A guide to establishing a resilient finance function

Corporate resilience is all about ensuring it’s business as usual when the unexpected happens — or in a state of emergency. In many ways, departmental resiliency is crucial in any business continuity plan. 

The finance department, and its core operations, is one of the most critical functions for organizations. It covers everything from transaction management and the control of cash flow to vendor management and expenses. After all, without reliable cash flow, no business can survive.

It’s also why solid routines and the right technology are essential, especially during extraordinary events, to ensure a business has the suitable systems in place to stay operational.

Don’t let an incident catch you off guard. The shift to emergency, from business as usual, can happen almost immediately — like what we experienced during COVID-19.

Hard work is required to adapt when business conditions change drastically. You might have to suddenly secure your supply chain or change how your employees work, such as switching to remote or hybrid work models. You may need to digitize legacy systems to ensure they are visible and accessible from anywhere.

An effective business continuity plan requires serious planning, and in many cases, the best place to start is with your finance department. Read on to learn key tips on how you can build a resilient finance function and other actionable insights from the Qvalia finance team.

A more resilient financial function ultimately means healthy cash flows no matter how stressful the market becomes. It means recovering from incidents that cut into the budget and having the company continue to work as intended no matter what.

Given how the business environment has evolved in recent years, it should be obvious why resilience gives you a competitive edge as markets become more dynamic, new technologies shake up the way we approach work, and globalization complicates the world market.

By addressing four essential areas, you’ll be in a better position to adapt your team and increase your resilience quickly:

One relevant term to know is “business continuity.” Should a new product launch fail, a project cost more than expected, or a general downturn in revenue occurs, having a business continuity plan means being able to get everything back up and running quickly. Business continuity can refer to almost any department in the business, not just finance. It’s the blueprint for sustaining business operations regardless of what happens.

There are several barriers to financial resilience that most management teams don’t think about when undergoing this process.

The counteract the unknown, finance teams should reassess processes to maintain operations and cash flow. Here is some helpful guidance for CFOs and finance teams on strengthening their operations, keeping calm, and carrying on.

Prepare yourself for building financial resilience by getting into the right mindset first.

Maintaining accessibility to transactions and financial data, and securing the capabilities to process transactions must be a top priority.

Secure your invoice management routines. Incoming purchase invoices in PDF format, or worse — print format, will be a significant issue during extensive remote work. If you can’t visit your office mailbox, ordinary tasks will become an unexpected challenge:

Many businesses rely on service providers for invoice scanning and OCR. Manual handling is risky, independent of geography and who’s carrying out the service.

Your processes are vulnerable if service providers can’t live up to the agreement (true story – that is what happened to one large European-based scanning center that was quarantined as a result of the COVID-19 pandemic in March 2020). You’ll lower your exposure to risk by reducing the reliance on third-party services.

E-invoice adoption is undoubtedly the fastest and most reliable way to eliminate the need for scanning and analog data management.

Hybrid work has become a popular alternative to the traditional office-only setup. As business operations shift away from a single office location and into various remote areas where your employees choose to work, it’s becoming more critical than ever for finance departments to define clearly and formalize their end-to-end processes. You need to elucidate:

You also want to test your documented processes out in the field to check for potential deviations once work begins. Having a clear and accurate idea of how financial functions work is a massive step in the right direction for ensuring uninterrupted workflows in the future.

Part of documenting internal operations is collecting data and analytics to drive new insights and improve decision-making.

To be more specific, financial teams need to consider cash flow visibility more than ever. Given the timeframe in which revenue will arrive, and new purchases will be made, are you sure you’ll have enough cash on hand? To keep business moving forward, make sure you aren’t facing a crunch at any point.

Achieving this visibility involves collecting data and generating analytics on your cash levels. Part of the job is improving the quality of the data you collect, which boosts the quality of your decision-making. Over time, the insights generated become less ambiguous and more comprehensive the better your data sources are. And using automation to your advantage also speeds up the process, ensuring that the company can react promptly to potential cash flow problems.

Make a stress test of your sales process – and implicitly, your customer’s internal accounts payable routines.

We can’t stress it enough. E-invoice adoption is crucial for businesses to secure operations. Electronic formats improve the resilience of the finance team and will help to ensure the business momentum.

You need to explore your abilities to increase e-invoice usage, both in accounts payable and accounts receivable processes.

Manual work tasks require your team’s attention. Processes are possible to improve and automate, but sustainable automation requires reliable and structured digital data. Therefore, you need to identify potential bottlenecks of analog information and manual work tasks in your workflow.

These are some of the most common manual tasks:

The efficiency benefits of implementing automated tools are well known, but they apply exceptionally well to finance since the work is incredibly rule-based and quantifiable. Therefore, your initiative to make your company more economically resilient should include exploring machine learning and artificial intelligence.

But we need to answer the question of “how?” There are many types of automation businesses use, but it’s recommended to aim for high-end rather than entry-level implementations. For instance, robotic process automation is a relatively basic use of technology. More developed organizations might turn to true machine learning to aid in financial planning and find patterns in big pools of data.

The evolution won’t happen overnight, and you can expect teething issues when new tools are introduced, but be prepared to evolve with the rest of the industry if you want to stay financially resilient.

Automation makes companies more resilient by bringing together separate financial functions and allowing them to work together cohesively. This streamlined workflow ultimately:

Using automation tools to connect individual parts of the financial function together cuts down on costs and frees up time that staff can better use on more important aspects of the job.

