Activities should be trimmed and go deeper

As global competition intensifies, companies regard continuous operational streamlining as vital to their competitiveness. Financial management is also expected to engage in the continuous streamlining of functions. In many organizations, basic financial management has been outsourced and global service centers are proliferating in low labor-cost countries.

While streamlining their operations, financial functions are also being expected to make a deeper and more strategic contribution to supporting and developing business activities.

Financial management is digitalizing and automating

Digitalization has rapidly transformed business activities. It has created new types of service and business models as well as new, unprecedentedly effective methods and tools for value creation.

Digitalization has also transformed financial management functions and markedly reformed practices. The pace of change continues to increase. The proliferation of automation and software robotics has accelerated data management and greatly reduced the number of human errors. Digitalization is enhancing basic financial management functions and improving accuracy and quality. Work that is independent of time and place has made work processes more flexible.

Automation of the routine tasks will free up resources for the analysis and integration of data."

With some justification, the digitalization of financial management and automation of many basic tasks are a cause of concern among financial managers. They also offer financial management experts the opportunity to use their expertise to solve complex problems, thereby generating more value for businesses. Wherever the automation of financial management reduces the human input needed in routine tasks, it will free up resources for the analysis and integration of data, while enabling a genuine focus on supporting business operations and evaluating new commercial opportunities.

However, the pressure is also mounting to develop the skills and competencies needed to succeed in this new role. Automation is leading to major changes in the job descriptions and skills required of financial managers and professionals. A new way of thinking and openness to adopting new types of work and changing practices are needed. Both organizations and individuals are responsible for developing processes and know-how to meet the growing expectations directed towards an organization's financial management.

New competence requirements for financial management

As the role of financial management changes, job descriptions and skills requirements are being transformed. A key skill is the ability to understand the relationship between financial performance and the performance of various business functions. In turn, this requires closer cooperation between financial management and other business units, in which the financial management expert primarily supports decision-making and operational management. No longer a mere producer of reports and data masses for decision-makers, the financial function is an active user and interpreter of information. The focus is shifting towards the perception and analysis of future opportunities instead of reporting historical data.

The focus is shifting towards the perception and analysis of future opportunities instead of reporting historical data."

A growing number of international rules and regulations are arising with respect to financial management and financing. Financial experts must be able to upgrade their skills and knowledge of topical issues concerning matters such as taxation, transfer pricing and international accounting standards.

While the perception and management of financial risks involve the mastery of regulations and international legislation, other business risks and their management are receiving greater emphasis in the everyday work of financial and financing experts. To prevent unpleasant surprises, in addition to identifying business opportunities financial management needs to spot potential risks and uncertainties that may disrupt business activities. This requires skill upgrades, the active following of trends and the monitoring of international economic cycles and political developments.

Deeper insight is needed into the hidden causes and effects behind financial figures, as well as the formation of phenomena such as customer value."

As the role of the financial function becomes more strategic, financial management and experts will need deeper business know-how and a broader vision of commercial success factors. Numerical skills are no longer sufficient - deeper insight is needed into the hidden causes and effects behind financial figures, as well as the formation of phenomena such as customer value.   

As the role of financial experts changes, cooperation, interaction and communications skills, and tools for shaping opinions, are growing in importance. Financial experts need to collaborate with other departments and colleagues in gathering and analyzing the relevant data from multiple sources. The ability to distinguish essential information from the data mass, summarize it and present it intuitively and persuasively to management and colleagues is taking center stage.

The financial function is an internal service provider with the task of promoting and supporting the success of an enterprise. In addition, outstanding service-mindedness will be increasingly required from the financial professionals of the future.