The Role and Impact of Financial Management on Strategy, Operations, and Business Performance
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- This paper seeks to show that companies with the strongest finance capabilities to support business transformation are leaders in the market with superior business performance
- From the research it conducted, the three primary barriers to business performance are:
- Insufficient alignment between strategic and operational decision making and lack of talent to support it
- Lack of up-to-date information for strategic and operational purposes
- Standardisation: inadequate process and data standards
- However there are four key roles of finance which reveal an organisation’s ability to enable and drive enterprise transformation i.e. Revenue growth, operating margin, asset efficiency and expectations
- Finance can lead, rather than lag, business transformation
- That’s why finance masters (companies with significantly stronger capabilities) have invested a lot in marketing sales &force, innovation, supply chain, human capital and information technology
- Although companies will have a hard time catching up to these finance masters, many of the lagging companies have invested significantly in the foundations for mastering finance and business
- Managing cash flows, financial and operational performance, and other enabling capabilities are the vital foundations for transforming the enterprise through finance
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