The current business landscape is characterized by a rapid pace, intense competition, and constant change. This makes it unsuitable for traditional finance and accounting practices that rely on looking back. Instead, modern companies are embracing agile finance, a contemporary financial management approach that transforms how finance teams operate and deliver worth. Agile finance moves the focus from creating and guarding data to decision-making and collaborating with leadership teams, promoting a mindset shift.

Although this seems like a logical goal on paper, many finance and accounting professionals face numerous daily obstacles that hinder the implementation of agile finance. These challenges include meeting compliance regulations, inadequate staffing, and struggling to gather and analyze data from outdated systems. To transition from traditional finance practices to agile finance, it’s crucial to adopt cutting-edge technology like AI and cloud computing, in addition to the principles of agile that originated as a software development methodology.

Agile finance has the potential to enhance operating efficiencies and employee happiness, making it unsurprising that CFOs and business leadership members in organizations of all types are keen on adopting this model.

What is Agile Finance?

In broad terms, the agile methodology integrates forward-thinking technology, culture, work practices, and organizational structure to empower people with key information so decision-makers have access to real-time data and can make informed choices promptly. When these agile principles are applied to finance management, businesses can establish finance processes that prioritize digital intelligence over transactional administration and foster a culture geared towards consistently delivering value.

In agile finance, essential activities like record-to-report (R2R) and compliance are automated, enabling employees to spend their time focusing on strategic initiatives. For instance, AI and machine learning (ML) can reduce time spent on low-value, redundant tasks like accounts payable data entry and create opportunities for analysis and process advancement. Agile finance personnel can dedicate more time to reviewing financial, operational, and market data, yielding competitive advantages for their organizations.

The culture of agile finance is illustrated through forward thinking, velocity, continuous improvement, and performance assessment. Agile finance aims to build a team that can be a better company partner at all levels, inserting continuous value to the existing operations and forthcoming strategies. The collective attributes of agile finance include operational excellence, digital intelligence, and business influence.

Benefits of Financial Agility

When multidisciplinary finance teams establish strong connections with business and operational teams, benefits tend to arise naturally. Furthermore, agile principles such as operational intelligence, digital intelligence, and continuous innovation play a crucial role in refining finance deliverables, resulting in more advantages.

With this in mind, here are some of the benefits of financial agility to consider:

1. Quicker Decision-Making

Cross-functional teams work together continuously and are authorized to make prompt strategical pivots, resulting in faster decision-making. This enables the finance team to restructure its priorities as required, ensuring dependable, accurate information is conveyed to the relevant parties in a timely manner.

2. Reduced Complexity

Simplifying financial processes can be achieved by restructuring responsibility and accountability in a more streamlined fashion. Having smaller squads can minimize the number of people involved, which leads to fewer complications. Moreover, using automation and the latest tech products can also decrease complexity by minimizing the need for manual intervention.

Learn more: Top Benefits of Accounts Receivable (AR) Automation.

3. Equalized Data

By embracing digital software and relying on information technology partners and unified financial tools like enterprise resource planning (ERP) applications, agile finance is able to establish a singular source of accurate data. This enables teams to concentrate on analyzing and interpreting financial information instead of spending time creating and controlling it.

4. Increased Revenue

Agile finance teams are able to discover potential new business prospects by utilizing sophisticated analytics to detect correlations and trends. According to a joint study conducted by Oracle and the American Institute of Certified Public Accountants, companies that are backed by digital astute agile finance teams have a significantly higher chance of experiencing positive revenue growth compared to those that don’t (46% versus 29%).

5. Improved Offerings

The objective of agile finance is to elevate the influence of the finance team in the decision-making process of a business. This enables companies to make well-informed decisions in a shorter span of time, which, in turn, helps them seize new market prospects or fulfill new requirements from current customers.

6. Shorter Turnaround

Companies that have access to all-inclusive data from agile finance teams frequently experience commercial advantages. This includes the ability to expedite the launch of new products in the market or to modify products that are currently being produced and sold based on customer feedback, resulting in improved consumer satisfaction.

7. Enhanced Transparency

Agile teams are cross-functional, enabling individuals from various business sectors to have access to numerical data and analytics. This degree of transparency ensures everyone is informed and aligned with the same information, thereby providing clarity on which data is most valuable and which is least relevant to the company.

8. Boosted Employee Engagement

Agile financial systems require additional skills, particularly in areas such as communication and teamwork, and offer rewards in the form of greater autonomy and influence to their employees.

This is highly desirable for finance teams, as it enhances employee engagement. By being relieved of mundane tasks, and instead, having the opportunity to exert a considerable effect on company processes through creative thinking and problem-solving, finance employees are more passionate and fulfilled. Recent research conducted by McKinsey & Co. shows that agile organizations witness a 30% increase in employee engagement, which would likely have a significantly positive impact on any business.

How to Achieve Financial Agility

To attain agility, finance organizations must be open to adapting their culture and procedures. The requirement for forward-thinking, velocity, and continuous modernization and review may necessitate a company to revamp the ways in which its teams are structured, supervised, and remunerated. With this said, companies might have to reassess and retrain their senior staff members who come from more traditional finance backgrounds, as skills such as data review, information management, business acumen, and cooperative communication become more essential. As such, many organizations will need to invest in professional growth courses and tactical help for their teams.

The implementation of digital technology, such as RPA, ML, and AI, is also crucial to achieving financial agility, as it facilitates the adjustment of existing processes. These technologies can lessen manual work in high-volume, repetitive tasks, liberating staff to concentrate on more valuable duties for the business.

  • RPA is typically used for bank reconciliations, cash application, and invoice processing.
  • ML organizes vast quantities of data into patterns to help identify anomalies like fraud and error, substantially decreasing the need for human intervention and improving internal controls.
  • AI-assisted analysis is commonly used by FP&A teams to forecast sales, inventory levels, and cash flows. Learn about some realistic ways your business can take advantage of AI.

Partner with MIBAR

Our team at MIBAR recommends NetSuite ERP as an integrated financial management software that can help agile finance teams prioritize analysis by handling high-volume, low-value tasks. By centralizing financial and operating data into a single source of truth, NetSuite provides reliable and accurate data to support dynamic business decision-making.

Contact MIBAR to learn more about NetSuite’s cloud-based accounting software that offers a shorter time to value and enables quick and accurate financial analysis.

Additional Resources

Financial Close Process Checklist, Challenges, and Best Practices

Year-End Close: 7 Tips for Taking Back Control

How to Fix Messy Financial Data