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What does the future of a finance function look like?

What does the future of a finance function look like?
18Sep2018

Having a well-thought out and documented finance system in your business helps you to have better control over your cash flow. Work with the advisory team to experience the benefits of having an effective finance function in place.

Having a well-thought out and documented finance system in your business helps you to have better control over your cash flow. Knowing when an invoice is coming in allows business owners to plan their spending without the chances of an unexpected payment occurring that may put a dent in cash flow when you least expect it.
 
Working with an advisor will allow you to implement a finance system that works for your business and provide transparency on your expenditures. However, with the accounting standards constantly being changed, it’s important to regularly engage with your advisor to ensure that your finance processes are still relevant in the ever-changing accounting world.
 
Our advisors here at Carbon have recommended three points to consider when it comes to devising a finance function.
 
  1. Adaptable – A finance function shouldn’t be seen as a “set-and-forget” document. Businesses change and grow, but still need all the correct finance functions in place. Reports still need to be generated. The initial finance system may need altering to cater for these changes, so ensure your finance function is scalable and easy to adjust.
  2. Be on top of changes in accounting standards. Accounting standards are constantly changing, and your finance function needs to be updated accordingly. Some of the major new standards that will have the biggest impact on financial reporting include:
    1. AASB 15 Revenue from Contracts with Customers – this update will potentially force companies to have to change their sales contracts in order to recognise revenues in the period that is reflective of when the services are performed.
    2. AASB 16 Leases – this will require companies to put on a balance sheet all leases over 12 months, whether finance or operating. This is so that rent has some asset attached to it.
  3. Effective, accurate and timely reporting – There is a growing need for effective reporting for businesses of any size. This was previously seen as a cost prohibitive exercise since it required an internal CFO and a finance team to generate comprehensive financial reports shortly after month end. With the advent of technology and outsourced finance functions, it’s now within reach to small and medium businesses, as the need to hire someone internally is removed. As costs for software reduces and the utilisation of cloud-based technology increases, it’s putting downwards pressure on the cost of having a finance function. Companies of all sizes can now benefit from virtual CFO services at a more cost-effective price, thanks to the likes of software such as Xero and Spotlight.
 
Contact the advisory team at Carbon if you’d like to experience the benefits of having an effective finance function in place.
 
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