CFOs in high-potential businesses move from ‘bean counters to bean growers’

The function of finance departments has evolved in past 10 years, says report by ACCA

The role of CFOs in SMEs with high-growth potential is evolving from an auxiliary role to that of a strategic partner, according to a report by the Association of Chartered Certified Accountants (ACCA).

The paper Ready for Growth? A checklist for CFOs of high-potential businesses explores the way finance functions in growing businesses interact with the other leadership functions and how they work together to drive growth.

The report’s author and ACCA head of SME policy Rosana Mirkovic said fast growth is “almost always driven by one of three factors”.

“Strategic internal decisions to enter new markets, acquiring technical expertise that enabled the development of new products or as a response to external stimuli such as consumer demand,” she continued.

“Taking advantage of the opportunities for expansion brought about by these factors almost always entails certain risks for an SME. For example, the rapid nature associated with this type of growth can lead to issues such as insufficient staff capacity, increased business ‘traffic’ such as simultaneous deals or entering new, very competitive or politically unstable markets.”

>See also: How can SMEs and banks align their interest to mutual benefit?

In the report, Finance Training Academy managing director Andi Lonnen advised members of financial teams, often described as “bean counters”, to “go and find where those beans are grown”.

“Get out into the business, attend team meetings of different departments so you can understand their issues and what’s going on and how it’s working,” she said. “Read relevant trade journals, attend conferences – whatever it takes to really get under the skin of the business rather than just produce the numbers. It will really help you bring the numbers to life. It will tell the story.”

Another section of the report identifies that it is often instances of high-growth that make a strategic and integrated approach from the financial function necessary. This often leads to the appointment of a CFO; if the company didn’t have one in place already.

Related: The Accountant as Entrepreneur – We meet CFOs treading the fine line

“In several cases, this served to shift the finance function from being a purely administrative process to being a ‘finance partner’, becoming responsible for strategic and risk analysis, and directly feeding into the business planning for the first time in the company’s existence,” the report reads.

“If the high-growth business subsequently experienced a second, and later, episodes of high growth, by this point the finance function had already evolved into an integral part of business, driving as well as supporting it, advising on financial feasibility (especially of high-risk projects), and with a much greater proactive (rather than reactive) capacity than before to anticipate growth and change.”

Further reading: Five ways you may be limiting your own growth

Praseeda Nair

Kellen Rempel

Praseeda was Editor for GrowthBusiness.co.uk from 2016 to 2018.

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