Modernisation through delegation: the 21st century FD

By Neil Robertson.

Although an age of rapid technological advancement – where more and more time-consuming tasks are completely or partially automated – has had an undeniably positive impact on the enterprise community, there’s an argument that it has left some professionals behind.

And though we usually think the professionals most at risk are on the lower end of the corporate payscale, finance directors may also be in danger of obsolescence. While they play a vital role for any business, it’s one that is becoming increasingly tricky to perform.

FDs often struggle to make the best possible decisions because they don’t have access to the right data. A lack of meaningful information can also translate to a lack of meaningful insights – and it’s much harder to delegate financial responsibility to the wider organisation when they don’t know what to do with it. When FDs assume all responsibility, processes become slow, teams fall behind, and cash flow and budget spend are adversely affected. So how can they move on from this centralised approach and enter the 21st century?

Why FDs struggle

It’s first necessary to establish why FDs have such a hard time of it in 2017. In truth, their limitations often correspond to the limitations of their technology. Accounting applications aren’t always as functional as finance departments might like. Management report data can often be 5-15 days out of date, and paper records that need to be uploaded on to the system can often be inaccessible – lost, disorganised, or stored in unlabelled filing cabinets as they often are. Absent the correct data, and with multiple stakeholders to consider, routine processes become bureaucratic nightmares. This rigidity means that innovation and experimentation are often stifled: FDs are forced to resort to tried and true methods for running their departments, and cannot even meaningfully iterate on them. 

Technology and trust

A simple answer, then, is to use technology that doesn’t have such limitations. Where possible, software should facilitate the job of the FD: certain tools can deliver real-time data to the entire business, and empower budget holders to take charge of their spend.

There’s more to this than technology, of course. Budget holders, directors, and project managers must be trustworthy enough to act responsibly with the company’s money – and without the buffer of the finance team to tell them ‘no’. If things go wrong, they may well find themselves held accountable for decisions that they were not involved with. But being able to trust budget holders is necessary: without financial delegation, processes will remain laborious – and FDs will remain overburdened and business performance will be at risk.

FDs, for their part, may be reluctant to relinquish control, but they should not nurture dependence among their colleagues. Delegation teaches departments responsibility and accountability: it also teaches finance teams to recognise the difficulties their colleagues face, and to treat them as more than numbers on a balance sheet.

When they can share information and share responsibility, performance, both individual and of the entire organisation, can only improve. Budget holders should know what commitments have been made; they should have access to accurate forecasting and historical spend analysis. That requires technological investment, to be sure. But it also requires that FDs trust other departments to use this information correctly.

As markets become more volatile, and digital transformation continues apace, FDs will need to modernise. But before they take this vital step forward, they might want to think about taking a step back.

Neil Robertson is CEO, Compleat Software