Cutting costs — and keeping them in check — is an ongoing and essential job. But, as anyone tasked with managing a budget can attest, it only goes so far. At some point, you simply need to bring in more money.
Many organizations have reached this point, according to a recent article on CFO.com. At 770 U.S. companies surveyed by Bain & Company, only 58 percent of CFOs have been able to meet their cost-savings goals; even fewer are managing to sustain these savings in the long term. No wonder that many in the industry have been calling for CFOs and finance departments to shift from passive supporting roles to more active participation as strategic business partners.
CFO.com suggests four keys to making a company effective and efficient in the long term.
1) Support functions that adapt to external conditions and participate in business decisions. Documenting an organization’s past financial performance is only part of the picture; finance departments should expand to include strategic activities as well.
2) Aligning service levels and goals with actual business demands. Make sure that when your organization demands the highest standards of service, it’s in the areas that are critical to primary business objectives. In less critical areas, “good enough” may be a better goal than striving for perfection.
3) Using a service-delivery model. Connecting traditional support functions with strategy can help streamline workflow and cut lower-value activities. For example, business units can be more efficient when given greater control over their overhead expenses.
4) Supporting key staff with the right tools, processes and incentives. It’s not enough to find the right person for the job — they also need a framework that ensures their efforts can create lasting successes.
In the end, finance departments that simply take orders won’t be successful, according to CFO.com. Instead, they should focus on uncovering the needs of customers and shaping demand. Company-wide analytics platforms and business intelligence tools, like expense management software, are vital to making these connections between a company’s past performance and its strategic decisions for the future.
We appreciate hearing from our readers. Please share your thoughts below in the comments section!
Our choice of Chrome River EXPENSE was made in part due to the very user-friendly interface, easy configurability, and the clear commitment to impactful customer service – all aspects in which Chrome River was the clear winner. While Chrome River is not as large as some of the other vendors we considered, we found that to be a benefit and our due diligence showed that it could support us as well as any large players in the space, along with a personalized level of customer care.
We are excited to be able to enforce much more stringent compliance to our expense guidelines and significantly enhance our expense reporting and analytics. By automating these processes, we will be able to free up AP time formerly spent on manual administrative tasks, and enhance the role by being much more strategic.