Why strong relationships between finance and other teams are key to better cash flow management
Finance affects everyone in your business. Whether it’s marketing needing a higher budget for the latest ad campaign, or sales asking how many discounts they can viably offer, finance is at the heart of every organisation.
But the finance team’s relationship with other teams isn’t always where it should be. This function is often siloed and judged by other departments as being too tight with the purse strings, despite the fact the team is often one of the biggest gatekeepers of growth.
But all areas of your business could benefit from strengthening this relationship. The better the relationship, the more open teams will be about their funding needs, enabling finance managers to better predict future financing and make smarter cash flow decisions. It can also help them identify inefficiencies and opportunities for cost reductions.
Teams like IT, marketing and customer service – on the other hand – gain an insight into how the finance team determines budgets for each department and how much money they have to play with for the year ahead. Not to mention, they’ll feel more comfortable suggesting improvements to their workflows and get a deeper understanding of the important role the finance team plays in keeping the business running.
So, how can you improve the connection between finance and everyone else for the sake of the business?
Be deliberate in sharing information
The finance function is often viewed as being tucked away, keeping themselves to themselves and tapping away on archaic spreadsheets, which makes it hard for people to understand what they’re actually doing day to day.
Finance members could start by making a commitment to share important information and updates in company meetings. Maybe you have a weekly or monthly ‘town hall’ which brings everyone together to learn how the business is performing. Why not ask for a 10 minute slot here? Make sure that presentations are recorded and available online in case anyone’s on holiday or is unable to attend, so there’s no excuse not to be up to date with the numbers.
It’s crucial that any info you share is easy to understand, and not just from the perspective of a finance team member. Try to avoid using complicated phrases and acronyms – not everyone is going to know the difference between ARR and EBITDA, remember. If you need to use acronyms, make sure you add a glossary containing all the definitions and explanations.
Be an active listener
This is one for the office goers.
When you’re making coffee in the kitchen or eating lunch in the breakout area, listen to what your colleagues are saying about finance. What are people complaining about? Which financial process is causing them stress this week? The more you pick up on, the better you’ll be at effecting change before you’re asked to. It’s this kind of proactive behaviour that will encourage people to come and talk to you if they don’t agree with the way something is being done or have ideas for improvement.
If you’re a remote worker, why not try an online Q&A to give people a chance to get things off their chest? Organise a monthly Zoom meeting with one or two members of the finance team and encourage people to join if there’s anything they’re unsure about. The more clarity people have about your processes, the more time you’ll save explaining things to them. You could even create a dedicated questions and suggestions channel over Slack or Teams, for example.
Have a clear expense policy in place
A good expense policy should cover as many scenarios as possible, in order to leave as little room as possible for questions, confusion and overspending.
Maybe your team travels a lot for work. In this case, your policy should clearly state how much employees can spend each day on food, drinks, travel and accommodation. If you don’t want your employees splashing out on taxis, restrict expenses to public transport only. Failing to stipulate what spending is within company policy can lead to employees spending more than you’d like them to – remember that what might seem ‘reasonable’ to one person might be totally different to another.
Use Pleo’s expense policy builder to create your own spending guidelines from scratch. Make sure you keep new joiners (and existing employees) in the loop about any changes to the guidelines to prevent overspending.
Communicate your plans for the future
People like to know what’s coming. So if you’re planning to reduce the marketing team’s budget, let them know so that they can prepare. They’ll thank you for the heads up, as being blind sided with this information could ruin the work they’ve already put into a project or campaign.
And don’t forget to invite the same level of communication back. If the IT team is going to secure an expensive software contract next quarter, for example, ask that they let you know in advance so you can manage expectations when it comes to cash flow. It’s a two way street, after all.
Combine finance with strategy
Plenty has been said about 2023 being the year that the CFO role evolves into strategy.
Instead of just focusing on the company’s outgoings, finance leaders are automating financial admin to free up time to partner with the CEO on key matters. The benefit of this is the CFO bringing their spending visibility and data to the table, enabling the CEO to make more informed strategic decisions. Plus, aligning finance with leadership gives the team a seat at the table, and a voice when it comes to the future of the company.
Not sure where to start? Download our free CFO playbook for an in-depth look at the evolution of the CFO to strategic business partner and the role they play during an economic downturn.
Make money easier for everyone
Many people only come into contact with the finance team when they’re being chased for receipts or reminded to add their expenses before month-end. But there are tools out there which automate business spending, making it easy for finance and employees.
With Pleo, for example, employees simply buy what they need for work, snap a photo of the receipt and upload it in the app. It’s that easy. They can add categories, tags and notes if they like, giving finance the necessary context for each purchase. Employees don’t have to worry about being left out-of-pocket, and finance teams don’t have the hassle of chasing for lost receipts or expense information. No more angry reminder emails, no more scolding for late submissions.
Plus, finance teams have the added benefit of less time spent on boring, time-consuming processes (see how we helped our customer Baltic Assist spend nearly 80% less time on manual expenses.)
Ultimately, better rapport between the finance team and the rest of the business is crucial for things to run smoothly. It opens up the lines of communication and gives everyone a deeper insight into how the financial side of the organisation is run, giving them the opportunity to help rather than hinder these key processes.
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