Finance plays a central role in fast-growing SMEs’ business planning

A report by ACCA has found that there is a clear correlation for high-growth businesses with finance functions, extending beyond pure funding functions to being a strategic business partner.

Rather than playing an auxiliary role, the report found the finance function "played a central role" in the business planning of most of these successful SMEs.

Analytics

Based on interviews with chief financial officers and financial controllers from eight successful firms, the report concentrated on businesses that had grown by 70% over three years.

The results revealed that analytics dominated the finance functions’ workload, so in

most cases the traditional accounting role became a more strategic one as the business grew.

The finance function diversified along with the growth of the business, reaching beyond basic process tasks and morphing into the role of strategic business partner.

Integral part

Rosana Mirkovic, head of SME policy at ACCA and author of the report, explained how the development of a business changed the financing role.

"The rapidity of this type of growth can lead to issues such as insufficient staff capacity, increased business 'traffic' such as simultaneous deals, or entering new, very competitive or politically unstable markets," she said.

The finance function therefore needs to play an integral part in ensuring the business takes full advantage of new opportunities.

"To combat this change in environment, the finance function must become integrated across the key business development departments in order to prepare carefully for, and plan, new growth," Mirkovic added.

"SMEs experiencing fast growth require a CFO willing and able to take a key role in monitoring and controlling high growth as it unfolds, as well as forecasting future trends and possible new directions for the business," she concluded.