CFOs should aim to encourage data quality and consistency, as financial data comes from multiple separate departments and thus ends up in different formats when collected together.

In order to promote a standard for data alignment across sections of the business, the finance department needs to allocate time to cleaning up data and deploying technology and digital platforms for improving data quality.

Tying into the last point, most of the tools we use today come predominantly from the cloud, so a cloud-first strategy matters for building financial resilience. Why is cloud delivery so popular?

Using the cloud to support the financial function gives you a solid digital foundation to work from. It’s much easier to integrate cross-departmental data this way, enabling coordinated collaboration and more comprehensive company-wide visibility.

One valid challenge of adopting digital tools to support financial functions is the increased risk of cybersecurity incidents and the need to achieve regulatory compliance with digital security laws. Cybersecurity is an unavoidable consideration for modern companies, and it impacts all aspects of the business including finance.

For instance, what can you do to ensure your private and sensitive data is protected against data breaches? What will your customers think if their personal information gets leaked after working with your organization? What regulations like the EU’s GDPR will punish you for such an incident?

Businesses — as well as consumers — become more aware of their digital privacy, so don’t lose sight of adopting the leading cybersecurity frameworks while undergoing your digital transformation. Finance especially must pay attention, as it’s often the first department to be digitized and a prime target for potential cyberattacks.

Resilience relies on robust compliance, so protect your data integrity, safety, and image in the market by keeping aware of cybersecurity threats and working with third parties that understand the risk and know how to mitigate it.

Automation is powerful by itself but certainly can’t replace internal team members when it comes to more creative and strategic parts of the job. How you use and treat your employees matters as well when it comes to developing a resilient financial function.

Financial teams must be laser-focused on maintaining cash flow whenever incidents occur. Financial resilience relies on liquidity; that is, it requires effort to be put into spend control, inventory management, payment procedures, financial automation, and other tools available to the department.

CFOs and other finance leaders must also consider where data analysis should be applied. Instead of focusing on the short-term or analyzing data in the past exclusively, try to steer the conversation towards long-term changes and goals and use financial data to predict what might happen in the future.

Just like in any other business aspect, finance becomes easier when you have a supportive team at your back. Managers should focus on finding ways to resolve complex tasks and encourage staff members to build up their own resilience at work. Consider implementing professional training to allow employees to reach more rewarding roles in the company.

A positive approach will ensure that everyone finds purpose at work, even when major challenges come into play.

Finance departments working in long-standing industries often find that their current operations are either dated or insufficient for modern markets. It might be time to consider reorganizing the workflow so that internal employees have a tighter grasp on what makes your business resilient.

For instance, have the workday revolve around financial data analysis. Instead of traditional hierarchies, have employees organized by teams, each of which draws upon a shared pool of data analytics that help define the priorities of the business. This way, everyone can contribute to solving business challenges.

And don’t forget to encourage skill development and personal growth, whether it’s by asking advanced employees to help train lower-level ones or offering rewards and promotions for certain milestones.

Outsourcing to external service providers is hardly a new strategy, and most of the business world is aware of its benefits, from reducing risk to managing cost. But did you know that it can be invaluable for building financial resilience? However, the strategy is not without risks as you’ll still rely on manual work to be done.

By no means is this list an exhaustive one. Be diligent when looking for potential areas where your internal staff could benefit from supplementary work from a partnered organization.

Your systems, accounting, and transactional data must be available anywhere. Adapt to the needs of distributed teams and review your accessibility. Successful remote work is not only a matter of technology — it’s also depending on your routines.

Secure that all your core financial and transactional systems are remotely accessible, including software and cloud tools for invoicing, accounts payable, accounting, and reporting. If cloud-based tools already are in use, this is usually not an issue.

If your systems are hosted on a local network, make sure that your team can access them via VPN (virtual private network). Your IT should be able to help you set this up.

Related to accessibility are issues of approval setups and hierarchies. For example, do you have a fallback for bank account access, VAT and tax authorities, and other business-related government services? Identify setup weaknesses in case of, for instance, sick leaves.

Don’t overlook your data security. For access via remote VPN, it’s highly recommended to use strong user authentication methods. Passwords should be strong and randomized, preferably with additional two-factor authentication.

It’s a must for teams to be able to communicate seamlessly, in addition to access systems remotely. Here’s where finance teams can learn from the developer community, which has used and fine-tuned their routines over the years.

Explore user-friendly communication and chat tools such as Slack or Teams, and collaborative apps like Trello or Asana, to maintain operations independent of your team’s location.

Implement standup routines á la agile methodologies and daily check-ins posts in your chat for your finance team, where every team member provides updates on everyday tasks in the morning. Short virtual briefing meetings, combined with check-ins, bring transparency and culture independent of location. 

A common standup meeting model is based on providing team members with answers to three questions:

Building resilience in the finance department is about making long-term plans and changes to ensure that you can survive any kind of market unpredictability. A large part of that task is adopting the right digital tools and platforms to modernize your workflow.

There is one thing the examples above have in common – the reliance on, and need to, increase the digital transformation. Remote work and technical infrastructure capabilities, together with increased adoption of electronic transactions, will improve your resilience radically.

The adoption of electronic invoices and the digitization of transactions are probably the most effective and fastest way to improve processes, whether it’s in accounts payable, accounts receivable, accounting, or even spend analytics.