Bridging the Gap Between Finance and Operations
Sometimes it seems that finance and operations teams speak totally different languages. Finance speaks in terms of cost centers, balance sheets, and cash flow, while operations may speak of inventory turns, lead times, and resource management. We all understand that both teams provide essential functions, but when they cannot communicate well, and share data and insights, the gap between them grows. It’s a gap that grows larger as companies get bigger.
The most successful organizations are those able to bridge the gap between these two essential functions and focus their combined efforts on improving the business’s overall health. Sage Intacct recently offered insight on building a bridge between finance and operations in a new eBook, Bridging the Finance and Operations Gap. Here are the top takeaways.
Lack of communication and visibility are the culprits
Within smaller companies and start-ups, leaders often wear multiple hats. As these companies grow, however, they tend to hire leaders and build departments dedicated to a single function. As this happens, finance and operations teams tend to communicate less and often end up with siloed tech stacks that limit visibility to their area of responsibility. In other words, the gap starts here.
Decision-making and margins are the victims
The disconnect between finance and operations can have serious negative consequences for an organization. For example, without insight into cash flow, operations leaders cannot make the most informed decisions about how much inventory to buy. As a result, this seemingly simple disconnect can lead to higher inventory carrying costs, backorders, lower profitability, and lost sales.
It’s a downhill slide from there
Poor decision-making and lower profits often lead to finger-pointing, low morale, higher rates of employee attrition, and even a loss of confidence in senior leadership. Usually, companies in this position experience declines in metrics such as time-to-market, net promoter scores, employee retention rates, and asset utilization percentages.
How to bridge the gap
If lack of communication and visibility are the cause of the chasm between finance and operations, then a free flow of information and deep insights are the solution. This will require a common platform to allow both teams to access accurate information that fuels data-driven decisions.
A cloud-based financial management system can be that platform, delivering a single source of truth across people, functions, and departments. It allows a business to accurately combine financial and operational data to monitor holistic performance. To effectively bridge the gap, the platform must also work in sync with other business functions and connect easily and securely to other applications, especially customer-facing systems such as CRM and eCommerce.
For many organizations we work with, Sage Intacct became that uniting platform, delivering real-time business insights that unite and empower both finance and operations teams. Read more about Bridging the Finance and Operations Gap by downloading the eBook or contacting a member of our consulting team.