[Interview] How can the finance function better meet the needs and expectations of the wider business?

As guardian of the corporate purse-strings, the finance function has long enjoyed a privileged influence on strategic and operational decision-making. But that influence is now being threatened by other executives keen to gain the confidence of the CEO. To investigate this changing dynamic we spoke to Jamie Lyon, Head of Corporate Sector at global accountancy body ACCA. Jamie leads ACCA’s global thought leadership, research and insight programme on the CFO agenda and the future of the finance organisation.

 The real skill is about being commercial while making sure the business ticks over day-to-day. 

The role of the finance function in changing across the corporate world. The drivers of this change are largely external. “The state of play of the global economy dictates what corporates expect from their finance people,” says Jamie. For example, during the economic downturn, and for a considerable time afterwards, the watchword was survival. This meant the finance function focused on its core responsibilities to control costs, encourage efficiency and maintain cash flow.

Now market sentiment is more buoyant and many mature economies have returned to sustained growth. This different market environment brings with it different expectations on how the finance function can best serve its partners in the rest of the business.

As other corporate functions become more involved in strategic decision-making, the finance team also needs to take on a wider, more commercial role. There is an opportunity for finance professionals to collaborate with departments such as Sales and Marketing to work out which channels to market are most profitable.

So how can the finance department adjust to this new role and remain a trusted business partner to the rest of the executive team? For Jamie Lyon the answer lies in balancing the competing demands of the role: “The real skill is about being commercial while making sure the business ticks over day-to-day.” He shares three important tips:

1. Align the finance function to the KPIs that really drive value

As the corporate agenda switches from efficiency to growth, so too should the priorities of the finance function. “One of the big challenges that corporate finance functions face is aligning their finance work and commercial support to the things that drive real value in the business,” says Jamie Lyon.

This requires a sophisticated understanding not just of the core business activities, but also an appreciation of how value is assessed by the rest of the business. What is it that colleagues in other functions genuinely value? How should this be appropriately measured, tracked and reported? This insight will help the financial team put in place the right KPIs and prioritise efforts on activities that will maximise value-creation.

 2. Be open to risk

Taking risks is not a natural element of the typical CFO’s psyche. The training that finance professionals receive is often compliance-focused; it priorities financial controls and rigid assessment of the payback on investment. This leaves little room for taking risks.

However, Jamie’s advice is clear: “Finance teams must be prepared to take calculated risks to seize growth opportunities. They are used to taking a rational and measured approach. With the current business environment still shrouded in uncertainty, this is the right time for many businesses to reassess their risk appetite.”

 3. Make the most out of available data

“The balance between financial and non-financial data is becoming more important. Finance professionals have to step up to the mark and accept that there’s a lot of change happening,” says Jamie Lyon. Senior executives want to be able to assess the health of their organisation in the round, and are looking beyond the balance sheet. With increasing frequency, information about other organisational priorities – risk, talent, technology, innovation and customer – are being given equal attention alongside financial data when boards take business decisions.

To be an effective finance leader and business partner means showing willingness to work with and synthesise this range of data, and investing in the systems and processes to do so efficiently. “Finance teams need access to good tools which will allow them to conduct the data synthesis, extrapolation, forecasting, modelling and progression that they require,” says Jamie.


To be an effective finance professional means learning to adapt to the changing expectations of colleagues, and having the right skills, mind-set and confidence to work collaboratively across the business. The rewards for those willing to embrace this new model can be significant: the most commercial finance teams are viewed by their colleagues as facilitators of growth, not policemen of cost. This means they are able to secure a privileged influence over strategic decision-making for years to come.

Virtuous habits: embrace Commerciality to stay ahead of your peers

Research conducted by Meridian West and Financial Times shows financial professionals are perceived by their clients to be less commercial than other advisers. 34% of senior executives say legal professionals are excellent at providing advice that shows commercial insight, compared with just 15% for accountancy and finance professionals.

Why should this be? With their grip on the numbers, financial professionals are close to the heart of any business. Yet external advisers are becoming increasingly specialised – able to give clients a view on the intricacies of transfer pricing in Eastern Europe, say – often at the expense of being able to share a broader, more commercial perspective. Compared with lawyers, accountants are disadvantaged by regulation such as Sarbanes-Oxley, which create barriers (both real and perceived) about offering business advice.

With increasing frequency, information about other organisational priorities – risk, talent, technology, innovation and customer – are being given equal attention alongside financial data when boards take business decisions. External advisers need to respond to this appetite for forward-looking metrics and non-financial KPIs. One way to stay ahead of peers and keep ahead of changing client expectations is to embrace Commerciality.

What is Commerciality?

Commerciality is a much used, but ill-defined, term. Yet the nub of Commerciality is simple: it involves focusing on business outcomes when providing financial information and advice. To do this successfully means understanding the context in which decisions based on that advice will be taken. This is an area where many professionals struggle. Pride in being technically correct can lead to inflexibility. Lack of clarity about desired business outcome can lead to results that don’t quite hit the mark.

