Within every company, every organization and department is experiencing pressure to cut costs and add value to the services or products they provide. As a result, each sector of the company must prove its worth, add value to its organization and have the ability to evolve its priorities, processes, and even its way of doing business to create more value.
It's no secret that finance is one of the most critical functions within a company. After all, it's responsible for ensuring that each business has the monetary resources it needs to succeed. Unfortunately, however, finance is often seen as simply a cost center rather than a value center. In this blog post, we'll show how to create value for your company and its stakeholders by transforming your finance department into a value center.
The Digital Transformation Era Has Altered Businesses' Priorities
The digital transformation era has placed new demands and expectations on businesses. No longer can companies rely on yesterday's business models to succeed today. In order to stay relevant and keep up with the competition, companies must be able to rapidly adapt their strategies, processes, and even their ways of doing business.
This is especially important in industries where more work continually piles up without the ability to hire additional human resources. For example, as the world becomes more digitized, the banking and financial services industries are under pressure to do more with less. In order to stay afloat, they need to find ways to provide services that clients need without increasing the size of their staff or adding new branches.
The same can be said for the accounting and finance industries. With the advent of new technologies, businesses now expect more from their finance departments than ever before. They not only want accurate and timely financial statements, but they also want real-time insights into their business's health and performance with a click of a button.
What Is a Value Center?
A value center is defined as a business unit that creates benefits for the company beyond its direct contribution to profits. In order to be considered a value center, the finance department must create value for other departments or functions within the company. For example, the finance department can create value by providing accurate and timely financial information that helps other departments make better decisions.
Another way the finance department can create value is by identifying cost-saving opportunities or ways to increase revenue. For instance, the finance department can work with the marketing team to identify ways to reduce advertising expenses or develop new pricing strategies that will increase sales.
The finance department can also create value by helping the company avoid or mitigate risk. For example, the finance team can help develop financial models that can assess the risks associated with new product launches or expansion into new markets.
New Finance Technologies Can Help Create Value
In order to create value for their organizations, finance departments must make use of new technologies. The good news is that there are a number of new finance technologies available that can help financial teams and CFOs be more efficient and effective.
One such technology is cloud-based accounting software. This type of software allows businesses to access their financial data and reports from anywhere at any time. This is especially helpful for companies with employees who work remotely or are always on the go.
Financial modeling software is another type of technology that can help finance departments create value. This type of software can be used to develop financial models that can be used to assess risks and make better decisions about investments.
Finance departments can also make use of data visualization software to create value for their organizations. This type of software allows finance teams to take data from financial reports and turn it into visually appealing charts and graphs. This is helpful because it makes it easier for decision-makers to understand the data and make better decisions about where to allocate resources.
The Benefits of Automating Financial Processes
When it comes to creating value for their organizations, finance departments can also benefit from automating financial processes. Automating financial processes can help finance teams and CFOs in many ways, including:
Providing Cross-functional insights
When financial data is centralized and accessible to all finance team members, it becomes easier to spot trends and patterns. This information can then be used to make better decisions about where to allocate resources.
Helps To Develop New KPIs
By automating financial processes, finance departments can develop new KPIs. This is helpful because it allows finance teams to track progress and performance against specific goals.
Negotiates Better Discounts And Deals
When financial processes are automated, it becomes easier to identify areas where the company is spending too much money. This information can then be used to negotiate better discounts and deals with suppliers.
Reduced Error Rate
When financial processes are automated, there is less room for error. This is beneficial because it helps to ensure that financial reports are accurate and reliable.
However, this can be amplified with the use of Cloud-Based Technologies.
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Automation And Cloud-based technologies
Using cloud-based technologies can help finance departments to create value for their organizations in many ways. Some of the benefits of using cloud-based technologies include:
- Improved security - When financial data is stored in the cloud, it is more secure because it is not vulnerable to physical damage.
- Increased collaboration - Cloud-based technologies make it easier for members of the finance team to collaborate with each other.
- Better scalability - Cloud-based technologies are more scalable than traditional on-premise solutions. This is beneficial for businesses that are growing quickly or have fluctuating needs.
- Lower costs - Cloud-based solutions are often less expensive than traditional on-premise solutions because there is no need to purchase and maintain hardware.
The challenges of transforming finance
While there are many benefits to transforming finance into a value center, there are also some challenges that businesses need to be aware of. Some of the challenges of transforming finance include:
- Resistance from employees - Employees who have been working in a traditional finance department, may resist change. It is essential to ensure that employees are appropriately trained on new processes and technologies.
- Implementation costs - There can be significant costs associated with implementing new finance technologies and processes. Businesses need to ensure that they have the budget to implement these changes correctly.
- Change Of Management - Implementing new finance technologies and techniques can be a challenge for businesses. It is crucial to have a solid change management plan in place to ensure that the transition goes smoothly.
How to overcome these challenges
There are a few ways businesses can overcome the challenges of transforming finance into a value center. Companies can overcome these challenges by providing proper training, having a solid change management plan, and having the budget to implement new technologies and processes correctly.
Despite the challenges, transforming finance into a value center is essential for businesses that want to succeed in today's economy. By using new technologies and processes, companies can improve their financial efficiency and effectiveness. This will ultimately help businesses create value for their shareholders and other stakeholders.
Choose Jenji To Create Value For Your Financial Department
Finance departments must make use of new technologies if they want to create value for their organizations. There are a number of new finance technologies available that can help finance teams and CFOs to be more efficient and effective.
At Jenji, we understand the challenges that finance departments face when it comes to creating value for their organizations. That is why we have developed a platform that makes it easy for finance teams to automate their financial processes. Learn more about our solutions and how we can integrate with your existing systems by contacting us today.