Finance Industry

5 Lessons for 2022 from this Year’s Agile Finance Summit

Finance teams are often pigeon-holed into operating as a back-office function. They shouldn’t be. At the pace businesses move today, strategic financial decisions can make or break the organization. Who better to guide — or at least inform — these decisions than the finance team?

This year’s Agile Finance Summit taught us a lot about how finance teams can play a bigger role in their organization’s strategic initiatives and overall success. From helping the C-suite prepare for a round of funding to increasing the business’s runway, finance teams need to be at the forefront of important business decisions. Here are our top five lessons from the summit.

1. Collaboration is the make-or-break skill for modern finance teams

The only way a business can truly achieve a financial goal is if every department is aligned on the strategy to achieve that goal. 

Finance teams are responsible for collaborating with other department leaders, with the goal of creating a two-way exchange of information:

    1. Finance should share financial goals and help other department leads align their budgets to those goals.
    2. Finance should seek “earned secrets” from other departments that may impact their financial models. 

Earned secrets are something a department learned through experience to solve a company-specific problem. Finance needs to learn about these earned secrets, so they can forecast how these nuances may impact the company’s financial goals.  

2. Finance teams must contribute to the employee experience, too

For too long, businesses have left it up to HR and talent development teams to recruit and retain top talent. That approach isn’t working (see: the Great Resignation). 

And why would it? HR and talent teams are just one part of an organization; they have little control of what happens outside their teams. Instead, every department in the organization needs to step up to help HR create a positive employee experience.

One way finance can do its part is by implementing simple, user-friendly tools and processes for employees to make purchases. 

Our recent survey showed that 72% of financial professionals find processing expense reports for employee purchases to be one of the most frustrating parts of their jobs. And employees often don’t like filing for these reports, either. The process is tedious, at best, and at worst, compromises an employee’s financial wellness.

 Finance leaders can improve the employee experience for both their team and the broader organization by eliminating out-of-pocket purchasing and expense reports, and using a spend management platform instead. 

3. A financial analysis and plan are critical for every round of seed funding

If sandbagging your numbers to show quarter-over-quarter growth was ever a winning strategy to woo investors, it isn’t anymore. Businesses must instead be able to show a path to growth and a credible narrative and plan to get there.

Finance teams should support this effort by helping business leaders evaluate and define the milestones the business wants to achieve and then determining the resources and funds needed to achieve them.

To do this effectively, finance teams should:

  1. Forecast over a 24-month period
  2. Plan for a few pivots

Early-stage companies change direction often, and pivots can be costly. While over-borrowing has its downsides, running out of money too quickly is the worst-case scenario.

4. Finance teams have more working capital options than ever

Half of small businesses have only 27 days of cash on hand, according to a JPMorgan survey. Fortunately, there are several new cashflow solutions that can help finance teams extend their runaways. 

Products across the market include:

  • Line-of-credit solutions, such as Lendio
  • Merchant cash advances, such as Square
  • Receivables financing, such as Fundbox
  • Next-generation purchasing platforms, such as Teampay
  • Early pay/dynamic discounting, such as Kyriba
  • Platforms that let you pay any expense by credit card, such as Plastiq

Choosing the solution that works best for your business will depend on several factors: how deep you’re willing to go into diligence, whether the loan will result in a lien on your business, where you are in your growth stage, what you qualify for, and how much the capital will ultimately cost you. 

As with any loan, finance teams should weigh the pros and cons of each scenario before committing to a solution.

5. Human-centric purchasing platforms can remove the complexity of spending for remote teams

Both your full-time employees and contractors have needed to make more business purchases than ever since the world shifted to remote-friendly. Desks, computer monitors, collaboration software — there’s a lot to buy to build the ideal home office. 

Finance teams can save themselves and their employees time by simplifying the purchasing process, as more businesses embrace hybrid or remote work in the long term. The best way to do this is to invest in one central platform that allows all employees to intuitively make purchases from wherever they are.

Implementing a human-centric purchasing solution also democratizes access to financial data, which drives better decision-making amongst employees and team leaders. Everyone in the organization is a decision-maker, and good decisions require accurate and detailed data. 

Finance teams will play an essential role in shaping business strategies

The role of the finance team will continue to evolve in 2022, with finance playing a greater role in strategy than ever before.

For more on how finance teams can support their business’s growth, watch sessions from the Agile Finance Summit on demand.