These days a finance department is a metrics department. What gets measured gets done. There needs to be much more clarity around whose job it is to take action when ratios are going the wrong way. There needs to be more visual cues in our dashboards, reports and white boards. Trend lines and statistics are much better graphed to give impact. There are many areas where the finance team in conjunction with others could dig deeper to build a better business, e.g.
- Could we price our products more efficiently?
- Where could we improve margins?
- What system changes could make the sales teams more efficient?
- Could we improve supplier contracts?
- What processes within the organization are causing value to leak?
- What is the ROI of IT investments?
- What historical ratios could give us insight into changes needed?
- Have the finance team audited the essential sales & marketing ratios:
- ROI of major marketing campaigns?
- Sales commissions
- Customer retention rates
- Cost of acquiring sales leads
- Are there patterns of customer behaviour that can be detected from the metrics that would give insight and help to our marketing and sales teams?
- Are there inefficient mini systems around the business that use poorly built excel spreadsheets?
- Could finance teach the basics of accounting and finance to our senior managers to improve our competitiveness?
- Could we conduct more thorough financial analysis of our competitors to aid sales?
By using the finance team in more operational areas we will align the interests of all departments to build a stronger awareness of margins and key performance indicators that drive performance improvements.