Take tax planning: this is an area rife with complexity where technical and specialist knowledge is vital and advantageous. To benefit from tax efficiencies it might make good financial sense to advise a company to operate a foreign subsidiary. However, a solution that is technically sound on paper may in reality throw up many operational challenges such as an increased cost of workforce mobility, and have a negative impact on corporate reputation by not being seen to pay a fair share of tax.

A truly commercial professional balances these competing demands to find a solution that helps an organisation achieve the best possible business outcome. This may require problems to be framed in new ways. In the above example, rather than dive straight to a technical tax-planning solution, it may be possible to achieve the desired outcome – freeing up cash for investment – through means that fewer reputational or operational drawbacks.

Commerciality in practice: seven habits

Commerciality is a mind-set. Yet this does not mean it cannot be taught to new graduates or honed further by experienced professionals. To translate Commerciality into pract7 habits of commercialityice it is important to focus on behaviours. Identifying behaviours that frustrate clients, consciously eliminating these and replacing them with more commercial ones through practice and repetition is the best way to ensure lasting improvements are realised.

Based on extensive research among thousands of finance professionals and their clients, Meridian West has developed a framework to help professionals identify, communicate and improve Commerciality. The seven habits of Commerciality framework can be applied by finance professionals to any client engagement, regardless of their area of expertise. [More on the 7 habits]

Virtuous habits in practice: three examples

First: understanding the people. Business is mainly about managing people, relationships and politics. Being aware of individuals, their competing interests and motivations is therefore imperative not only for determining the solution to a given problem, but also how the rationale for that solution is communicated.

For example, one firm spends time creating relationship maps for all of its client engagements mapping out all individuals within their own team and the client team. This includes stakeholders such as the CEO and NEDs, not just the direct members of the finance team they liaise with on a daily basis. It is important to pay close attention to the competing interests and preferences of this wider group of individuals who may have power of veto over any decisions made.

Next: agreeing the scope. When deadlines and resources are tight, it is tempting to launch straight into a piece of work to complete it as quickly as possible. This leaves little time to think through the strategy. The most commercial advisers set goals and metrics about what a successful client engagement looks like, communicating information about desired outcomes, tasks, resource and timelines.

Scoping is critical for external advisers grappling with a move away from traditional ‘time and materials’ pricing to fixed or success-related fees. Having a clear scope of works agreed up front helps accurately price an engagement to avoid writing-off large amounts of work when client needs change.

Lastly: communicating with impact. A common complaint we hear a lot from time-poor executives is that financial reporting is long, technocratic and has to be translated for non-financial audiences. They want information which is easy to understand, quick to assimilate and highlights the key points in complex or contentious issues. Simple changes such as prioritising risks, explaining implications clearly for non-financial audiences and communicating visually make a big difference.

The payoff: why bother with Commerciality?

Meridian West’s Mid-Market Monitor, an annual study of buying behaviour in the audit and advisory market, shows that Commerciality can be a significant differentiator when clients choose which external firms they work with. Being able to articulate knowledge of sector trends, provide foresight on relevant issues, and be proactive on scoping and project management can boost pitch win rates and the profitability of engagements.

One firm that has tackled this challenge head on has reengineered its delivery of pension advice to adopt an approach based on Commerciality principles. In doing so they have been able to virtually eliminate an average 20% write-off in fees for subsequent engagements.

So what next for finance professionals?

The seven habits of Commerciality framework focuses on virtuous habits that have both short-term pay off (greater efficiency or profitability) and long-term benefits (improved competitive positioning). Developing a strategy sheet for an engagement, creating a stakeholder map, or focusing on outcomes need not be a tortuous experience.

Any adviser can benefit from spending just a few minutes being more thoughtful about Commerciality and what this means for their interactions with clients. Small changes matter. At the beginning of an engagement have the courage to ask Commerciality-focussed questions: Who are the key stakeholders? What form of communication is preferred? What kind of solution is being sought? What is the desired outcome? The answers might just surprise you.

[By Alastair Beddow, Associate Director and Ben Kent, Managing Director at Meridian West. A version of this article first appeared in the July issue of ACCA’s Accounting and Business magazine. ACCA is the global body for professional accountants.]

[Top tips & case study] How can advisers better achieve their clients’ desired outcomes

In the first of a series of articles, Ben Kent and Adrian Furner explore how advisers can better achieve their client’s desired outcomes. [Habit 1]

Success needs to be defined by achieving the client’s outcomes rather than excellent inputs or outputs.

Too often advisers confuse deliverables, with outcomes. This mismatch arises because professional services firms tend to adopt pricing models that reward their advisers for providing deliverables, whereas clients’ businesses are usually only rewarded when they achieve certain outcomes. In the context of the 7 Habits of Commerciality, being truly commercial means being able to bridge this gap. Advisers need to focus more diligently on how their advice is used in the boardroom during the decision-making process.

