How big of a role should finance play in your business’s decision-making strategy?
Find out how finance should affect your business planning.
It can be easy for business groups – sales, marketing, IT, customer service – to all start planning for their goals and creating timelines without thinking about the role of finance in decision making. But just like when individuals consider finances when making decisions such as going on vacation, moving, retirement, it’s important to consider finances and financial planning when it comes to making business decisions, too.
Budgets and Goals
The role of finance is two-fold. On the one hand, it helps to monitor expenses, pay the bills, and stick to a budget. The other part is helping a business to generate more money and be profitable. Accounting teams usually sit under the leadership of the finance department to help account for all the expenses that a business accrues, from payroll to supplies, and also monitor any open or pending transactions with vendors or customers that are unpaid – like helping the sales team follow up on accounts that haven’t paid their product invoices.
Overall, this kind of financial monitoring is crucial to a business’s overall success. Finance is the department that helps to set the overall financial goals for a company and then monitors progress towards those goals. This kind of financial planning is crucial to helping other departments establish their own individual goals and budgets. These financial figures also help to dictate things like if a business can afford to hire new positions, give raises or bonuses, offer new employee benefits, or offer customer sales on products. Finance, then, plays a truly huge role in the strategic management of just about every business decision.
The Finance Team
Finance roles can play an important part in how finance relates to the rest of business units. The personalities of the personnel as well as the roles and responsibilities within the finance team can inform how the financial strategy is formed. Some companies hand down their financial mandates to the different departments to shape their policies, while other organizations will ask for input and feedback to help the finance team shape the financial planning process.
Good business finance teams are made up of people who are forward thinking, informed about current technology, educated and experienced in long-term planning, analytical, and adaptable. Some roles within the finance department include:
- Finance manager
- Collection specialist
The roles and responsibilities of a finance team may vary slightly, but the overall goal will be consistent – to manage a business’s finances to help them stay financially viable and help to dictate budget and expense decisions to shape overall business strategy and departmental decisions.
The role of finance in decision making may not be obvious to every employee at every business, but it is always important and foundational in business decisions. Strategic financial planning helps employees make good, informed, well-rounded decisions at every level of business. A well-communicated plan helps to keep everyone on the same page and can really improve a business’s bottom line. How has your business used finance to shape your business’s strategy and decision making?