In a recent post, we explored the role corporate financial management plays in an organization. To recap, financial management teams plan, organize, direct and control the financial activities of an enterprise. Their primary functions are to ensure the organization has enough funds to successfully operate the business; provide investors and shareholders with adequate, regular returns; advise decision-makers about investments; and facilitate a sound capital structure by balancing the ratio of debt to equity capital.

There are good ways of doing this and not-so-good ways. Those companies who fail either disappear from the business landscape with hardly a whimper, or they explode in a disastrous financial train wreck. Clearly, you don’t want either option for your organization. To help you avoid these sad fates, we’ve compiled a short primer on best practices for corporate financial management.

Revisit Your Business Plan for Corporate Financial Management

For some companies, this may seem like a step backward. They did the hard work of forming a business plan long ago, no need to look back now, right?

Wrong.

As Emmanouil Schizas, Senior Economic Analyst for ACCA, points out, the initial business plan your organization devised for investors and financing may no longer accurately represent the needs and directions of the company. Schizas explains, “Many business plans are static, formal documents that were developed as a one-off exercise when the business was seeking external finance.” In a business poised for growth, these rigid plans soon become inadequate and obsolete. What’s needed instead is what Schizas refers to as a “living-document,” a business plan that retains the flexibility to grow and shift as the company develops.

The function of such a plan is to align the organization’s efforts toward common objectives, both in terms of short-term projects and longer-term benchmarks. A dynamic business plan such as this one allows for shifts in the market, assuming that changes in the market are often what make way for growth and expansion. These plans take into consideration the fact that the market is always a moving target; therefore, its forecasts will need to accommodate shifts in market size, structure and customer preference.

As these changes occur, successful organizations keep returning to their business plans to see what realignments they need to implement. Ideally, this regrouping should happen on a regular basis, either at the beginning of the calendar year or the beginning of the fiscal year. At such time, it’s useful to consider such questions as:

What is the priority for new initiatives? Do you want to provide new services? Secure revenue sources? Open new markets? Listing these goals and prioritizing them can help galvanize the efforts of your team and make sure everyone is aiming for common targets.

What is your approach to customer mix? Given that attaining new customers is five times more expensive than retaining old ones, how does your organization plan to initiate new sales or deepen existing customer relationships?

Are there changes to fixed- or variable-cost structures? Has rent gone up? Have there been changes in your insurance plans? Is the company spending more on travel or marketing than it has in years past? Staying current on your fixed- and variable-cost structures helps everyone keep the all-important breakeven point in mind.

Invest in Technology and the People That Use It

There is no doubt that developing technologies have changed the landscape of corporate financial management. Analysts now have access to powerful data-mining tools, enhanced data analytics and the ability to monitor business activity in real time from anywhere in the enterprise.

Properly used, these tools can help support cross-functional collaboration, reduce the instances of human error, and increase overall efficiency through process simplification, standardization and shared services. In a recent Financial Effectiveness Benchmark Report conducted by PwC, researchers found that up to 40% of finance effort could be aligned to more value-driven activities through automation. But top-performing companies are going beyond automating processes. Instead, they are using technology to eliminate some business processes altogether.

Alongside the investment in technology, successful finance teams are putting their money into people who can make it work and use it to its full capacity. Whether this means hiring new associates or ensuring the proper training of existing employees, making sure the team members are fully fluent in the prevailing technology seems to be paying off in more ways than one.

Tech-savvy team members are able to fully utilize the financial tools available to them, resulting in faster, more informed decision-making. PWC reported that in top-tier financial teams, the analysts’ use of technology allowed them to spend up to 20% more time on analysis versus data gathering. These analysts, in turn, tended to earn up to 25% more than their counterparts, as they are valued as insight professionals. Nonetheless, these companies are still able to run at 36% lower costs than their competitors due to enhanced insight and improved efficiencies.

Move Toward Business Partnering to Improve Financial Management

More and more, financial teams are putting aside old templates of operations in which they took a passive, advisory role. Instead, they are casting themselves as partners to the businesses they support. This move has led to a new evaluation of skill sets. To be a truly effective business partner, finance teams need individuals who can solve problems in the workplace and communicate complicated objectives to a wide variety of audiences. Soft skills such as team work, creativity and empathetic reasoning are now more in demand than ever.

By becoming more intimately involved in the day-to-day operations of their businesses, CFOs and finance directors are able to make more informed decisions and forecast the possible impact their decision may have on the company as a whole. The finance staff cannot support or influence innovative decisions if they do not know and monitor the details and inner workings of the business well enough.

Working closely with the operational parts of the business gives them insight into what is important and imperative in the industry and, more specifically, among the other team members. Moreover, initiating a business partner relationship can allow the finance function to understand how growth affects the company over the long term.

The role of financial management teams has changed in recent years to encompass so much more than investments, capital and accounts. As these functions continue to evolve and develop, trust Blueprint to help you make the most of your business opportunities.