Finance team structure – how to save money and increase impact

One of the questions I am asked the most is what’s the best finance team structure?

I always say the same.

The mindset of the people you have is way more important than the structure.

If your finance team have a commercial mindset, then they will work well in any structure.

If your finance team don’t have a commercial mindset, there’s no structure in the World that will make them into influential partners.

I say the same about systems.

The right mindset can overcome any system shortcomings.

But no system in the World will overcome a lack of a commercial mindset.

Nonetheless, structures are a part of life.

So what is my favourite finance team structure?

For me there are 3 things to think about when you are designing your structure:

1. how to get square pegs in square holes, so people can do their best

2. how to prioritise as finance, not as departments within finance

3. how to eliminate levels, so things can happen fast and not get caught in the hierarchy

There is no perfect structure. It all depends on the context.

Here’s my favourite finance team structure.

Part 1: Accounting, control & reporting

Think of this as the foundation of any finance team structure.

Without strong controls and accounting nothing else works well.

The focus here is on slick process, fast month end close, and strong controls.

This could happen in a shared service centre and/or center of excellence.

This team are responsible for all statutory and regulatory reporting.

Purchase ledger and accountants payable.

Importantly they are also responsible for level 1 management reporting.

Level 1 reporting is producing standard reports that tell us what has happened, and the surface level causes of why it happened.

Surface level causes are the causes that can be found in the system.

So let’s say sales are down 10% vs. budget.

The standard report shows what region, business unit, or product group is causing the decline.

Part 2: Financial Planning & Analysis

Planning is a future focussed activity.

Many FP&A teams though seem to do standard month end reporting.

You really want your FP&A team to be running a forward looking continuous planning process.

By continuous I mean looking 24 months out on a rolling basis, not just to the end of the next financial year.

Once a year the ‘annual budget’ can fall out of the planning cycle.

For me planning has 3 basic elements:

1. identify past financial trends and the commercial and operational root causes of the trend

2. think about what could happen in the future commercially and operationally

3. turn all that into future financial outcome scenarios to help make better commercial and operational decisions

FP&A teams can’t do the above if they spend 2 weeks a month doing month end reporting, so it’s vital that the accounting team cover that off.

The FP&A team can then become a powerhouse of finance.

And the engine of the powerhouse is a shared pool of analysts.

If you have a finance analyst for sales and a finance analyst for marketing what happens?

The analyst for sales prioritises the analysis most important for the sales team. And the marketing finance analyst does the same for marketing.

But what happens if the biggest opportunity is for a new product launch?

The marketing analyst is snowed under trying to do some must-have work, while the sales analyst is doing some nice-to-haves.

So I like to have all the analysts in one team, reporting to one person, all pulling together.

You can still have different levels of analyst within the pool, just don’t create mini-teams within it unless you have a really large pool.

I work on the basis that you either have 10 people working for you or none. Apply that rule to your team and you’ll be fine.

Ok, so I get it. But why shared? Shared by who?

Shared by the business partners, supporting decisions.

Part 3: Decision support business partners

Your accounting and FP&A teams are now running the machine of finance.

You’ve got a shared pool of analysts efficiently doing the churn.

Fairly soon it will be automated and AI will do a surprising amount of it.

What’s left is something that will be hard to automate, until the major business leaders and decisions are.

Because what’s left is the missing piece in bridging the gap between data and decisions.

Relationships & insight.

If you want finance people to influence decisions they need to build relationships, turn data to insight and bring numbers to life.

The best finance business partners and leaders can build rapport fast, with anyone. Find out how you can here.

And they use those relationships to generate insight.

These things take time.

The biggest thing stopping great people with great potential being great business partners?

Time.

They are normally knee deep in analysis, month end, budgets and forecasts.

Your new structure just took that away.

The excuses are gone.

It’s time to deliver.

How does this save money?

When you create a pool of analysts you eliminate huge waste.

Because if you have 2 sales analysts they will spend 100% of their time working on sales analysis, whether they need to or not.

When you have a pool, prioritisation happens at a different level.

The whole team work together on the highest priority items, and the nice-to-haves are eliminated.

I reduced our analyst numbers by 20% using this model.

And the result?

We did the must-haves and a lot of the nice to haves!

Why?

Because the whole team worked together to achieve the must-haves in super-fast time.

How does this increase impact?

When you create even one dedicated person supporting decisions you can achieve great things.

Remember, this person has no direct reports to worry about.

No month end or reporting, accounting do that.

No forecasting or budgeting, the pool of analysts do that.

Their only job is to build relationships and bring numbers to life.

If they do that, they will influence decisions.

And if they influence decisions, they will have huge impact.

So what now?

There’s no perfect finance team solution.

And different sizes of team need a different approach.

Remember, there are 3 things to think about when you are designing your finance structure:

1. how to get square pegs in square holes, so people can do their best

2. how to prioritise as finance, not as departments within finance

3. how to eliminate levels, so things can happen fast and not get caught in the hierarchy

Here’s my favourite finance team structure.

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