Finance has become more and more strategic in driving the high-level vision and direction of companies across nearly every industry. We’ve seen a huge increase in the way that CFOs interact with and support the various lines of business, particularly with the operations teams. The relationship between finance and operations explained below.
But first, how do finance teams make the importance of what they do understandable to those in the operations teams? How can the teams work together to drive the strategic vision of the company? How do finance and operations work to avoid being a hindrance to one another and become a collaborative effort instead?
On this week’s episode of CFO Weekly, our guest is Charles Liu. Charles is the EVP and Head of Finance for Hawke Media, a full-service marketing consulting firm based in Los Angeles, working with clients all over the world.
Making Finance Understandable To Operations
In the finance world, we’ve all seen it before. You get with the operations team and start talking about numbers and their eyes start to glaze over. It’s supposed to be the accounting team’s job to figure out the numbers, right? Let the operations team worry about operations, and the accounting team worries about the dollars.
When you really peel back the layers, however, you start to realize that the operations team knows numbers far better than one might think. Ask the operations team who put on concert festivals how many feet of fencing they need. Or how many security guards, or how many portable toilets per thousand attendees. You’ll quickly find out that numbers are incredibly important to the operations team.
You just have to break down the numbers in a way that they understand. You have to speak to them on their terms. In a quantity times unit cost equation.
“If you don't have accurate knowledge and buy-in around the quantity times unit cost equation, you're not going to be very successful at the job," Liu said.
Finance and Operations Collaboration
Even if the operations team understands the world of finance, the question remains how to make sure that the operations team and the finance team work together. It can’t be a one-way street. So how do you make budgeting a collaborative activity?
A project accountant can’t build a multi-million dollar budget alone. From the beginning, you have to be asking the operations team to come up with estimates of quantities and unit costs for everything. In a sense, it almost ends up being the operations team that is building the budget with the accountant merely signing off on things.
“I've always believed that a primary focus of mine should be on being an advisor," Liu said.
Building a Better Relationship
When operations and finance work together, they become unstoppable. It unlocks something within the teammates and allows them to accomplish things that they simply wouldn’t have been able to do without that collaboration.
So how do you build that relationship? First and foremost, with communication. There is no such thing as too much communication. It’s all about opening up that two way street between the two teams, and being an advocate for each and every group within the company. You have to show yourself as impartial. You’re not there to be the good guy or the bad guy. You’re there to help make sense of a problem.