Finance is undeniably one of the essential departments of any company, whether small or large. However, several people have the assumption that finance professionals are only responsible for money management. While handling cash flows is the primary responsibility of the finance sector, it is not its only function. Finance individuals are also in charge of strategic planning and decision-making. They are responsible for gathering data that assist in asset purchases, staffing levels, and expansion planning. They also provide information to help managers make critical strategic decisions for business growth. The finance department also conducts a thorough analysis of reports generated. It provides a central understanding of several factors and trends. Success in the finance sector does not stem from only money management, and there are many factors at play. For instance, companies that utilize technology (FinTech) outperform competitors. Similarly, those that expand their investment portfolio churn out lucrative returns.
Some of the growth hacks (secrets) mentioned above might be entirely foreign to you. And that’s acceptable. In reality, there are several best-kept secrets about the finance industry—some of which we will unveil below.
Closely monitor industry trends and patterns
One of the most valuable secrets we can share about success in the finance industry is monitoring industry trends and patterns. Having sufficient knowledge about industry trends and patterns is imperative. Trend analysis can help you keep track of your business performance. You can identify the areas where your business is doing well and where it lags. Knowing the highs and lows of your company helps in making more strategic decisions about future operations. Furthermore, monitoring industry trends and patterns is also essential because it helps keep track of the money going in and out of business.
Since identifying and analyzing industry trends is vital to businesses, it is crucial to ensure that your finance professionals are experts in these functions. You can either hire competent individuals or train your existing employee base. For instance, you can urge your employees to consider online education that allows them to remain abreast of industry standards and trends. They can enroll in an online masters in accounting no GMAT required to learn about the latest developments in the finance industry. Besides, investing in your current employee base is comparatively less costly than hiring new ones. It will also allow you to meet employee development goals.
Cater to each finance function separately
Many people think that one accountant can take care of all business financials. That is not true. There are different areas in the finance industry that greatly vary amongst each other. For instance, strategic accountants cannot evaluate taxes for your business. It is because each’s nature of business differs significantly. Tax accountants take the more conservative approach who only differ tax liabilities. They are only concerned about taxation, including tax laws, tax authorities, etc. taxation, in general, is a particular sector.
On the other hand, strategic management accountants focus on maximizing profits and warning about a precedented financial peril. These accountants prepare financial statements, help managers set future company goals, and draw up budgets. Accounting is a much broader field. The secret here is to cater to each of its functions separately by having the experts handle it.
Utilize the role of technology in achieving efficiency
If you think everything in the finance industry is manual work, the following information might be surprising for you.
The impact technological transformations are making in the finance industry is remarkable. The task that once used to take hours to complete now takes only a few minutes. Innovators have made tremendous progress in automation recently. Multiple software can now create a complete investment plan, provide asset allocation services, and even perform complicated tax procedures for businesses. Not only that, several software and applications can also analyze a large amount of data almost instantly.
Moreover, RPA, a financial service technology trend, can help banks reduce human error, save money, and improve speed. Since RPAs automatically generate documentation and reports, they can also assist financial institutions with auditing and compliance.
Some technological developments are constructive in analyzing customer behavior. For instance, software like Mix panel and google analytics can provide you with a detailed analysis and review of customer behavior, including their likes and dislikes. This quick analysis can save many financial professionals’ time and help them make better, accurate decisions.
These technological developments have and are altering operations in the finance sector and for the better. It is not only reducing the burden of human labor but also aiding precise and correct results.
Outsource when and where necessary
Another best-kept secret about the finance industry is focusing on its core competencies and outsourcing the other functions. Today, several financial service providers excel because they direct their resources and time to only providing financial expertise. The rest they leave to outsourcing. So, you can evaluate and determine which of the functions are not exceptionally essential. For instance, hire a recruiting agency to help you attract top talent.
Similarly, you can consult with marketing agencies to promote your finance business instead of doing it yourself. It will allow you to focus on developing your financial services and how to strengthen client relationships further. Besides, outsourcing specific functions can turn out to be less costly than doing them yourself.
Deciding to compete or collaborate
As is well-established at this point, the financial industry is responsible for making some critical business decisions. But were you aware that one of those decisions includes whether to compete or collaborate? Of course, the finance department doesn’t solely take such a critical decision. There are other members from senior management involved as well. However, the finance department’s (whether in-house or outsourced) opinions and advice are primarily valued more than any others in such decisions.
Deciding between competition and collaboration is a challenging task. There are specific questions every financial officer needs to ask themselves before collaborating with competitors. Firstly, is your and the competitor company’s market stance the same? If not, how open are you to a difference of opinion? How efficiently will you be able to work together? And most importantly, do you think the extra profit you gain will be worth the hassle?
After looking for answers, finance professionals (along with others) decide about collaboration.
Conclusion
The points mentioned above disclose several secrets about the finance industry that many people don’t know. However, these are critical factors that help in excelling in the finance industry. These are strategies (secrets) that allow a financial company to soar to new heights.
If you are looking to set up a finance firm, you must know all bits and pieces about the industry. Many finance firms blindly follow the age-old techniques. It keeps their business stagnant, bearing no growth prospects. But if you want your finance business to reach among the top tier, you must focus on these best-kept secrets.
