The Role of Finance

Key Thoughts:-

Once in a while, an article that summarizes my thoughts. Here’s one I just read. The article mainly mentioned the CFO specifically, but I think no one person can do a job, it’s a whole team. So I believe it’s applicable to all of us.

Summary:-

The article opened with a declaration that Finance bring a unique view to the table – ‘a broad, objective perspective on costs, cash, and capital, with the long-term best interest of the organization in mind.’

However, near-term pressures to ‘reduce costs, better manage cash and working capital, and monitor capital expenditures’ cause some Finance function to shift focus.

Areas Finance should focus on includes:-

1. Information Management. Management is about making decision, and we can’t make decision if we have no information. Or if we have bad information, we make bad decision. The need for greater accuracy and control over the ‘development and use of information’

2. Enterprise Risk Management. Awareness of risk means that the risk management processes will require greater, broader, and more frequent effort.

3. Cash Management. A recent survey shows that the CFO’s agenda has shifted from ‘value preservation’ to ‘value creation’. Needs to be front and center in discussions of growth opportunities. The need to develop scenarios planning means we need competencies in cash forecasting.

4. COO’s area of responsibilities. The consolidation of COO role in some hospitals means more areas come under Finance, facilities management, human resources performance management, regulatory affairs, and general operations.

My Comments:

It’s heartening to note that at PAH, Finance is already doing a lot of the area listed, this serves as a reinforcement that we are on the right track. What we need is increase the effectiveness of what we are contributing.

Reference: Finance Needs to Sit At the Head Table, Edward J. Giniat. HFM, May 2009, pg 80-82.