How ‘Financially Mature’ Is Your Organization?

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Wherever you fit in, investing in freelance finance talent can help you grow.

No matter where an organization lies on the spectrum of “financial maturity,” enlisting the aid of fractional workers, or freelancers, can boost the effectiveness of finance teams, according to the results of a recent survey of senior finance executives.

Matt Kamhi, vice president of experience at Chicago-based Paro, shares this and other insights from the company’s 2022 Financial Maturity Study, which focused on challenges senior finance executives face, from growing their teams to making sure their company is profitable to protecting against market volatility.

What are the stages of financial maturity and why is this important from a finance and accounting perspective?

There are three main levels of business financial maturity we uncovered in our survey: Prove It, Grow It and Expand It. The importance of understanding these varying stages of growth is to proactively adapt competencies that will help mitigate and combat common challenges likely to arise at the next stage.

Prove It: Businesses in this stage generally fall between $1 million and $10 million in annual revenue and tend to have lower financial maturity. Senior finance executives are focused on proving their model and building a foundation to scale their business (39 percent). The top challenge in growing the business is staffing, hiring and retention (43 percent), with customer acquisition (42 percent) and combating market changes (40 percent) following closely behind.

Grow It: These organizations, ranging from $11 million and $50 million in annual revenue, remain focused on investing in the continued growth of their business and increasing market demand. Thirty-six percent of businesses within this revenue bracket say strategic planning is a top concern as they move toward scaling. Senior finance executives also recognized the power of better data analysis, especially forecasting: Nearly half (48 percent) of executives at such businesses report forecasting as a top performance capability in which they can improve.

Expand It: Businesses with $51 million to $100 million annual revenue seek to scale and grow rapidly (41 percent). To do so, they aim to build operational efficiencies by bringing their digital infrastructure up to speed and enhancing business processes, which explains why 47 percent said digital transformation is their most prominent challenge.

We’ve just been through one of the hottest talent periods in history, yet your study found senior finance executives struggle with bandwidth and lack of strategic advisory. Why are companies not recruiting for more support roles?

Our study uncovered a very interesting gap in how senior finance executives view and value the accounting and finance function versus how they activate it for its full potential. Ninety-three percent of senior executives say investing in finance and accounting is essential for sustaining business growth. However, only 24 percent of executives say their business is investing in these functions for that reason. If companies do not take a step back and see that they’re inhibiting their own growth potential, they may find themselves lacking a competitive edge versus companies that do invest in finance and accounting as a critical driver of business growth.

This disparity is because businesses struggle to find a cost-effective way to hire the right people—79 percent of respondents said they were open to increasing headcount to take advantage of surges or expand offerings, but only 16 percent are doing so. Additionally, 39 percent of senior finance executives said staffing, hiring and retention is one of their main obstacles to growing the business.

This is where fractional resources can offer a boon to an organization’s bottom line. At large, many finance and accounting professionals are aging out of the workforce, and younger generations view their careers differently, especially with challenges presented by Covid-19 and how it altered the workplace. This alternate view, however, has created a ripe opportunity for companies to seize upon fractional talent, which allows companies to bring in targeted resources that have the specializations needed to solve challenges and work toward growth goals.

Fractional talent can also be viewed as temporary support. If these businesses are looking to scale, is bringing someone who isn’t as familiar with your specific operation the right approach? 

To buy into the idea of fractional roles, businesses should analyze the benefits it provides them and shift their perspective from thinking that fractional (or freelance) talent are “cheap resources” who are between jobs or aren’t specialized. In a job market as tight as today’s, the value proposition is clear for the businesses in need of fractional, freelance or on-demand talent:

Access to specialized skills: Fractional finance professionals offer expertise that businesses can tap into with ease. If your business requires a specific skill set, such as ERP implementation or fundraising, for a project, you can identify a fractional resource that has spent years perfecting that craft. The more experienced a fractional expert is, the more value they can bring to a project. The business can benefit from the fractional finance professional’s experience without devoting internal resources or adding a permanent full-time position to their payroll.

Larger talent pool: When hiring a full-time employee, companies are usually restricted to the area in which their business operates. By opening the opportunity to fractional experts, companies can access a larger talent pool from around the country, which allows companies to find the specific talent, qualifications and skills they require without settling for the best available person in their immediate area. 

Fractional talent allows companies to build and scale faster: Hiring fractional finance experts can help companies skip the onboarding and training process and go straight to impactful work, which could save months of resources and time.

Why should companies consider a financial service provider? What can it do for their business?

The demands placed on the financial division of a company are multifaceted and rapidly changing. Traditionally, finance departments were ancillary to leadership. They would provide the numbers and data that executives used to inform big business decisions, but they wouldn’t necessarily make those decisions themselves. However, with recent shifts in the availability of tech tools and a shift in openness to non-traditional financial resourcing solutions—69 percent of survey respondents say fractional resources make up at least a portion of their finance and accounting team—finance departments can take on a much more strategic role. 

Whether an organization is struggling with internal bandwidth or need for strategic advisory, or larger, external factors such as profitability, financial service providers can provide varying levels of knowledge that help augment a company’s existing capabilities. When evaluating providers, executives stated the most important criteria include:

– Providing data and insights to help make decisions (37 percent)

– Having a system that provides an innovative tech platform (35 percent)

– Helping to plan and optimize for the business’ next steps (34 percent)

– Providing customized solutions for a business problem (34 percent) Leveraging the assets of a financial service provider that analyzes your specific company’s needs by defining the solution and matching you with the appropriate talent will empower businesses to reach their next stage of financial maturity, and in turn, growth.

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