Finance’s Role in Sustainable Growth Strategies

A traditional approach often takes the front seat, with leaders keen on generating money rather than considering other crucial factors that influence a company's financial success. However, the companies practising sustainable growth will be the most resilient during an economic downturn—and the current financial climate is the perfect example.

Operating in a post-pandemic world and with all signs pointing towards a recession, companies need to focus on sustainable growth and practises that increase efficiencies rather than simply trying to generate as much cash flow as possible.

Of course, the finance team plays a vital role in making this happen, yet fragmented processes and time-consuming manual tasks hamper the performance of many team members.

Finance team members need to remain calm in the face of increasing economic pressures and adopt the right tech stack to make the most informed decisions possible. This often requires them to embrace digital transformation and increase visibility across the organisation.

Here’s a look at how businesses can continue to grow safely in the current economic climate and the finance team's role in making that happen.

The Importance of Sustainable Growth

Sustainable growth is a topic that’s been moving up the C-suite’s agenda as of late, as it’s crucial for the company’s success. Not only does sustainable growth impact the overall bottom line, but it also affects the company’s long-term viability.

Without considering sustainable growth, companies can reach a point of sales saturation, leaving them to either quickly refresh their product offerings or find new sources of financing to get over the speed bump. However, financing can be harder to come by during times of economic uncertainty and isn’t always the smartest route.

What about the companies experiencing hindered or slow growth?

Even during a recession, companies not experiencing fast-paced growth face the risk of stagnation, losing money, and struggling to turn a profit. As such, sustainable growth is fundamental for the long-term success of a business.

How Finance Is Championing Sustainable Growth

Finance teams are a vital asset in any organisation and have an integral role in establishing sustainable growth throughout the company. To do this, they must fully understand the risks and opportunities associated with this type of growth strategy. If they are unable to do this, they could act as a barrier to change, as opposed to drivers for success.

There are several ways the finance team can champion sustainable growth within the organisation.

Utilising data and insights

One of the key challenges facing finance professionals is getting the insights they need to be successful. This requires lots of accurate data, which can be time-consuming to collect and interpret.

Enter automation:

OCR, machine learning, PO management, and other automation tools help save hours that would otherwise be spent on manual, labour-intensive tasks. Businesses, specifically finance teams, must focus on investing in these tools to increase overall efficiencies and encourage sustainable growth throughout the organisation.

Once they can capture and analyse data quicker, determining the ROI of different business functions becomes much more straightforward. This allows the finance team to spot potential growth areas and determine where money might be better allocated.

They can also leverage this data to make more accurate and informed forecasts for the future, a pivotal aspect of setting strategic growth targets.

Managing budgets effectively

One of the most critical responsibilities in finance is setting departmental budgets. This can be a complicated feat, especially during times of economic uncertainty. So, if a company wants to achieve a recession-proof environment, it’s up to the finance team to reevaluate spending priorities and embrace these challenges.

One way of improving departmental efficiency is by strengthening cost controls, so finance teams can better understand the company’s financial situation and closely manage and monitor cash flow.

In addition to stricter cost controls and budgets, finance teams are expected to go beyond traditional accounting responsibilities and explain how these new efficiencies drive the overall strategic vision.

Automation tools and access to real-time data are crucial for making this happen.

Interdepartmental visibility

One of the finance team's most important jobs is ensuring increased visibility across departments throughout the organisation. By connecting and analysing all relevant data points and encouraging better decision-making, finance can take the lead regarding sustainable growth.

This could be as simple as helping to digitise and automate processes relating to finance. They may also have to explain newly implemented processes and strategic goals to less finance-oriented departments.

Moreover, spend controls and approval processes give the finance department greater control over cash flow. As such, the team is more directly responsible for how money is spent.

Upskilling the team

Finally, as the finance team works in different areas of the business and implements new technology and processes, they may need to strengthen their own hard and soft skills to make the transition as seamless as possible.

With a new set of skills, the finance team will find it easier to partner with other departments across the business, such as sales and marketing. This will help them work more closely together and help ensure that everyone in the company understands the numbers being presented to them and that they are making informed decisions based on those figures.

Today’s financial leaders need to look beyond simply implementing new technologies. They need to invest in the skill sets of their employees. This will ensure they can deliver what the business needs during these unpredictable times and champion sustainable growth across the organisation.

Learn why finance leaders need to prioritise sustainable success and how Tipalti can help you to do the same with your business.