Obtaining Resources for Improving the Finance Function: Ideas from Practice

This research investigates the question ‘How can a finance function get approval and resources for an improvement that is mainly internally oriented (within the finance function) and where the benefits will mainly be indirect in nature?’ For the finance function to make the improvements necessary to provide a high-quality service to its customers and play a pioneering role in the transformation of the organization into a permanently high-performing organization, resources for making improvements are needed, but in practice may be difficult to obtain because operations often take precedence in the allocation of resources. Existing literature provides limited information with which to answer the research question, so this study uses experts from the financial field, employing two round table discussions and a Delphi study to identify courses of action that financial experts deemed most effective for obtaining resources for improvements. Ten effective courses of action were identified that, according to the financial experts, should be applied in combination and in a particular order to be most effective in obtaining resources for improvement.

Future-Proofing the Finance Function: An Empirical Approach

This paper investigates the question: How should a finance function deal with megatrends and disruptors in such a way that it can secure its sustainable performance? The existing literature contains little information on how to make the finance function ‘future-ready’ so that it can deal with its changing environment. Such changes consist mainly of threats (and some opportunities) caused by worldwide megatrends and disruptors. This gap in the current literature inhibits the ability of a finance function to prepare itself for the future. Based on a previous study of megatrends and disruptors, and using a framework for creating high-performing finance functions, this study determines the impact of megatrends and disruptors on organizations’ finance functions. The resulting impact matrix and its robustness were evaluated by two groups of finance experts. The research resulted in the development of an impact matrix and a process -- called the Futurize! Diagnosis -- that the finance function can apply in order to make itself future-ready.

The Determinants of Cash Conversion Cycle and Firm Performance: An Empirical Research for Borsa Istanbul Turkey

The ultimate goal of firms is to make a profit and to achieve this ultimate goal, firms execute various functions. Finance is one of the basic functions of firms and firms need financial instruments such as cash reserve and outsource to carry out their activities. Cash management within the finance function is an important issue that needs to be carefully considered, especially in the short and medium term financial planning stage. Presently, the high competition among firms forces companies to manage their cash in the most effective way. The conceptual studies on the subject are quite old and date back to Keynes. According to Keynes, firms demand cash for transaction, prudence and speculation. As a result of analysis, it has been determined that cash conversion cycle has an impact on return on assets (ROA) and return on equity (ROE). There is a statistically significant and negative relationship between cash conversion cycle (CCC) return on assets (ROA) and return on equity (ROE). In addition, there is a positive relationship between return on assets (ROA) and firm size while there is a negative and statistically significant relationship between debt ratio (DEBT) and return on assets (ROA).

Enterprise Architecture for Accounting and Finance Transformation: Using Strategy Maps to Develop High-Performance Finance

Although enterprise architecture is evolving into a multiple billion-dollar business, it has received limited attention in the accounting information systems literatureRecently, The Hartford implemented a unique and robust approach that used Kaplan and Norton’s well known “strategy maps” as part of the enterprise architecture process to transform the finance department and embed strategy into accounting and finance. The Hartford developed a strategy map and used that map as the basis of enterprise architecture integration. The process generated a creative future state that included a linear flow of information that mirrored the information life cycle, while providing a “single source of truth” archive for financial information in order to redesign the finance function to attain “high performance finance.” In so doing, the paper investigates a unique approach, an “innovative practice,” that allows grounding accounting and financial information systems in an organization’s strategy formulation process.

Impact of lean operations on the roles of finance functions and their application of lean

Purpose This paper aims to study the relations between lean operations, lean principles in finance functions and the roles of finance functions. Design/methodology/approach The paper uses structural equation modeling to analyze data from 408 different firms in the Danish production and services sectors. A dyadic approach is applied, as a sub-sample of 107 chief operating officers in the responding firms is used to investigate the construct validity, reliability and average deviation index of the instrument measuring the roles of finance functions. Findings The paper finds that lean-operation firms emphasize four different yet interdependent roles of finance functions. The paper also finds that lean operation leads to firms’ finance functions adopting lean principles. Research limitations/implications This paper characterizes lean-operation firms as contextually ambidextrous to predict relations between lean operation and roles of finance functions. The paper expands prior case study findings on the roles of finance functions in lean-operation firms, and the findings of the paper underline that finance functions continue to play an important role in these firms. Practical implications Decision-makers in lean-operation firms should not be hesitant with respect to integrating finance function workers into the lean operation. Furthermore, decision-makers should understand that a balanced emphasis of the roles of finance functions is necessary to avoid overemphasizing exploitation at the expense of exploration, or vice versa. Originality/value To the best of the authors’ knowledge, this is the first paper to provide large-scale evidence of the roles of finance functions in lean-operation firms and to show that lean principles diffuse to finance functions. Furthermore, the paper introduces a new instrument for measuring finance function roles, based on the competing values framework.