DUBLIN–(BUSINESS WIRE)–The “Finance Department Performance Benchmarks 2018-19” report has been added to ResearchAndMarkets.com’s offering.
India’s 2019 Finance Department Performance Benchmarks are designed to provide a baseline against which organisations can measure themselves on a variety of efficiency and effectiveness parameters.
The report is based on data collected from more than 240 CFOs from the large, medium, and small companies across the manufacturing and services space who responded to a detailed questionnaire covering areas such as costs, staff, the volume of work, organisation structure, finance automation, and outsourcing and in-sourcing trends.
Seemingly, every organisation today wants to transform Finance into an effective, capable, and leaner function, and one that enjoys strong economies of scale. But how do they go about doing this? In a business environment where volatility and uncertainty are the new norms, CFOs – with their unique, enterprise-wide vantage point – can be the CEO’s strongest ally.
Finance can bolster organisational performance by strengthening business-performance monitoring and forecasting, risk management, and by ensuring high levels of both transparency and control. The success of such initiatives, however, depends on the ability to create effective and standardised Finance processes. This only adds to the CFO’s already action-packed agenda and demands smarter, faster decision-making to reduce costs, drive revenue, identify new opportunities and sustain growth. Understanding where they stand relative to their peers is a crucial first step, and while global benchmarks exist, the Indian reality is less well-researched.
To better gauge the approaches and practices in play in India – in respect to Finance department structures, priorities, and processes – The publisher studied over 240 companies, representing a wide gamut of the industry, via a detailed survey covering a host of operational and performance-related parameters. The benchmarks the study yielded are intended to provide a baseline against which organisations can measure themselves on a variety of efficiency and effectiveness measures, such as budgets, work volumes and efficiency.
In addition, the report analyses Finance staff headcount levels, qualifications, skill levels and organisational structures. The function’s core performance is also analysed using specific metrics for activities run by the CFO’s office, from transaction processing and taxation to investor relations and treasury. The other critical themes of finance IT and desired automation are also evaluated, and compared against leaders in the industry.
Finance Budget
Beyond a certain revenue threshold, there are economies of scale to be realised from running a Finance department. The smallest firms spend 2-10% of revenue running the department, while for the largest ones, this drops to below 0.5%. 59% of CFOs believe that their budgets are just right, and 43% expect their Finance spends to rise by 10% or more in FY20.
Typically, the two biggest areas of spend are transactions processing and treasury. For other activities such as investor relations, business partnering, employee claims processing and tax, the budget allocations vary by the firm’s size, industry and ownership structure. On a line-item basis, the lion’s share of most Finance budgets goes towards personnel costs, while professional services fees constitute a second major chunk. Ownership also influences spends. Companies listed overseas allocate a greater share to professional services as against companies listed in India.
FINANCE STAFF SIZE AND SKILLS
Headcount
At the median, Finance employees account for 2.8% of the total workforce in a company. Listed Indian companies employ more than twice as many full time equivalents (FTEs) as unlisted ones. On the whole, services firms have fewer FTEs than those engaged in manufacturing, but this trend reverses when comparing larger companies across sectors. The majority of Finance FTEs is engaged in transaction-processing activities. The compositions of Finance staff by activities vary by sector and ownership.
Qualification and skills
In terms of qualification, 52% of Finance staff hold B. Com or M. Com degrees, while 15% or fewer are qualified CAs, or have other Finance-specific qualifications (CFA, CS or ICWA). There also appears to be a clear shift towards incorporating more generalist skills. CFOs feel their Finance staff is falling short on influencing and communication skills, as well as in cross-functional knowledge.
Hiring
Finance departments generally have lower attrition rates than their companies as a whole. Importantly, about two-thirds of new Finance hires come from outside the company, and just 24% come from within the department.
Finance Systems
Spends on technology and systems are on the rise, accounting for up to 10% of all incremental Finance costs. Automation is also high on the agenda of many CFOs. Currently, most companies fall short in terms of automating to the degree that CFOs would like. Transaction processing and internal reporting are today the most automated of Finance activities, though even there, CFOs would like to automate further.
Key Topics Covered:
1. Finance Cost
1.1. Finance budget for 2018-19 (Rs crores) and as a percentage of revenue: 25th, median and 75th percentile levels
1.2. Finance budget detailed split by sector, ownership and revenue band: 25th, median and 75th percentile levels
1.3. Expected change in finance budget in FY20 and factors driving the change
1.4. Finance budget allocation by activities and splits by sector, ownership and revenue band
1.5. Finance budget split by line items and splits by sector, ownership and revenue band
2. Finance Headcount
2.1. Finance FTEs in 2018-19 by sector, ownership and revenue band: 25th, median and 75th percentile levels
2.2. Core finance FTEs by sub-function
2.3. CFO span of control
2.4. Finance staff qualification: 25th, median and 75th percentile levels
2.5. Finance staff hiring and attrition trend
2.6. Finance staff skill/competency gap
3. Finance Department Productivity
3.1. Frequency of forecasts (major vs minor updates)
3.2. Number of days to prepare annual budget/forecast/update (actual vs desired)
3.3. Sufficiency of line items for budget and forecast reports
3.4. Key volume metrics for tax, transaction processing, treasury, and other sub-functions
4. Finance Outsourcing and Insourcing Trends
4.1. Extent of finance activities outsourcing and insourcing
4.2. Current status and plans to develop CoE and SSC
4.3. Drivers of insourcing decisions
5. Finance Systems
5.1. Level of automation of finance activities (current vs desired)
5.2. Current state of finance systems investments and maturity
5.3. Current position of ERP systems
5.4. Confidence in finance system’s ability to create a single version of truth
For more information about this report visit https://www.researchandmarkets.com/r/nvwlbf
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