Companies are losing millions of dollars as a large number of finance professionals lack sound business knowledge and analytical skills to assess the projects,a survey has claimed.
According to the study conducted by financial training and consulting firm Elements Akademia,70-90 per cent finance staff lack business acumen and presentation skills which lead to failed business projects and possible loss in revenue.
The survey,conducted among 110 company executives in 30 companies and 100 Chartered Accountants (finance profile) found that most finance managers are restricted to a “mechanical role” of book keeping,auditing and reporting.
It found that only 5-7 per cent of the firms felt that their finance department was participating in decision making.
“Companies generate superior returns by making the right strategic choices…and those that make bad choices (such as failed product launches,failed acquisitions,failed expansions) see their stock prices go down,” Elements Akademia CEO Nishant Saxena said.
“By objectively analysing all investments,projected returns and risks,a good finance manager can recommend which initiatives are likely to succeed and which are too risky and hence avoided,” he added.
The finance staff essentially act as “Internal Venture Capitalist” in the company,helping the General Managers decide which opportunities to invest in.
However,often the finance team lacks the broad business knowledge needed to make the right strategic choices,he said.
Echoing the view,Cipla Group CFO Rajesh Garg said that not all finance personnel need to have the business acumen a lot of delve deeper into the business operations and develop communication and presentation skills.
“The finance team needs to help company predict the future,provide current/real time analysis and also know about the organisation has done in the past so as to help it
mitigate risks,” he said.
Asked why only the finance staff needs to develop these skills,Garg said that it was because finance is an integral part of all aspects of business from the production level to the marketing side.
Financial advisory firm Amplus Consulting’s MD Praveen Nigam,however,differed from the findings of the study and said that finance personnel don’t lack business acumen as such and it depends on the opportunity presented by a company.
According to Nigam,many large and small firms do not offer finance teams enough opportunities to participate in business decisions.
“It is the mid-size firms which give enough opportunities to the finance team in terms of accounts,finance and tax and the finance guys generally perform above expectations and become part of the management,” he said.