Rebranding control – a new way of working for finance teams

FinTech Magazine speaks to Karen Ko, the Senior Finance Director at Pleo, about the benefits of implementing distributed control frameworks across a business’ financial team.

How do businesses’ financial models work now?

For finance teams, we are used to having control as part of our job. There are controls around financial processes, control of budget, control of costs … the list goes on. But what does control actually mean? 

In most cases, this means the CFO will have control over all financial matters across the whole company. For all this to sit with one person, let’s face it, it sounds like a daunting task. And if we don’t get the balance right, it can lead to lengthy processes, stifling decision making and creating a trust vacuum. 

That’s why empowering employees to do everything from making payments and reimbursements with the right governance in place is a more sustainable solution. 

For today’s finance teams, we should consider having a distributed control framework. In doing so, we not only increase our financial oversight, but we can grow increasingly resilient to an unpredictable future with readiness, agility and peace of mind.

Why change now?

For modern business leaders, a challenging economic climate has ushered in a new era of working where companies are looking to remain more agile than ever. 

This is because according to McKinsey & Co., greater levels of agility can see 30% gains in efficiency, customer satisfaction, employee engagement and performance. 

This is particularly relevant for small to medium businesses (SMBs), for whom “doing more with less” has become their mantra, with limited headcount and budget.

At a time when teams are striving to be as agile as possible, devolving parts of the finance function allows the teams autonomy, creativity and initiative to come up with innovative ideas for the business and free up management time to focus on strategic plans. 

What’s more, with added trust and responsibility, employees avoid feeling undervalued and short on opportunities to show their true potential. 

Something that is particularly damaging when research from the Harvard Business Review shows how employees at high-trust companies bring 106% greater energy and 50% more productivity and experience 74% less stress compared to those at low-trust employers. 

In a bid to define control as something different from overly bureaucratic processes, I outline how forward-thinking leaders can rebrand it for a new age of spend management.

How should control be communicated? 

One ingredient key to control is transparency. Teams across departments and entities should be crystal clear on what their processes and policies are. 

Instead, too many businesses rely on explaining the limitations or red tape around spending amid approvals – much like telling someone the rules of a game as you approach halftime.

This is not only a massive time waste for financial teams, but it can lead to overspending and some seriously annoyed employees when reimbursements hang in the balance because the details don’t align with obscured spending policies. 

By having clear spending expectations and rules, your team is always kept in the loop and will feel trusted and confident to buy what they need for work, reducing the likelihood of them having to pay out-of-pocket.

Businesses should outline policies early on, but be wary of falling into the trap of a one-size-fits-all approach. 

Each department’s budget may differ wildly depending on their spending needs, and only a bespoke policy that clearly outlines expectations and limitations will keep everyone on the same page and bring peace of mind to the company as a whole.

How can control be made accessible while still being secure? 

Any forward-thinking company well into its digital transformation should be learning from its data. 

When the right data is put into modern spending tools and software, they have an enormous amount of insight to give us, and finance leaders should be using this to identify habits to help redefine and set budgets. 

What’s more, this can open the door to predictive analytics – it can be a true game changer when it comes to exposing risks and opportunities that might otherwise be missed. 

But for this to work, efforts must be made upfront to ensure the data infrastructure is sound and the data is accurate so that the teams have the confidence to rely on the results. 

This will not only lead to insights lighting the path ahead but help relieve the pressure on CFOs who are becoming an important partner to the CEO.

How would a distributed control network help businesses? 

Defining and navigating what it really means to be forward-thinking at work is an ongoing evolution. But forward-thinking finance leaders should recognise that control doesn’t have to be something restrictive – in fact, it should be quite the opposite. 

Control is a necessary part of the job and a way for companies to achieve readiness, agility, and peace of mind. Limiting control to a select few will not help finance teams though – distribution is the answer.

 Pair this with a clear expense policy, real-time expense reporting and processes that work for everyone, and your team will be equipped with a new way of working that can make sense of an uncertain future. 

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