Today, Fortus welcomes a new office into the fold. Read more on our new Reading office.
The role and importance of the Finance team
1 April 2021
Finance teams will vary from business to business, dependent on their size, and extent of their business journey. Some will be fully internal and some will be outsourced in full, others may have a mix of the two. Whatever the make-up, the function of the finance team’s the same.
The finance function in essence is the control and planning of the financial resources of the organisation. It’s the lifeblood of a business, without which it couldn’t survive.
The activities of the finance function can be split into the elements below:
This is the day to day recording of the financial transactions. I’ve seen this drastically change over the 20 years I’ve been in practice/industry. With the use of technology, a large part of this is now automated with the use of bank feeds, digital recognition of invoices all linked to cloud-based software, enabling access to the data on any device, in any location with an internet connection. This not only reduces the cost of the finance function, it creates efficiencies and consistency across the board.
Throughout the financial year, there are various filing requirements, such as the filing of VAT returns, filing of year end accounts and associated tax returns along with other regulatory requirements to other bodies the business maybe associated with. These filings must be done accurately and on time.
Management and Control –
The production and use of financial and related information to monitor, inform and instigate operational actions to meet the business’ objectives. This can be directly output from the accounting software or maybe generated from an amalgamation of sources, presented in a clear and formal format. Control’s an essential part of the function, ensuring processes and authorisations are adhered to in order to minimise risk the business faces.
Management of the financial risks within the business. The business will face many risks, including financial risks of fraud, which could be both internally and externally, misappropriation of assets and also theft. The finance function will implement processes to mitigate the risk to the business.
To inform and influence, from a financial perspective the development and implementation of strategy. The business will have a mission and vision, but in order to review and achieve these, it’s crucial to have financial information to assess the progress and enable decision making along the way.
Inform and engage with investors and funders and maintaining the necessary level of financial resources of the business. These may be internal or external to the business and the level of information and data provided will vary, but it’s necessary either way for the investor to have a clear understanding of how their investment’s performing.
The finance team will vary in experience and qualifications, but typically will consist of a Finance Director / Head of Finance, Financial Controller, Finance Manager, Finance Executive, Finance Assistant and Credit Controllers, all of whom have an important role to play in the effectiveness of the function.
The finance team will all interact with other functions of the business, from the credit controller liaising with account managers to ensure their clients’ accounts are up to date, to the Head of Finance reporting to other Heads of services on the performance of their respective unit.