What it is a finance business partner does? I have written about what finance business partnering really is and what a finance business partner should do first thing once started in the job. However, put in the simplest terms what is a finance business partner doing? There is no doubt about that if you look at job descriptions for the role when companies are hiring they are doing many things. I looked through 23 job ads on LinkedIn where companies were hiring finance business partners. The top 5 responsibilities were.
- Forecasting or Budgeting
- Management Reporting
- Performance Management
- Strategic Plans
- Financial Analysis
In total, I identified 30 unique tasks and these are only the more hard-core ones whereas the ones relating to influencing are too intangible to count.
What’s special about finance business partners?
It’s clear from above that these responsibilities finance business partners have in common with a range of other positions such as financial analysts or business controllers. So, what makes finance business partners different from these related positions? In my experience, I would put it up like this.
*The finance business partner is not involved in the execution
First, finance business partners manage performance through analysis of the numbers. They couple the analysis with their knowledge of the business to present recommendations to management or the functions they partner with. They can present several options but typically they should present a recommended option. Management will make its decisions based on the recommendations and the finance business partner will assist in the tactical planning of the initiatives resulting from the recommendations. At this point they leave it to the frontline to execute on the initiatives but follow up on a monthly or any other agreed upon interval in terms of if the initiatives yield the expected results. This takes them back to performance management. If the initiatives yield the expected results then there is no need for additional actions. However, if things are not moving in the right direction they should discuss with the frontline and present new recommendations for corrective actions. All in all, it’s quite simple but it requires trust from management and a good collaboration with the frontline.
How does it compare with what companies are looking for?
When doing forecasting and budgeting what you do is you chart the course for the coming period be it a year, a quarter, a week, etc. Based on that you propose some recommended actions let’s say investments or cost savings initiatives for the coming period. Management will decide what is needed to reach the performance promised to the shareholders and leave it with you and the frontline to get the results. This aligns well with being involved in the strategic planning. You will then move on to reporting progress on agreed upon initiatives i.e. management reporting and in case things are not progressing as planned you resolve to financial analysis to figure out what is going wrong. In fact, most of what companies were expecting from their finance business partners had some sort of flavor of above.
Isn’t it still somewhat fluffy?
I’ll give you an example of how this would look like. In one of my previous assignments I was overseeing the performance of a company. At one point, I found out that the escalations we had in our contracts (typically a duration of 3-5 years) was not adequately covering the cost increases we were facing. I discussed these concerns with the business and while it did because some stir they agreed that we should consider it. Together with the Commercial function we analyzed the correlation between market rates and labor costs in the specific geography we were doing business in. We found out that over a prolonged period (5+ years) there was a quite strong correlation between the two. However, in a shorter period (2-3 years) the correlation was practically non-existent. That naturally meant, which is not exactly rocket science, that for shorter contracts we needed a higher risk premium compared to long-term contracts. We could also make a fairly accurate assessment of how much of a difference in the premium was required. Armed with this new knowledge Commercial was now better prepared for future contract negotiations and found out that of two recently signed contracts the profitability on each was much different than assumed. That basically left me with just managing the performance of the new contracts and describing how we were now yielding better results.
The importance of the finance business partner cycle
The way I see it, following the cycle as described above is quite essential for a finance business partner. First, it gives the finance business partner a structured methodology to work from, but just as importantly it helps them understand what tasks they shouldn’t be doing. This will solve the issue described in “Why We Need Business Partnering Transformation” of the finance business partner role being a free for all in terms of responsibilities. This gives them clear priorities and helps them identify where they can add value. It also tells them what skills are needed to be successful. Being analytical, ability to communicate and stakeholder management would be the most important ones.
So, do you think this is the core of finance business partnering or are there other areas a finance business partner should focus on? Successful finance business partnering is critical to the future of the finance function so I am very curious to hear what you think?