Design and Execute a Finance Strategy

Written by Rentia Muell.

Finance and integrated Risk Management

Finance and integrated risk management is a discipline that includes the setting of the financial destination for the organization and advising on the selection of strategic options to reach that outcome. It further encompasses the development of financial plans to ensure that the organization delivers on the agreed targets and that resource utilization is continuously optimised. Finally, financial management ensures that the organization is economically efficient, identifies risks at an early stage and provides adequate and concise accounts for the use of resources to all stakeholders.

Finance Strategy and Execution – To Design and Execute a Finance Strategy:

Every function in an organization impacts on strategic alignment. Finance, like all other organizational units, needs to design a strategy aligned to the overarching organizational goals – cascading it down to process or initiative level in each responsibility area. This process is critical, in an ideal world every person in the finance organization, from the boardroom to the backroom, would understand the strategy, be fully committed to its vision, and understand how their individual actions support the bigger picture.

Scientrix is an ideal solution for defining a finance strategy that is aligned with the corporate and business strategies; cascading it down to every individual in the finance organization, as well as clarifying cause-effect relationships. It helps to reduce the complexity in the finance world, creating a blueprint that can be used as a template to align and standardize purpose, structure, scorecards, processes and internal controls across multiple finance units. This is also ideal for the induction and training of new finance employees.

Finance Management – To Ensure Effective and Efficient Processes:

Although the Finance division aims to play a stronger strategic role, the management of the basic processes often remains a challenge. Finance has started to use process quality controls such as ISO, and other process documentation, but these tools are not delivering robust processes. Although ERP systems have contributed a lot in making processes more stable, there’s little transparency regarding whether the finance processes are efficiently deliver the required outcomes.

Scientrix provides a way to speedily obtain an overview of all the finance processes, aligning them with critical outcomes, breaking them down step-by-step into detail and then linking internal controls to the processes. In this way the finance director has an integrated view of the processes, process knowledge and process performance data.

Finance Management – To Effectively Manage Costs Across the Enterprise:

Cost in an organization can essentially be managed through budgetary control and strategic cost management.

Budgetary control is an effective way to ensure that an organization’s expenditure remains within approved limits for each cost centre. The tracking of cost centre expenditure, and the endless amounts of reports and details, makes it cumbersome and doesn’t provide a concise overview of the spending, the trends over time and the corrective actions – within one view.

Scientrix integrates the cost centre and the accountability structures in the form of a matrix, and a matrix-in-a-matrix, thus providing an immediate overview and identification of problem areas. It condenses and organizes cost information layer- by-layer to provide an overview, clarity and reduction of complexity in a collaborative way.

Strategic cost management is about designing a strategy on how to reduce costs by setting stretch targets and fundamentally challenging the business model and its inherent cost structures. It’s about what we do, where we do it, how we do it and how well we do it. The challenge is to design a solution across the organization, covering all strategic levers and cost drivers, and outlining clearly cause-effect relationships in such a way that the investment in changes yields substantial results.

Scientrix is ideal for designing an enterprise cost management solution that aligns key strategic levers, demonstrates cause-effect relationships and tracks initiatives from inception to results. It facilitates rigid thinking processes that explore all possible options.

Finance Management – To Design an Integrated Performance Management System:

Setting 3 to 5 year financial-planning targets are meaningless if they’re not linked to efficient strategy and execution. It all starts with identifying the expectations of the capital market and then defining a set of overall financial targets regarding profitability, liquidity and growth for the organization. The enterprise then designs potential strategies on how to achieve these financial targets. Finance has to quantify these strategies using financial modelling tools, ensure that the KPIs and targets are correct and that the proposed strategies will achieve the desired financial outputs. Once this is ensured, a rigorous performance management process with direct links to the reward system needs to be deployed.

Scientrix with its sound mathematical underpinnings supports the design of the strategy and cascading process, as well as ensuring an implementation of a fully integrated performance management system.

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