Strategic Finance Book

[Nazarena Lugg]

Buildinga strategic finance function flips the paradigm of traditional corporate finance on its head by leveraging the latest technology to free up time spent on low-value, backward-looking tasks, so you can identify (and follow through on) opportunities to guide your business into the future.

Strategic finance is the practice of translating operational finance data from across a business into sound financial insights in real-time. Many modern businesses, especially growth-minded startups, are embracing strategic finance because it leverages modern technology to support long-term goals and growth.

Normally, CFOs have to cobble together many tools to power their modern finance function. They use a host of point solutions for daily operations, an ETL tool to pipe that data into a database, a financial business intelligence (BI) tool for visualizations, and a financial planning tool for forecasting. Mosaic is an all-in-one strategic finance platform that replaces this costly, complex tech stack.

Strategic finance is a more modern iteration of FP&A (financial planning and analysis). Whereas data silos and manual processes forced traditional FP&A teams into reactive analysis and short-term monthly budget planning, strategic finance leans on more automation and data integration to maximize business partnerships. A strategic finance function balances both short-term and long-term planning, surfacing insights that help senior executives, department leaders, and C-suite decision-makers drive growth.

Strategic finance managers are responsible for ensuring finance teams can support company-wide departments in an efficient manner. As finance leaders, they use their unique perspective at the intersection of all business data to make partners across the organization more finance-savvy, enabling more effective and data-driven decision-making.

True strategic finance requires real-time data and instant insights. Finance teams can (and, for lack of better alternatives, often do) combine many different data analytics, financial reporting, and accounting tools to shape their financial strategy. But, this multitude of tools and streams of data can make rapid insight and iteration all but impossible.

The finance team is a well-respected and important department in any business. Most provide expert accounting and compliance services, build budgets, and offer checks and balances against rash decisions.

This article explores the concept and offers key ways to make strategy central to your finance function. We also identify common blockers, including slow processes and outsized workloads, which hold finance teams back.

Strategic finance is simply putting the company's growth and long-term vision at the heart of the finance function. Decisions may be controversial or require immediate sacrifices to generate long term change, but are always data-driven.

Overseen by the finance department, key decision makers use strategic analysis to delve deeper into current operational issues and create an action plan. The overall purpose of strategic finance is to steer the company towards its goals - revenue growth, sustainability, environmental impact, and more.

Fortunately, the finance function sits at a unique cross-point in the company. With a direct view into each department, financial managers must work with other departments to inform their plans and create bottom-up budgets.

CFOs and finance executives also have some of most senior roles in the entire business, and deal constantly with stakeholders. This vertical hierarchy gives finance authority within the business, and makes it the perfect catalyst for strategic planning.

And finance professionals are invaluable in any corporate feedback loop. Considering their proximity to the data, they can work with both ground-level and high-level information to move the company forward.

Most strategic decisions are reflected in the numbers. With direct access to expenses, profits and losses, for example, the finance team is the first to know and ideally placed to monitor the effects of any changes.

Certain departments in your company have to focus almost exclusively on generating results, such as sales and marketing. But the finance function is a service unit at heart, working on the business rather than inside it.

While finance departments are perfectly positioned for maximum impact, many of their other day-to-day tasks take up time that should be spent more strategically. In fact, only 40% of finance professionals feel that most of their work adds value:

And applying automation tools to your figures provides quicker results than that of manual manipulation. This can be highly beneficial to your business, since real-time data lets decision-makers take more timely actions. With finance leaders stating that one of their main objectives in 2023 is to reduce friction, technology will be key to building a strategic finance function.

Essentially any repeated, low-creativity task can (and probably should) be automated. So start with the highest impact for your finance function - the tasks that take too long and provide very little value.

The roles in corporate finance are very broad-ranging, and really can prepare someone to be on the general management track, ultimately to be a business leader. The Strategic Finance Academy begins that early on, and develops that capability throughout the course of the next year.

When we would meet every Friday, we would have three or four different companies come and present with recruiters and alums, and talk about both their company, their projects, their roles, and then also the opportunities for MBA students.

You have companies come in and give you cases, so you can better understand the industries and what it's like to be a financial professional there. But you also have something called M&A Day, where they have a company come in and teach you a real case about a mergers and acquisition case.

We spent three days visiting companies in Indiana, and then in Louisville and Cincinnati. That bonding transformed the Academy into a great network, and into a great resource of peers that I could use going into my internship search.

I went on the San Francisco trip, and I was able to network about 15 to 20 different professionals at Intel, so that when it came time for interviews I actually knew each of my interviewers pretty well.

There are several different network opportunities. Recruiters will come on campus. There's roundtable sessions, where we conduct very informal mock interviewing. The best Fortune 500 companies are hiring from Kelley. Kelley prepares the students to be successful. I, myself, am a former Kelley, and was successful. I think that that success breeds further success through network, through an understanding of career opportunities, and how the curriculum is set up here at Kelley.

Are you interested in corporate or strategic finance? Are you drawn to consulting? The Strategic Finance Academy enables you to find the right fit for your career goals and to gain the analytical skills you need to solve business problems. You will:

Students in the Strategic Finance Academy have landed internships and full-time roles in companies such as 3M, AT&T, Discover, EY, Ford, Intel, Merck, PPG, Target, and Xilinx. And Kelley MBA graduates pursue careers across the US and abroad. View our employment statistics.

Strategic Finance Academy Director Neil Powell has more than 25 years of corporate finance experience, having served in a number of roles in the high-tech industry. He has both domestic and international experience, serving as business controller, senior director, vice president of finance, and corporate controller in Fortune 50 and small cap businesses. He earned his MBA at the Kelley School of Business.

LP joined the Kelley Graduate Career Services staff in December 2021 after 10 years of student service experience in and around Indiana University. A proud Hoosier with two degrees from IU and a background in higher education and student affairs, he most recently oversaw graduate student professional development and led the graduate career coaching team in the Luddy School of Informatics, Computing, and Engineering. As a coach for the in-residence MBA program, LP enjoys assisting Kelley graduate students in meeting their career goals and achieve success.

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The journey towards a great CFO introduces the concept of strategic finance, the new financial business partnering approach. With financial modeling, scenario planning, and real-time data analysis, strategic finance helps modern businesses thrive in an uncertain world.

What is strategic finance? Why finance function is ideal for strategy? Who does strategic finance report to? The difference between FP&A and strategic finance The benefits of strategic financial management Why having a strategic finance team is crucial in 2023? Three signs that you must switch to strategic finance Building strategic finance function with technology Get ahead with next-generation strategic finance tool

Further, strategic finance aims to increase profitability in the long run. Usually, financial management aspects like planning & forecasting, risk assessment & management, cashflow & burn management come under the radar of strategic finance.

But, at times, it also assesses the financial impact of strategic decisions, such as mergers and acquisitions, capital investments, new product development, and standardization of the finance function. With strategic finance, you spend less time on traditional accounting and more on high value tasks impacting business growth directly.

The strategic finance unit reports to the CFO or Head of Finance. Since these folks are interested in the overall strategy of the business and its direction, they often have a dotted line reporting to CEO, COO, and other C-suite executives. You could also witness them reporting to the Board of Directors for special projects.

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