5 Best Practices to Drive Financial Model Transformation and Governance
Adaptive organizations require a change-catalyst strategy that can rally teams around digital transformation initiatives and enable their people to create momentum. This means creating a blueprint to continuously optimize financial, operating, and organizational processes. Here are some best practices to start with for transforming your financial models:
1: Unlock adaptability
The need for digital resilience—the ability to leverage technology to adapt and stay agile—has never been more urgent. Cultivating a culture of innovation and continuous improvement within your finance team is critical to embracing change and aligning people for optimal impact.
Companies that capitalize on digital transformation have realized how to unlock their greatest resource— the people who work for them. To spark innovative ideas, you need to encourage your finance team to play an active role in transforming your organization. Driving change requires you to use data insights to create vision for the future and to successfully convey that vision to your team.
Futurist finance teams embrace advanced analytics to move from static reporting to predictive insights and recommendations. Machine learning, AI, and dynamic reporting tools set people up to get insights faster and drive action with more confidence.
How to drive change?
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- Innovate finance roles: Transform finance teams from guardians to business innovators. Set OKRs that reward innovation, process optimization and attainment of financial process efficiency.
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- Adopt technology: Embrace rapid deployment of innovative tech solutions to meet evolving business needs.
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- Enable collaboration: Foster enterprise agility through collaborative teams. Integrate tools for streamlined information sharing and business intelligence.
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- Empower employees: Simplify app development and deployment for employees.
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- Enhance decision-making: Shift from reactive to proactive decision-making. Utilize digital workspaces and data visualization for confident decisions.
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- Promoting team synergy: Create an iterative and collaborative environment with feedback loops, flexible communication, and cross-team planning to meet customer expectations.
2: Focus on impact
Navigating finance team challenges and priorities is complex. To improve outcomes, identify friction points and transformation opportunities. Focus on critical areas like financial analysis, reporting, strategy, automation, risk management, and workforce effectiveness. Your change management strategy should adapt processes and align people for desired results.
Effective finance teams have a clear understanding of the business model, financial structures, operations, and organizational dynamics. They know how to harness technology and optimize reporting and insights to create a hyper-connected business. This understanding empowers people to focus on things that matter most to the organization and accelerate time to critical decisions and actions.
How to drive change?
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- Create a business operations map: Create a map for financial models, operational processes, and organizational structures.
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- Leverage data-driven insights: Ensure data-driven insights to address performance issues, cost allocation, and inventory management.
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- Use agile reporting: Shift from static monthly reporting to agile financial insights supporting multiple entities and currencies.
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- Access customer insights: Access deep customer experience insights.
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- Optimize cash flow: Improve cash flow by optimizing inventory and asset capitalization.
3: Embrace digitization and speed
Digitization and data provide a significant opportunity for you and your finance teams to deliver more value to the organization, faster. New digital financial models provide innovative ways to capture value from the products and services that your company delivers to the market. At the same time, finance leaders are facing growing risks caused by geopolitical turmoil, regulatory reforms, market instability, and cyber threats. Harnessing the power of the cloud helps finance to create early warning systems to proactively manage risk while driving transformational change through new business operations experiences.
Modern finance teams leverage technology to streamline tasks, enhance job satisfaction, and retain talent. These tools boost productivity, foster collaboration, and enable business agility, extending beyond traditional accounting. Cloud ERP solutions such as
Dynamics 365 Finance and Operations offer interoperability with productivity tools, eliminating the need to switch apps for effective collaboration allowing finance professionals to focus on strategic actions.
How to drive change?
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- Foster collaboration and productivity: Create a hyper-connected business with cloud-based apps extending beyond financial management.
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- Streamline processes and data integration: Integrate core business processes and data with financials while automating tasks across departments.
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- Accelerate financial closing: Speed up monthly and yearly financial closing and reporting by connecting general ledger, accounts receivable, and fixed asset data.
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- Automate billing for revenue recognition: Implement automated recurring billing to adapt to new revenue recognition standards, minimize risks, and ensure precise financial statement reporting.
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- Create an agile, connected work environment: Bridge skills gaps, save time, and reduce errors by uniting people, processes, and data in an agile, mobile, and always-connected workspace.
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- Optimize collections process: Enhance the collections process with a rule-based collection strategy that automates task and email reminder creation.
4: Drive governance and standardization
Today, it’s easier than ever for companies to do business worldwide due to technology. But with geographic expansion comes new challenges. Not only must companies contend with different languages and cultures, but regulations within and across regions are increasingly complex and frequently changing, making global expansion and operations difficult for many businesses.
Modern finance teams can scale worldwide expansion, reduce risk, and manage complexity by streamlining global operational processes. Through optimized workflows, they can provide greater consistency and compliance across the entire organization. Financial model innovation also requires tools to support local languages, currencies, taxes, and compliance regulations.
How to drive change?
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- Unify data securely: Utilize secure, cloud-managed data platforms to unify information across departments and global subsidiaries.
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- Proactive risk management: Implement early warning systems to proactively manage risk and detect process discrepancies.
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- Eliminate data silos: Adopt solutions that eliminate duplicate efforts, break down data silos, and establish centers of excellence for collections and other processes.
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- Automate accounting standards compliance: Comply with accounting standards by automating revenue forecasting, allocation, recognition, subscriptions, renewals, and reporting through rule-based event-handling processes.
5: Get to insight
Financial visibility means accessing your financial performance quickly, cohesively, and extensively. Implement agile strategies, real-time risk assessment, and faster decisions with advanced data analytics and artificial intelligence to maximize profitability.
Finance teams need the ability to connect data and translate it into insight, without requiring a data science degree. The business intelligence and financial reporting tools of today are infused with advanced analytics and AI that connect stakeholders and help them better understand, interpret, and use financial data.
How to drive change?
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- Enhance cash flow management: Improve cash flow through predictive recommendations and proactive guidance for processes like customer payments, credit and collections, budget control, and financial planning and analysis.
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- Leverage predictive analytics: Utilize predictive analytics for enhanced management of cash flow, bank reconciliations, fixed assets, budgeting, and project-costing.
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- Real-time insights: Access real-time insights into cash flow, financial patterns, and trends using built-in reports and data visualization tools.
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- Efficient customer agreement tracking: Efficiently track customer agreements, including price details, discounts, delivery dates, product availability, and fulfillment status.
- Identify margin improvement opportunities: Identify margin potential improvements using modern data analytics across geographies, business segments, and product categories.
