professionals drive successful partnerships with divisional units and departments
In addition to being analytically driven, finance professionals must possess strong interpersonal skills to enable and build enduring business relationships which drive success partnerships across divisions and departments.
Financial teams need to dedicated time and effort in decision-making to support assignments. This type of support is separate from traditional finance activities such as board presentations, annual budgets, and quarterly forecasts.
There needs to be a “cultural mindset” of cross-departmental partnership that begins with and is fostered by the company’s management team. Without it, it can be challenging for finance professionals to integrate themselves into the business.
If department collaboration with the finance teams isn’t championed by company leaders, effective and efficient communication will be difficult, and likely materialize into poor information quality and decision making.
Examples of decision support assignments for financial professionals:
You work for an organization that sells products online. You are working with your digital marketing team to track some Key Performance Indicators (KPIs) such as: traffic, conversion, and average order value (AOV) but there’s currently no processes in place to measure and monitor their performance.
Business teams should collaborate with the financial professionals to:
- Determine data sources
- Create a standardize reporting template
- Define frequency of review
2. Finance professionals optimize employee productivity and optimize consumer behavior by reworking KPIs
It falls on your financial department to analyze your people, processes and systems to gain real-time insights in order to identify which KPIs will be most beneficial to track and optimize, whereby improving employee productivity.
Taking the initiative to understand your KPIs while developing a standardize reporting template will lead to more meaningful and action-driven discussions.
Examples of Key Performance Indicators (KPIs) to optimize consumer behavior
Web Traffic (Users, Visits, Entrances, Unique Visitors) as a KPI to optimize consumer behavior:
Web traffic measures the number of visits, unique users and entrances to your company’s website. A good strategy is to understand market trends and identifying competitors to measure against.
One distinctive way to increase web traffic is to optimize your company’s web pages so they appear on search engines – a process called “search engine optimization” or “SEO”.
Conversion as a KPI to optimize consumer behavior:
Conversion measures the number of orders placed, divided by number of visits to your website. Attempting to derive the “normalized” percentage rate by exclude promotions and holiday periods is a preferred first step.
Determine how your company’s conversion compares to average ecommerce rates in the same industry.
One way to increase traffic is to optimize your company’s website for mobile. According to the Pew Research Center, 76% of consumers report making purchases from their mobile devices. If your website isn’t optimized for mobile devices, you are likely losing out on conversion and subsequent revenue.
Average order value as a KPI to optimize consumer behavior:
Average order value (AOV) tracks total dollars spent, divided by the number of orders. This is a similar approach to conversion, whereby you obtain a baseline percentage rate and determine how your company’s AOV compare to average ecommerce rates in the same industry.
Effective ways to increase AOV include:
- creating an order minimum for “free shipping”
- upsell or cross-sell complementary products
- set-up a customer loyalty program (though this initiative tends to be more costly)
3. Finance professionals reduce risk and volatility for your business
Finance departments and professionals can be proactive in measuring the effectiveness or ineffectiveness of initiatives, allowing divisional units and/or departments to make modifications as needed to improve performance and achieve your company’s objections.
Developing and monitoring KPIs on a recurring basis — whether weekly or monthly — allows for a better understanding of the health and performance of your organization, which reduce risk in volatility.
Partnering with the business enhances the visibility of data. Finance teams share this data across the organization in the form of cross functional team meetings leading to increased collaboration, reduced silo workings and more innovative ideas.
Final Thoughts on Why Finance Professionals Are Key Business Partners
A more dynamic and unpredictable business environment demands a close partnership with finance professionals.
A finance department’s pivotal role is to provide real-time support and analysis, be a tactical advisor and add value that will assist in informed decision making.
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