The role of finance teams has undergone a major transformation. Today’s teams have moved beyond traditional tasks like bookkeeping, auditing, financial reporting, or crunching numbers to ensure the company’s financial health. Now, finance teams are being seen as strategic and futuristic planners who can drive company innovation. According to McKinsey, roughly two-thirds of today’s CFOs are now overseeing their company’s digital activities as well as investor regulations.

As the business market continues to evolve, finance professionals must continue to emerge as strategic leaders who are driving company innovation. In this article, we’ll review how finance teams have evolved beyond their traditional roles and into strategic powerhouses. We’ll also discuss the ongoing need for change in financial departments to thrive in today’s dynamic business environment.

The Previous Role of Finance Teams

Traditionally centered on bookkeeping, auditing, and financial reporting, finance teams have played a crucial, but narrowly defined role. According to Deloitte, as recent as five years ago, nearly 85% of finance professionals spent the majority of their time on transactional and compliance activities.

While these functions are crucial for a company’s stability, they often confine finance teams to a reactive role, inhibiting their capacity to contribute strategically and stifling innovation within the financial domain.

The task-driven approach that characterized finance teams in the past has significant limitations for today’s businesses. For example, focusing solely on routine tasks can result in a reactive rather than a proactive financial department. This can be a hindrance in a rapidly changing business environment where quick and strategic business is paramount.

Furthermore, the rigid adherence to repetitive tasks leaves little room for finance professionals to engage in broader, strategic thinking. Traditional approaches to finance tend to stifle creativity and limit finance teams’ ability to actively contribute to the overall business strategy.

The consequences of this narrow focus are not just internal. A PwC study found that 75% of financial directors’ time is spent on data analysis and comprehension — time that could be spent on more value-adding tasks such as growing the business.

Shifting Towards Strategy-Centric Finance

The move away from traditional finance methods were driven by a number of evolving business needs. These needs include:

Globalization: According to Visual Capitalist, global trade in goods and services has more than tripled since the early 2000s. The surge in cross-border activities has introduced new complexities in financial management, requiring finance teams to navigate diverse regulatory frameworks, manage currency risks, and understand the intricacies of international taxation.

Technology: Technological advancements, particularly artificial intelligence and data analytics have reshaped the business landscape. In fact, 82% of finance leaders believe that artificial intelligence is already changing the way they provide services to their organizations. This shift is fundamental in the face of today’s fast-paced business environment, demanding agility and quick responses to changing market dynamics.

Regulatory changes: Regulatory changes and increased scrutiny in the aftermath of global financial crises have elevated the importance of robust financial governance. One study found that 67% of finance leaders considered keeping pace with changing regulations as one of their top challenges.

By shifting towards a strategy-centric approach, finance teams can improve risk management, better support business decisions, and enhance value creation for stakeholders. By actively participating in strategic planning, finance teams can align financial goals with broader business objectives.

Modernizing Finance Teams for Strategic Excellence

As organizations look to transform finance teams in strategic powerhouses, empowerment is key. According to Deloitte, 85% of organizations are actively investing in technology to empower their finance teams, recognizing the pivotal role of modernization in fostering strategic excellence.

Below are just some ways in which organizations can empower their finance teams — from harnessing the potential of new technologies to fostering a culture of continuous learning and collaboration:

Investment in technology: The integration of technology, including artificial intelligence, data analytics, and automation tools, has become paramount in transforming finance teams. These tools reduce manual tasks, enhance accuracy, and provide valuable insights, allowing finance professionals to focus on strategic analysis and decision-making.

Continuous training and development: To empower finance teams as strategic leaders, ongoing training and development are crucial. Beyond traditional financial skills, finance professionals need training in strategic planning, effective communication, and data interpretation to contribute meaningfully to the company's overarching goals.

Cultivating a collaborative culture: Fostering collaboration between finance teams and other departments is essential. A holistic understanding of the business environment allows finance professionals to actively contribute to strategy formulation and decision-making.

Why a Strategy-Centric Finance Team Is Essential to Businesses

Transforming finance teams into strategic leaders brings a myriad of benefits that extend far beyond traditional finance metrics. As organizations continue to shift from a task-oriented approach to a more strategic focus, the impact will become more and more obvious.

Some of the top benefits of a strategy-centric finance team include things like:

• Improved business forecasting
• Enhanced stakeholder communication
• Proactive approach to business challenges
• Optimized resource allocation
• Informed strategic investments
• Agile response to market dynamics
• Catalysts for more innovation

3 Challenges and Mitigation to Empowering Finance Teams

While the benefits of strategy-centric finance are extensive, the approach does come with challenges. Below, we’ll provide an overview of the common obstacles in strategy-centric finance and how to overcome them.

1. Resistance to Change

One of the primary challenges in transitioning finance teams to a strategy-centric approach is resistance to change. According to McKinsey, 70% of change initiatives face resistance. Finance professionals accustomed to traditional tasks may resist the shift to a more strategic role. To mitigate this challenge, organizations must prioritize effective change management strategies, involving the finance team in the transition process, and communicating the long-term benefits of the shift.

2. Ensuring Data Integrity

Maintaining accurate and reliable data is paramount in strategy-centric finance. To mitigate risks associated with data integrity, organizations must invest in robust data governance practices and employ advanced data security technologies. Regular audits and training programs can further reinforce the importance of data accuracy.

3. Balancing Strategy with Compliance

According to Deloitte, 81% of finance professionals view managing regulatory change as a significant challenge. To strike a balance, organizations should invest in regulatory technology (RegTech) solutions. These tools can automate compliance processes, allowing finance teams to focus on strategic initiatives while ensuring adherence to evolving regulatory frameworks.

Tesorio: Shaping Strategy-Centric Finance Teams

Shifting finance teams from traditional task-doers to strategic leaders is not just a trend but a necessity in today's business landscape. A strategy-centric finance team is indispensable for driving business growth, navigating uncertainties, and contributing meaningfully to a company's success.

As organizations strive to enhance their existing finance functions, Tesorio's Cash Flow Performance Center equips finance teams with essential tools for making confident decisions and ensuring seamless operations and enhanced financial processes, including Cash Flow Management, A/R Automation, and Cash Forecasting.

Discover how Tesorio’s solutions can provide your team with all the visibility, confidence, and automation necessary to shift from a task-oriented to a strategy-driven approach.

Schedule a free demo now.