Finance Control and Strategy. A match made in heaven

Everyone who works in Finance is a bit of a control-freak. You might try to deny it, but think about this for a second: you’re managing the company’s money, you’re responsible of keeping track of every expense and you also need to be up to speed with everyone’s needs so you can have a clear understanding of where exactly is the money going, or if that expense is actually valuable for the organisation. And let’s not even forget the fact that, in the end, Finance needs to make money grow.

As Rydoo’s own CFO said, “we’re given a huge responsibility of managing the company’s money”. And even though staying in control of cash flows is a shared responsibility that should also be bestowed upon the managers of each team, there’s no denying that Finance has gained a privileged front row seat to the money tracking show. This has led to not only a higher level of control, but also to a more strategic involvement of the finance teams in the overall management of the organisation. CFO’s, Finance Directors and managers are now seen as essential pieces of the puzzle when it comes to developing strategies for the future of the business.

And in a time where uncertainty is tangible and, as Rajiv Ramanan, Co-Founder of Spendflo, said in a recent panel in London, “cash is king”, having a finance team that’s in the loop has become a reality for most organisations. Those who have not caught up to the trend might be missing out on opportunities to grow.

Picture a scenario where you’re a part of the Finance team of an organisation. Each team has their own needs and, every month, you get three different invoices for project management tools. Product uses monday.com, Marketing prefers ClickUp and Customer Success has all of their projects in Asana. And every month, you’re paying for three different platforms that, essentially, serve the same purpose.

“In a lot of companies, Finance just pays for the invoice and nobody knows that these two products are doing the same things for different teams”, said Rajiv Ramanan, during a live panel on Finance Control hosted by Paddle. During the event, Ramanan joined David Tuck, Co-Founder & CEO at Mayday, David Peterson, Partner at Angular Ventures and Danielle Keeven, Former VP of Finance from Paddle, to discuss the top challenges finance leaders face today and how they’re taking back control in 2023 by developing strategic plans to optimise spend and turn it into growth. “The only way to do that is to start showing everyone where they are spending their money”, added Rajiv. “Once people are aware of consumption, they become more rational about it.”

We live in a time where companies are cutting costs. As David Peterson mentioned, unlike what happened during 2020 and 2021, companies are not fundraising, but rather reducing spending in order to achieve breakeven. Most of them, said David, “don’t know if that next round [of funding] is gonna come. It’s not guaranteed in the same way it used to be, so they’re starting to think about profitability.”

The first step to achieve profitability is reducing unnecessary costs and, for that, Finance teams need to not only have a clear and global view of all costs, but also be able to establish which of those costs are actually essential to the team’s effectiveness and which of them can be reduced. This way, CFO’s and their teams will be able to understand what can be cut without compromising on delivery, and turning that extra money into something profitable for the organisation.

In order to do more with less, David Tuck says, Finance teams need to become more efficient and effective. Automation tools and AI can play a big role in that. “There’s been a bunch of great innovation in the finance tech stack space”, said the CEO of Mayday. Nevertheless, these days, most Finance teams are still very reactive in their functions, and for the teams to be able to have a more strategic involvement within the organisation, some of their day to day tasks need to be eliminated, or at the very least simplified. “There’s so much opportunity to eliminate [those tasks] and, as a result, help finance to be leaner and more effective in terms of bringing proactiveness across all of the other areas of the business.”

But doing more with less also means being conscious about your workforce. In a time where we see more and more big corporations laying off hundreds, or even thousands, of employees at once, as an effect of the current market state, Rajiv Ramanan says that organisations need to start hiring more consciously. “Be very particular about hiring and don’t overhire. Growth is important but, at the same time, in the current economic situation, we don’t know what will happen next. So, for every hire, you should have a clear cut plan so it can eventually justify how one hire became another.”

Hiring the best people for your team can lead to better results and more growth, but when you’re starting a company from the ground up, you might think twice about the people you want to have by your side from day one. That’s what Rajiv Ramanan did when founding Spendflo. “One of the main criteria for me when I chose my co-founder was to find someone who knew finance well. Because the function of finance has evolved so much that it’s not just about bookkeeping.”

For Rajiv and Spendflo, this meant having the Finance team collaborating on the development strategy of the organisation from the start. And the reality is most companies are following a similar path these days, with the Finance teams and CFO’s earning a place at the big table. “I’m always incredibly impressed when I see a finance leader as the strategic partner to the CEO”, David Peterson from Angular Ventures mentioned. “Having finance leaders at a board meeting and being deeply involved in the strategic decisions in a business can be the secret to a lot of companies’ incredible growth.”

According to David, for that to happen finance teams need to let go of their typical roles of only being in charge of books and should be able to have visibility of the strategic conversations that are happening at a board level. For Danielle, Former VP of Finance at Paddle, that shift happened gradually over her 15 years of working in the area and it had an impact not only in the growth of the organisation, but also in her happiness.

