Organisations look to evolve the roles and responsibilities of their crucial team members. These team members are then empowered to do their best work for the company. This also applies to accounting positions, especially at the qualified level.
Management accounts play an important role in coordinating an organisation’s financial reporting and gaining crucial insights into business performance. However, some companies are looking to expand this role by working with finance business partners, who are tasked with providing broader, more comprehensive leadership guidance and support.
In this article, we take a look at the differences between a management accountant vs a financial business partner. We’ll explain the role both play in helping a business reach its full potential.
What is the Traditional Role of a Management Accountant?
Each organisation relies on management accountants for the crucial role they play in reaching financial success. Working as part of an accountancy or finance department, these individuals are responsible for key functions, such as:
- Preparing monthly management accounts, financial reports, budgets, and presenting these to senior management.
- Helping to develop business strategies that can reduce costs and maximise fiscal efficiency.
- Advising about the financial consequences, risks, and implications of commercial decisions, while making sure that income and expenses are in line with the budget.
- Developing and overseeing the implementation of the company’s financial systems and procedures while spearheading new initiatives to improve these.
- Providing basic support across the finance team, including assistance with business as usual (BAU) accountancy tasks.
- Securing and arranging finance for new projects.
- Communication financial information to non-finance members of staff at every level of the organisation in a digestible manner.
Through these methods, management accountants play an important role in a company’s finance function, driving business performance and ensuring that major decisions are supported by good financial sense.
However, many management accountants are becoming financial business partners. They’re doing this by combining their knowledge of management challenges within their organisation and combining this with strategic understanding with their financial knowledge to guide their organisation forward.
The result is many organisations are choosing to develop their business partners internally. But not all companies are able to do so. In that case, it’s up to the management account to identify the opportunity and the benefits they can bring their organisation as a business partner. The management accountants then have to upskill themselves.
How Does the Work of Finance Business Partners Differ?
Many companies are looking to build the existing benefits that management accountants provide by expanding their area of responsibility, leading to the creation of a finance business partner role. This is more than just a change in the job title. A finance business partner requires professionals to take on a more comprehensive and strategic leadership role.
Finance business partners play a larger role in the business decision-making process. They work directly with senior management to offer analytical insights, strategic guidance, and expert views on whether the current approach will help the company reach its goals. This can mean they are less directly involved in the day-to-day number crunching, working more centrally as commercial decision-makers.
Here are some of the responsibilities that a financial business partner may be expected to do:
- Partner with upper management (business owners, directors, senior management, and more) to provide them with financial knowledge and expertise.
- Working with department heads to determine KPIs (key performance indicators) and financial targets.
- Supporting HR to calculate compensation packages, salary trends, and review forecasts & assess the underlying soundness of the strategy.
- Working with sales teams to understand the financial implications of a commercial strategy.
- Determine the strategic benefits of research & development projects, including any short-term returns, risk levels, and KPIs.
These responsibilities require financial business partners to demonstrate a broader range of skills (that are also people-centric) than conventional management accountants. Rather than focusing on the BAU aspects of accountancy, finance business partners need to have a strong commercial understanding of the organisation’s goals and be able to challenge decision-makers to ensure a strategy that is commercially viable as designed and implemented.
A finance business partner needs to do more than understand the underlying number. They also need to build relationships, communicate their expertise to all levels of the organisation, and use persuasive tactics to bring the organisation to accept their vision. In these ways, a finance business partner acts as much more than a financial analyst. They work to become a part of the organisation’s leadership team.
How Could Businesses & Their Management Accounts Respond to This Trend?
Effective finance business partners bring significant advantages to market-leading organisations. For this reason, many companies have begun to recruit for these roles in recent years. Hiring a finance business partner can result in valuable benefits when it comes to commercial decision-making informed by sound financial guidance. The most ambitious company takes advantage of this.
Organisations that want to maintain a competitive edge should consider if there is scope to appoint a finance business partner within their company in terms of hiring externally or upskilling their existing finance professionals. This requires a commitment to creating a distinctive new role rather than renaming a current role. It also depends on senior leaders being willing to accept the appointee as a real business partner and trusted adviser.
Management accountants who see financial business partnering as a viable career upgrade should work to improve their skills to this end, developing their commercial understanding and interpersonal skills in order to take on this role. For many, this may be the best way to put themselves up for a promotion to the senior management level.
There are some differences between a traditional management accountant and a finance business partner. While it is possible for a management accountant to upskill themselves and take on the duties of a finance business partner, some organisations choose to hire an external business partner.
It all comes down to whether the management accountant has the wherewithal to upskill themselves and combine this with their knowledge of the organisation’s management and goals. It also takes excellent communication and relationship-building skills to become an effective finance business partner.