1.

Background
In the globalised economic world it is essential for an organisation to be effective in a holistic manner.
It’s each and every department shall work proper cordination to obtain synergic results. Carysforth and
Neild (2009) suggest that a large orgainsation have 10 major functional areas / departments (figure 1),
where few of these are essiantial functions for medium and small businesses too, these are:
Administration, Finance, HR and Marketing. It is very importatnt to allocate different areas with specific
responsibilties so that flawless operating effectiveness is obtained. Besides, allocating tasks help in
establishing authority and transparency. The area of interest is worked upon is finance as it is believed
that people with converging learning style like solving problems that are techincal in nature and accounts
and finance are cources of interst of such people. It offers a position in which one doesn’t have to deal
with excess of people, it is a concentarted job where one can use his knowledge in solving practical
business problems that are presented in numbers and figures.

Figure 1, Source: BTEC First Business (2009)

2. Research Aim
The aim of the report is to understand the evolution in finance funtion form historical prospective,
identify emerging trends in the business as a whole and in the finance domain. The implications on the
business and finance function are to be understood and evaluating measures to counter them.

3. Research Questions
The research will be based on secondary data and will include the following questions:
  What are the key attributes the employer seeks in his employees?
 What are the biggest challenges faced by managers in today’s business world?
 What are the skills that matters the most?
 Areas in which your organization will invest at first hand.
 Which function is more difficult to improve?
 Degree of alliance in finance and risk management function.

4. Research Methods and Data Collection

To gather the information various reports of leading consulting firms are considered, most importantly the
report “Being the best: Inside the intelligent finance function” released by KPMG international. Apart
from it various journal articles are consulted and websites of leading news agencies and business
magazines are scrolled. Further, statistics websites such as Statista and other websites are also considered
to gather relative information.

5. Data Analysis
Finance is an important function of business. It is concerned with procuring funds for the business from
most economical sources and then investing these funds into various projects and ideas that are expected
to generate maximum profit. Later, when the business earns profit, it is the duty of head of the finance
department to calculate how much of the profit shall be retained and how much to distribute to the
owners. The head of the finance department in corporate is called Chief Financial Officer (CFO). To
decide the payout, CFO evaluates future projects and existing market interest rates and effects of selecting
the projects on Market Price of the Share. Besides, these three main functions: Finance decision,
Investment decision and Dividend decision, the CFO has to make sure that sufficient cash is always
available to settle both short term and long term obligations. Sometimes, the business is doing well but
cash mismanagement cause hurdle in the operations and cause competitive disadvantage to the firm.
Further, accounting function also comes under the finance department sometimes, it is responsible for
recognition, measurement, recording classifying, summarizing the financial transactions into Financial
Statements and communicating key information to both internal and external users. Accounting functions
is responsible for keeping the financial reports updated so that real time decisions can be made by putting
reliance on those reports. Apart from it compliances of various regulations and stakeholder’s instructions
are taken care of by this function.
 CFO Recording

Cash Accounting
Management Compliance
Function

Financing Investment Dividend Providing

Decision Decision Decision Information

Figure 2 - Finance Function

Apart from the above some other key tasks that are part of routine operations are – Treasury Management,
it involves managing cash and cash equivalence of the business, tracking cash inflows and marking them
against future outflows (Degenhart, 2009). This involves monitoring receivable’s accounts, short term and
long term investments and scheduling payments. It possesses reputational risk to the firm. Any deviation
from timely settlement of obligation exposes firm to penalties and goodwill loss; Establishing budgetary
control, i.e. keeping expenses under control through strict monitoring; CFO is responsible for establishing
an internal control mechanism that ensures that financial statements are prepared in true and fair manner
(pwc, 2017). Internal controls shall be effective throughout the year and throughout the different areas of
the business. Assets are safeguarded and possibility of frauds is reduced if internal controls are strong;
Scheduling meeting with providers of external finances which involves banks, private lenders and
creditors; Getting the statutory audit compliances done and signing the Financial Statements.

Over the years, finance function has evolved a lot, CFO participate in strategic decisions, they are policy
makers where earlier they were policy implementers. Their participation in Information System and its
development has increased. Information system is the most important infrastructure in the business and
determines its success and failure. The advent of large scale production has led to new responsibility areas
of a finance manager that is mobilization of funds in an efficient manner that small business can never
achieve (World Bank, 2019). New payment systems have been developed, instant payment around the
world can be made anytime, trade finance has developed and new risks of financial crises are evolving.
The business as a whole is facing new challenges day by day. Five such important changes are
Collaboration, agility, transparency, innovation and productivity (Forbes, 2015).
 Collaboration