“I started out in a corporate environment and switched over to tech. At first, I got very bored at clicking buttons”, Danielle recalled. “I’ve always taught my team, if you automate your job, you will never be out of a job. Automating the clicking of a button enables finance professionals to take on more intellectually challenging roles and add value to the business.”

According to Danielle, if a task is not necessarily adding value to an organisation, people should find different ways of approaching them in order to save time that could be used in higher value tasks, such as thinking about strategic ways for growing the business.

“There’s a world of added value that you can bring to the table with your intellect, with your insights and your perspective”, says Danielle. But, for that to happen, CEO’s and other members of the exec team also need to make room for Finance teams to be able to join the conversation. For that, yet again, the first step is for them to be involved and have that much needed global overview of what’s happening in the business. “If you keep your finance team in the back, they will not be able to identify what the business is doing in the front. It’s a dual responsibility. The finance professional needs to create that partnership, but the business also needs to bring the finance team in.”

This involvement and collaboration, Rajiv says, will inevitably lead to the finance team having more control over all of the areas of the business, even hiring. “Because finance will understand what’s the impact of each role for the business”, he says. In a scenario where you need to hire a new people for your engineering team, for instance, by having a clear overview of what the needs of that specific team are, Finance can create a clear cut plan with HR of what are the specific traits that new hire might need to have to fulfil these needs, and adjust the salary expectations accordingly. “It’s something that they need to have a very broad view of the business to understand”, the Co-Founder of Spendflo adds. “They cannot be aloof or separate, they cannot make decisions by operating in silos.”

Silos is one of the main topics being discussed at the moment, especially in a post-pandemic era where more and more teams are adjusting to a remote or hybrid way of working. The right tools can help solve the issue, but as Danielle mentioned, finance needs to immerse themselves into the business and become a contributing and collaborative partner in business expansion conversations. For the CEO of Mayday, there was a clear answer for the question of when would be the right time for the finance team to be involved in an international expansion.

“My flippant response was ‘before the expansion has already happened'”, David Tuck said. “So often, Finance teams are just reactive and try to catch on with the after effects and make the best at cleaning up, so to speak. There is no strategic initiative within a business be that an international expansion, be that a partnership that would be worse off as a result of finance being aware of it and involved earlier.”

According to David, Finance teams can play an important role and even enhance the results of such initiatives by being aware and involved from the very first day. “Finance is a front footed function and needs to be aware of what’s going on across the business”, he added. “Of course that there will be situations where finance might be neutral, but there will be so many others that can be demonstrably enhanced by virtue of that awareness.”

This involvement, both Rajiv and Danielle agreed, extends even to the sales department. Both Paddle and Spendflo often involve their Finance teams in sales to close deals. The reason behind it? Finance teams are often the ones better equipped to target other finance teams.

“I have my finance people talk to customers because they have a lot of business context”, said Rajiv about Spendflo’s Finance team’s collaboration with sales. “Also, my Finance person has an understanding of legal terms that can help with closing deals. I call him The Closing Officer, and that’s why he’s working with us on most deals and talking to customers.”

Danielle has the same experience at Paddle, first hand. During the live panel in London, she mentioned the fact that herself and other members of the team often hop on calls with prospects so they can clearly understand their expectations, challenges and needs. “Paddle is a finance tool and when finance is your biggest audience, having a finance person lead that conversation, being honest about it and not coming from a sales angle, other finance people will connect over things that are important to both of them.”

Other than that, having your finance team join on a call with CFO’s from other organisations can help them get insights that can help grow and further develop your product. By getting to pinpoint the prospect’s needs and challenges, Finance can then share this expertise with product and engineering, allowing them to improve the product.

“We [the finance team] get to understand the problems prospects and customers are facing and think how to solve some of these, and also communicate some of them back to product and engineering”, said Danielle. “The logic of tax law and implementation is different to mathematical logic. This is why product & engineering teams cannot follow standard common sense or mathematical logic and need to collaborate and leverage our tax professionals and finance teams to ensure it is implemented as intended by law.”

Close collaboration between different teams has been a topic of discussion over the last few years, and even though some might argue that each team has their own role in the organisation and teams should be able to achieve results without other’s involvement, the examples above show us that, now more than ever, collaboration is key, especially with the Finance teams. The role of CFO’s and the Finance team has shifted, and organisations need to stay up to date with the trends if they want to achieve growth and, eventually, breakeven and profitability.

For that, allowing Finance teams to focus on tasks that add value to the organisation and having them in the loop from day one are the first steps to take on. In the end, it will help Finance bring forward their strategic expertise and, ultimately, it can even help you save costs and grow your business.