The Benefits of a Finance Department

Published - Jul 05, 2022

It is easy to overlook back-office operations like HR or Finance. They don’t make money as the sales department or marketing department do, so it is easy to think of them as a cost centre.

A finance department is in fact, extremely beneficial to your business. It may not directly make you money, but it will save you money and help you to allocate your funds efficiently.

What Does a Finance Department Do?

The finance department is the centre of a successful business. It manages the cash flow to ensure the business has the finances to achieve its short and long-term objectives. The finance department will also manage day-to-day functions like:

• Payroll
• Accounting
• Financial projections
• Taxes
• Bookkeeping

Bookkeeping and accounting gather historical data, but other functions look ahead to inform business decision-making.

The Benefits of a Finance Department

A finance department can do a lot more than just managing your books. Here are some of the main business benefits of a finance department.

Informs Strategy

The finance department can create comprehensive reports that inform your business strategy. They track and examine financial data to predict business income and costs in the future. Monthly finance meetings can provide stakeholders with information about budgets, cash flow, and costs. This information allows business owners to create a strategy for all of their business income. Financial data can also be used to predict the outcomes of decisions before a company commits to a course of action.

Identifies Issues

If you want to know why your business isn’t profitable, follow the money. The finance department can identify issues that affect a business’ profitability and cash flow.

Financial data will help business owners and stakeholders identify areas where costs can be cut and when the business needs to increase its income. Without historical and projected financial data, a business is operating blind.

Improve Investor Relations

Investors value the financial data a finance department can provide. They like to see up-to-date KPI reports so they can understand the business performance. Providing your investors with comprehensive financial data will keep your investors happy and illustrate the strategy behind business decisions.

Mitigates Risk

Your financial department plays a vital role in keeping your company afloat during economic crises. They do this by:

• Managing business insurance
• Creating financial forecasts for 'worst case' scenario's
• Identify areas where costs can be cut to protect cashflow
• Applying for grants and government assistance
• Putting resources aside in case of emergency
• Inform contingency plans

During the Covid-19 pandemic, our clients relied more heavily upon us to stay in business. We increased our reporting and meetings so we could help our clients make timely decisions.

Raise Funds

Your financial department will help you to raise funds for your business. They will help you to generate the financial reports you need for your applications.

In many cases, businesses that have financial departments are taken more seriously than those without. Their applications will be filled out correctly and not have missing information. Also, when an applicant has financial expertise on their team, it indicates that the loans or funds will be put to good use.

We have identified pinch points and helped our clients apply for products that otherwise were not on their radar. Many business owners are not aware of all of the products available or have difficulty interpreting the eligibility requirements. In some cases, eligibility can be achieved with a few small changes. Your finance department is your ally in this highly technical space.

Posted in Finance on Jul 05, 2022