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Finance as a Growth Driver and not a number cruncher

Are you from Finance? Yes. Well then you must be good in number crunching isn’t it? Finance and number crunching, according to majority, goes hand-in-hand. But reality is way different. Read On!

Fin. no. cruncher

Finance undoubtedly includes number crunching but there are many more aspects which people generally overlook. In today’s world where everything is prefixed with “hyper” in the business ecosystem, the pressure on CFOs have increased manifold. Organisations generally face the problem of long resource intensive process or market volatility. This has resulted in increasing need of ensuring proper control under these unpredictable pressures. Thus, in order to successfully steer any business through its lifecycle process, it is important that the senior finance talent possesses commercial acumen. This is required to maintain stable operating margins while the business achieves scale. For example: Dr Reddy’s Laboratories, grew over 6 times in sales revenue since March 2005 to clock revenue of Rs ~10,000 Crore in 2013-14 witnessed a significant improvement in margins (~10 per cent in 2004-05 to 28 per cent in 2013-14). This is possible with the help of right finance talent possessing commercial insights about the business. Further, with everything becoming commoditised with data-overload, it is important that the finance team produce not only reports depicting numbers but also unlock the hidden value in the numbers and bring the essence on the table which will be beneficial for the business growth. This helps in faster decision-making.

On the other hand for start-ups too, finance plays a major role in improving valuations. For example: The hyper-growth in eCommerce company like Uber where growth is driven at a high speed on a winding road, it is important that the finance professionals focus on strategy and not restrict themselves to number crunching. A change is already seen when Uber’s former CFO Callinicos helped the company expand its footprint to more than 50 countries and secure $5 billion in funding. In India, Flipkart (in its 7 years of operation) is valued at Rs 70,000 Crore with estimated revenue of Rs 5000 Crore (without being profitable at operating level) while top 10 companies in organised retail space is valued for only Rs 10,000 Crore.

Success of Uber, Flipkart, and Snapdeal shows what happens when entrepreneurial spirit is leveraged to create opportunities. While on the other hand traditional corporates are left behind as they delayed in shifting focus to drive company strategy. Amidst this requirement, a CFO is well positioned to become more critical resource to the organisation as they help in creating value by spending maximum time on strategic insight or value creation derived from reports and not number crunching. It is quite evident that the job description for finance person is not only spreadsheet but also includes business strategy. Companies now focus in areas such as leadership, communication and management skills in the finance professionals as the function is now seen as an integral part of the business.

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