Belfast Telegraph

The importance of a strong finance function when adapting to rising costs

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A strong finance function with access to real-time information has been a critical factor for businesses over the past two years as they faced many challenges because of the pandemic.

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While the situation was out of their control, it highlighted the importance of being proactive rather than reactive, and businesses had to learn and adapt the way they worked by making changes and being innovative.

Now, in a post-pandemic world, the same principle applies. Businesses are now facing new challenges, particularly increasing costs. To ensure the growth and survival of a business, they need to have clear insight into how these rising costs will affect their bottom line in real-time, which will enable them to develop strategies to deal with this. 

Moving away from manually analysing data and transitioning into using technology will play a crucial part in this. By using cloud-based and other similar software, businesses can tailor their reporting to support their needs and help with future strategic growth and decision-making. This allows businesses to access real-time information, which, in turn, will reduce the time taken to complete the month-end routine and enable better cash flow management.

In addition to using software, businesses need to understand and utilise the correlation between the finance department and other business functions. The finance department has insight into all other areas within the business. Finance managers must communicate and work alongside other departments to fully understand and report on key data. This will help businesses plan for the future.

To create a successful plan for the future, smart businesses combine the monthly reporting and financial information provided by the finance department with other methods of analysis. With the ever-changing external factors facing companies, businesses must review their strategy and goals.

One such method for utilising data is strategic analysis. Strategic analysis is the process of looking at the environments in which a business operates, which includes both internal and external factors. Strategic analysis is very beneficial and can help to achieve a business’ growth and goals.

Strategic analysis allows businesses to look at their strengths and weaknesses and factor in external influences out of their control. This has the benefit of letting them identify items that add value and increase competitive advantage, which, with the current economic climate, may help combat those rising prices.

In short, companies should continuously review their business and financial strategies so that they can act quickly and adapt to factors outside of their control. They need a strong finance team who can work with other departments and can produce and explain financial information for businesses to react to and combat changing conditions both internally and externally.