Let’s be real – in many companies, the finance department is hidden away behind a wall of spreadsheets and budgets. Other teams only knock on their door to apply for a budget extension or drop off documents. ‘After all’, they conclude, ‘that’s their division’.
But this isolation is expensive – much more expensive than you might think.
In The Finance and Business Synergy Report, 60% of respondents said their employees lack the basic financial understanding to make good decisions.
That’s a scary number. When people don’t dare to ask the finance team for advice, or when the finance department isn’t brought to the table where decisions are made, it often ends in misinvestments and wasted resources.
Many mistakenly believe that the fewer people get mixed up with finances, the better. But in reality, the truth is quite the opposite.
We’re going to take a closer look at how you can turn this understanding around. We’ll delve into concrete examples of how collaboration can take the whole company to the next level, which factors typically stand in the way of collaboration and how to get this new understanding off the ground.
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Key takeaways:
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Why collaboration makes so much sense
You may be wondering why collaboration is so important.
To answer this question, let’s take a look at some interesting figures from The Finance and Business Synergy Report – a report we’ve put together to provide insights from more than 2,800 financial decision-makers across Europe.
In the report, 72% of respondents say they believe better collaboration between finance and other departments can make them a more financially successful company, help them become a more resilient company – and stay agile to increasingly unpredictable external factors.
Paradoxically, although many businesses understand the importance of collaboration, only 32% agree that they understand the role and influence of other departments sufficiently. In other words, there’s room for improvement.
‘Collaboration is critical to business success and the best companies should want their teams to win together. If there’s one thing my career has taught me, it’s that no important business result can be achieved without collaboration.
– Søren Westh Lonning, CFO, Pleo
To drive home the importance of cross-functional collaboration, let’s imagine a typical mid-sized manufacturing company struggling with fluctuating earnings and constant budget overruns.
Sales might chase revenue without knowing the actual costs. Manufacturing would probably focus only on output without understanding the cost of capital. And finance would likely be frustrated with the big picture, but have no real influence on day-to-day decisions.
Now, imagine that all departments within this company started collaborating.
Finance might start having short, weekly meetings with the other departments, translating complicated numbers into concrete actions.
This would tell sales which products actually generated a profit. The Head of Manufacturing would know the value of reducing stock, and procurement would learn to look past the price per unit and factor in the total costs. In this scenario, you can imagine the profits would rise while the costs would drop.
We’ve saved the most important thing for last: job satisfaction. Employees would feel better equipped to do their jobs, and collaborating across departments would create a completely new dynamic. When sales and finance speak the same language, when manufacturing understands the financial consequences of production – when everyone pulls in the same directions – something magical happens.
It's not about everyone having to be an economist, but about creating a common understanding of how our decisions affect the company's finances.
The challenges of collaboration
As the numbers suggest, most people do know why collaboration across departments is so important. In reality, however, collaboration is easier said than done.
So what is it that prevents so many companies from creating effective cross-functional collaboration?
One of the most common obstacles to collaboration is the so-called silos that isolate departments from each other.
Figures from The Finance and Business Synergy Report show that 68% of companies believe that silos – whether they’re communication, departmental or hierarchical – make it difficult for the finance department to collaborate effectively with other teams.
Download the report and get the complete analysis
What’s more, 62% of respondents say that an unprogressive mentality means individuals are stuck in their ways, opposed to change and unable to see the related benefits of collaboration between finance teams and other departments
Another significant challenge is the anxiety many employees outside of finance experience when it comes to handling company finances. 58% of businesses agree that those outside of the finance team are concerned they don’t understand finance and that they'll mess something up.
3 essentials for better cross-functional collaboration
To get cross-functional collaboration to work in practice, there are three essential elements that need to work together.
Firstly, it’s about the people who need to work together in new ways. Secondly, it’s about creating new daily routines that support collaboration. And finally, it’s about using the right digital tools to work smarter – not harder.
1. The people
The days of the dusty old bookkeeper hiding behind piles of documents are long gone.
Modern day finance employees must be mediators and sparring partners. They must be able to translate complex numbers into something that everyone can understand.
But this takes effort – from both sides of the desk.
Getting everyone on board is about building trust. As we mentioned earlier, many employees feel anxious when it comes to company finances and numbers. That makes it important to foster an environment where it’s okay to ask ‘stupid’ questions.
Make talking about finances relevant by relating it to everyone’s daily work.
A salesperson shouldn’t be bombarded with accounting terms – they just need to understand how different sales models affect the health of the company. A project manager should be able to see the connection between resource consumption and the bottom line.
It’s about bridging the gap between theory and practice.
2. The daily routine
Regular meetings don’t have to be boring status updates. Try introducing short, focused finance meetings with each department – maybe biweekly to start.
During these meetings, you don’t want to spend your time going through endless rows of numbers. Instead, you want to discuss concrete challenges and opportunities. What does the latest price change mean for your margins? How does the newest supplier agreement affect your liquidity?
Knowledge sharing is about making information accessible without drowning people in details. For example, create a simple dashboard with the most relevant KPIs for each department. Send short, relevant updates when significant changes occur. And remember to celebrate successes – when a department has reached a goal, or when a new initiative has yielded positive results.
Typically, the biggest challenge is the us-vs-them mentality. Finance is often seen as the ‘police’ of the company rather than the sparring partner they could be. Break this pattern by becoming a visible part of the daily routine. Have a coffee and a chat with the other teams. Listen to their challenges, and show them that you're interested in what they do.
The best ideas are often sparked by informal conversations.
3. Smart systems
Technology should be a help – not a hindrance.
Today, there are many user-friendly systems on the market that can automate tedious, manual tasks. This frees up time for what’s important: dialogue and analysis.
With that being said, it’s important to choose wisely. A new system should be easy to use for everyone – not just your accountants.
In The Finance and Business Synergy Report, 77% of respondents say that spend management platforms – like Pleo – help them drive effective collaboration between the finance team and the other departments.
No matter which solution you choose, however, the most important part is that your technology needs to support cross-functional collaboration. A good system makes it easy for you to share insights, comment on developments and follow up on decisions. It creates transparency and trust – and it enables everyone to make better decisions based on actual numbers and trends.
Technology shouldn’t replace human dialogue, but give us a better foundation for it.
How to get started
Getting a collaborative financial culture off the ground may sound like a daunting task. As with all other kinds of change, however, it’s about taking things one step at a time.
Start by identifying a department where better collaboration would make a real difference. For example, sales could benefit from a better understanding of financial key figures, as they can help them make more profitable deals.
Once that’s done, it’s about avoiding making the classic mistake: trying to change everything at once.
Instead of rolling out huge, new tools and processes across the organisation, start with smaller, more manageable projects – for example, weekly 15-minute meetings with the chosen department to go over a few important numbers. Or, create a simple dashboard that covers all the relevant KPIs.
Another common mistake is making things too complicated. Focus on the numbers and insights that actually matter to the department in question. Avoid accounting terms and focus on the practical aspects: ‘What do these numbers mean for your daily decisions?’
The most important thing is to get started. Start small, keep it simple and build up gradually. Rome wasn’t built in a day, and your new collaborative culture won’t be either. But every day you don’t start is another day spent missing out on better decisions and results.
