Structuring your Finance Department: Top Tips from Experienced CFOs
Knowing how to structure your finance department is a key question for any growing business.
You can read as many management books as you like, but the best solutions often come from engaging others about their experience and learning what has worked for them. That’s why we launched CFO Connect, a community and resource hub for CFOs in fast-growing European companies.
At our CFO Connect Berlin Meetup on November 15th 2018, we took a detailed look at how to structure and develop finance departments with Mikail Ege of Remerge, Markus Harder of Contentful, and Peter Jaud of Factory Berlin.
About our experts
- Mikail Ege, Finance Director, Remerge: Mikail has considerable experience in the performance marketing sector, including positions with eBay, Knip AG, and, most recently, as Finance Director for app retargeting outfit Remerge.
- Markus Harder, CFO, Contentful: Markus has a wealth of experience in finance planning and analysis, including roles at Morgan Stanley, Zalando, SoundCloud, CatchApp. He is currently the CFO of Contentful, a content management solution.
- Peter Jaud, CFO, Factory Berlin: With extensive experience as a Managing Director and Partner for Accenture, and, most recently, as CFO for innovation community Factory Berlin, Peter has a lot to bring to our discussion on finance structuring.
Finance department structure - a crucial consideration
Structuring your finance team for success plays a pivotal role in driving business growth. Getting the basics right here will enable your team to partner and collaborate with the wider business and identify new efficiencies and improvements.
As a finance leader in a growing business, you will need to tackle some tough questions:
- What are the fundamental requirements of the finance team, and do you have the capabilities, tools and business support to meet them?
- What is the right balance between reliance on software tools and individual capability?
- And do you need to internalise all finance tasks, or can you outsource certain jobs?
For answers to these questions, let’s hear from our three experts.
1. Get the basics right first
When establishing or expanding a finance team, it can be tempting to tackle everything all at once. But it’s important to start with the fundamentals.
For Peter, this means ensuring sound accounting practices, dependable data, and solid numbers. “You need to keep things simple and get the basics right,” says Peter.
Markus shares this sentiment. “The first step with a finance team should be about recognising the constraints you have and fixing them,” says Markus. “It’s a process of evolution”.
As Peter says: “As you grow, things become more complex. Worry about the fundamentals first, because things will become more complicated later.”
2. Think carefully before outsourcing accounting work
This is a common question for many finance teams: when does it make sense to outsource accounting work to external firms? And if you’re already outsourcing, should you bring this work in-house?
For Mikail, there can be real benefits to keeping things in-house, especially early in your team’s development. “Outsourcing can be useful,” says Mikail, “but it’s also a challenge. External accountants can be slow, and don’t have the same understanding of your business.”
“Keeping the accounting in-house early on gives you a good grip on your expenses and budgeting,” says Mikail.
Keeping things in-house can be a question of having good accounting tools in place. “I was fortunate,” says Peter. “When I started at Factory Berlin, there was an accounting system already in place - DATEV. It’s old, and not always user-friendly, but it works.”
3. Find tools that work for you
Building a successful finance team is more than just a question of people - you also need to consider the software tools you need, and how to implement these.
For Mikail, tools help standardise processes and save time:
With the right tools, you can shortcut a lot of time-consuming tasks.
“They can help you manage data a lot better, and let you close out the months faster” adds Mikail.
“We use Spendesk to manage expenses, and GetMyInvoices to fetch invoice information,” says Mikail. “Even a simple invoice retrieval tool can save a huge amount of time.”
Peter is a big fan of data analytics tool Jedox. “We use Jedox for mobile and web reporting,” says Peter. “DATEV might not be the easiest accounting tool to use, but we use Jedox to help get around this.”
However, it’s important to consider new software tools carefully before committing. “You need to make sure your customisation costs aren’t too high,” says Mikail.
Markus has another note of caution. “When implementing a new tool, information has to merge cleanly from the old tool to the new one.”
4. Recognize the support you need
Despite the downsides of outsourcing work, you still need to recognise your limitations and get expert help when you need it. Many finance teams rely on outside help for specialist tasks such as tax treatment.
For Markus, this has definitely been the case. “When I joined Contentful, I inherited an operations team, not a finance team,” says Markus. “The challenge was to work out how to structure the team, get a good grip on the numbers, then bring in external accountants.”
“Getting help with accounting and taxation was key,” says Markus. “It freed me up to focus more closely on planning and financial strategy.”
According to Markus, this can be a learning process: “Over time, you figure out the support you need to do a good job.”
5. Encourage your finance team to partner with the wider business
This question cuts right to the heart of the finance function: how should you encourage your finance team to collaborate with the wider business?
For Peter, this is about getting your people to partner with other teams. “You need to make sure everything is connected,” says Peter. “Be sure to talk to people in other teams and give feedback, and get your team involved in wider work.”
Mikail agrees. “The finance team should help other teams to share their expertise,” says Mikail. “It needs to invest time with the wider company to assist in decision-making.”
Markus is a big fan of this approach too:
Finance can help make processes collaborative, rather than just dictating numbers. With ‘mini-models’, a finance team can help departments capture their assumptions and explain them.
“A good example is pricing,” says Markus. “Pricing experts can verbalise their advice, but can they visualise it in a spreadsheet? Finance can help them capture this expertise and apply it across the business.”
6. Make good data a priority
Core accounting, wider collaboration, strategic planning: at the bottom of each of these finance functions is a bedrock of good data.
Everything hinges on this: if you’re working with sketchy information, it all falls apart.
“You need to feed the sheets,” says Mikail. “Data is the most important thing. If your numbers are wrong, then your assumptions are, too.”
Peter is on the same page. “Good data lets you keep a broader perspective on the business’s finances,” says Peter. “With the right data, you can look at things like your churn rate, your utilisation, and the efficiency of your spend.”
For Markus, this broader use of data is a key trend. “We’re moving from static information to connected information,” says Markus. “Everyone needs to learn how to do this - it makes data a lot more useful.”
Tips for smart finance team structure
If you’re looking to structure your finance team, it can be hard to know where to begin. Fortunately for you, there are always people out there willing to share their expertise.
Consider these helpful tips from Mikail, Markus, and Peter:
- Focus on getting the fundamentals right first
- Don’t expect perfection straight away
- Consider the benefits and drawbacks of outsourcing accounting work
- Find tools that let you simplify and standardise core tasks
- Recognise the expert support you need - from inside and outside the team
- Encourage your team to partner and collaborate with the wider business
- Understand that everything rests on robust, dependable data
When you’re done, take a look at our list of upcoming events, and come and join us!
Thanks again to our generous experts Mikail Ege, Markus Harder, and Peter Jaud for sharing their insights and tips.