Prodcutivity Agility

Innovation Transparency

Figure 3- Emerging challenges to the organisations. Source: Forbes, 2015

Collaboration refers to the working of different departments as a team to reach more efficiency. Agility
refers to changing environment in the workplace, it has grown out if the IT domain and now embraced
other departments (Forbes, 2019). 36% think that top managers are not taking right decisions. Employees
are more conscious to the information they are provided and the one kept secret. Transparency is sought
after by employees, 52% feel that their salary does not justify the amount of work they put in. The effects
of fostering innovation at workplace are immense. Top 5 word’s largest companies are Apple, Amazon,
Alphabet, Microsoft and Facebook (Statista, 2018), all tech based firm with technology at core of their
strategy. Yet, 47% employees believe that their ideas are not listened by their managers. Productivity
leads to efficiency and gives a competitive edge to the organization. Japanese car industry is world known
for its efficient car manufacturing practices. Their productivity has given them an edge over their US
competitors in terms of cost and quality. One of the main driver of productivity is well planning
(Olusanya, et al., 2012). Effective planning leads to worker’s efficiency and increases overall
productivity.

A report of KPMG (2013), there are two sources of pressure building on the function classified as internal
and external pressure. Internal pressure includes shortage of skilled staff, evolving complexities in the
orgainsation, the IT systems are getting outdated very fast, the intense competition has put budgetary
constraints that limits choice / alternatives to finance managers. The report find out significant
improvements have been witnessed in order to cash process but talent management is the biggest concern
for worries as knowledgeable workforce is difficult to hire and kept for long time. The control over units
is being strengthen through centralised monitoring system, it has increased finance managers
responisibilty. External constraints include globalisation, it comes with lot of opprtunities to the business
but with constraints. It’s difficult to mobilize resouces when the government of a particular economy
imposes restrictions (World Bank, 2004). However, Olajumoke (2010) argues that most of the effects are
positive but still the cons can not be ignored. One of the biggest challenge is managing effective
communication, due to people coming from different areas of the world it becomes very difficult to
maintain effective and efficient communication at workplace. If communication fails, it results into loss
of productivity. Increasing competion requires counter strategy, if cost leadership is choosen then it
requires a close monitoring over the costs, it has increased finance function’s work. Further, Global
financial crises such as in Greece and Venezuella impose greater risk to the firms having investments or
business interset in the area. These global challenges not only bother corporations but also the
governments, they are coming up with new rules and regulations which put more conformance burdon on
finance function.

Figure 4 - Source: KPMG International, 2013

To counter these challenges a set of strategy is required. The four areas defined in the KPMG (2013)
repot that are need to be focused are governance, control, efficiency and performance. To counter
collaboration challenge, activities require participation of managers from different departments shall be
conducted. Group tasks be allocated and interactive sessions shall be held time to time so that people
could now each other in short span of time (Forbes, 2013). It will improve their inter-personal
communication skills that will boost collaborative efforts. Agility can be a great competitive edge
(Mckinsey, 2018), it makes the organization responsive to unexpected change. Transparency require the
top management to be honest (William, 2016). Besides, the time and the person with whom the
information is being shared is also important. The shortcomings and deficiencies that a manager feels
shall be worked upon and improved. Steve Johnson has written that innovation does not come out of
employees minds itself but one has provide them with the environment where their brain start thinking
innovatively (EnY, 2018). The report suggest that the environment shall be comfortable with open
minded people nearby and experiments shall be encouraged. Increased productivity gives a solid
advantage that’s very hard for competitor to counter. To attain it focus shall be put on employee
flexibility, the workflow on the organization, use of automation software and development of employee
and strange but effective – the light (Wilson, 2017).

When asked by the top management of major listed companies what are the areas in which you will invest
in near future, the majority (43%) responded that talent acquisition would be the priority (KPMG, 2013).
61% claims that talent management is the most important factor to be focused in order to improve overall
finance function. The most difficult question remained which function in finance does the managers
believe to be the most difficult to get improved. Majority of the votes came in favor of talent management
(33%), followed by risk management (30%) and then profitability analysis (25%). The least votes went to
general accounting process and statutory reporting, these are the oldest function of finance departments
and have be understood very well by the manager during this phase. Every answer lies upon one
underpinning factor that is talent management. Its importance is very high. The second most centric
element remained to be risk management. 65% responded that risk management function is aligned with
finance function.

6. Recommendations and Conclusion

The aim of the report was to identify evolution in the finance function, recent developments and emerging
trends, their implications and methods to counter any adversaries. It has been identified that talent
management is one of the most important area seeking attention. It is well understood that Human
resource is the best resource of an organization. It’s the people who run the organization and if they are
weak, the organization will lose competitive edge. More collaborative exercises shall be done in the
organization as strong teams lead the organization go far. Besides, technology plays an important rule,
finance manager is key member of IT steering committee and has to give information to the developer so
that an efficient finance module in the ERP can be made. The risk management and Internal control
mechanism are of utmost importance, the government is putting more and more regulations on the CFOs
to make them accountable for failure to establish proper accounting system and any related frauds. The
finance managers of current generation needs to be highly conscious about their duty and responsibilities.
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