Focus on the client’s objectives, understand what success means for them

Take an M&A transaction as an example. An adviser is accustomed to providing advice and support for the negotiation of the opportunity, focusing on the execution of the sale and purchase agreement. However, for the client having this document drafted and signed is merely a milestone en-route to success. Success often does not occur until many months or years further on where the final objectives – achieving cost synergies, expanding the company’s geographic footprint, and bringing together IP to launch a new product – are fully realised.

Realise that the desired outcome is often personal and rarely contained in the brief!

It is often not taken into account that the reasons for a desired outcome may also be personal. A commercial adviser
acknowledges this and tailors advice to help the client get to their individual outcome.

Ask the right questions

With modern account management tools it is easy for advisers to assume that they know their clients well. However, the real skill is to truly understand clients in the context of the advice being given. Why is a given matter or engagement important to them? How does it link to the corporate strategy? What are their plans for the future? It is these types of questions that can give true insight into what matters to the client.

Be closer to clients, before, during and after – collaborate

Much of this understanding will only come from being closer to clients, before, during and after they need an adviser’s technical services. Professional advisers are often only brought in when there is a transactional need for their skills, by which time the client is often a significant way along in their decision-making process. Being closer to clients earlier in the cycle can really help advisers to better understand desired strategic outcomes. How many advisers really know the timing of their clients’ strategic planning cycles?

Help the client implement their advice by offering implementation services or handing over well to the implementation team. The Big Four accountancy firms have now developed post-merger integration capabilities.

Don’t rush in, build in space and time so that things are not overlooked

When trying to understand their clients’ desired outcomes, advisers often rush towards the solution almost immediately, often feeling that that they are offering the client value for money by converging on the solution from day one.

In the drive towards the solution, opportunities may be missed and the need to understand and test the solution against the client’s desired outcomes may be overlooked. Increasingly in complex and interconnected transactions, space and time needs to be built in to allow for more divergent thinking.

Case Study: What can strategy consultants teach the professions?

The top strategy consultants have a reputation for being extremely results focussed. What can they teach lawyers and accountants about commerciality?

We recently interviewed an ex-partner from one of the top three strategy consultancy firms. He believes that the rigorous professional training that young lawyers and accountants undergo can be a hindrance. “It is very easy if you are a lawyer or an accountant to believe that the only thing you provide is technical advice, and you probably feel nervous outside that space. They rock up and show off their technical expertise. Strategy consultants don’t have the crutch of a professional qualification so this forces them into a different space”.

Three techniques are particularly powerful:

1. Problem statement – At the outset of the project define very clearly what is the ‘problem statement’, i.e.. what is the problem you are trying to solve for the client, and how can the benefits be quantified in terms of ROI? Make sure that the consultant’s activities are focussed on achieving the outcome and cut the fluff.

2. Value proof letters – At the end of the year this partner’s team would write a value proof letter that said “over the last year we have worked on these three projects, this is the value of the work we have delivered to your organisation relative to the fees we charged. We were looking for multiples of twenty times our fee rate.” This forces consultants to focus on implementing change rather than just delivering a report. Without change there is no value delivered to the organisation. It also creates a mind-set shift: “It takes people away from focusing on the technical and towards the business outcome,” he says.

In his experience clients absolutely love this approach, and it overcomes the complaints that advisers get about deliver a presentation, going back to their office and leaving the client with a turkey. “It becomes the basis for a meeting with very senior people to say this is what we do, and this is how you felt. It completely opens up real honesty in the relationship.”

3. At-risk fees – “We often put part of our fee at-risk. We are paid the full fee if the results were delivered and the client was delighted. There is a discount if the client is only satisfied.” In the right circumstances, it is a terrific way of ensuring that the client’s and consultant’s interests are aligned. At-risk fees work best when success can be measured.

[Excerpt from an article that originally appeared in professional marketing magazine. For further details go to www.pmforumglobal.com. In the next issue: Habit 2 – Understand the business]


[Infographic] Learn how to be a commercial adviser

A Commerciality Hub infographic that explains commerciality from issue to solution at a glance.


Commerciality infographic



The power of alignment – how easy is it to use your advice?

The power of alignment – how easy is it to use your advice?

In our personal life, whether in the digital world, or the physical world, we often chose services, in a large part, based on how easy they are to use.  This ‘ease of use’ is often driven by how supportive they are of us achieving our desired outcomes.

Let’s take an example, buying a camera.  People buy cameras for many different reasons, it could be they want to record their family growing up, they could be going on a special trip, or be a passionate wildlife photographer.  Each of these people will have different desired outcomes, which in each case isn’t buying a camera, it’s producing great pictures to show to people.

For a retailer, understanding these desired outcomes could be the difference between making a sale, or not and therefore it’s important piece of the jigsaw.

With the advent of e-tailers we have seen a significant consolidation of the number of physical camera shops on the high street.  Those that have survived have done so by creating very loyal customer bases.  Often what they can provide over the e-tailers, is the ability for buyers to seek pre and post purchase advice.  This is often focused on their needs and context, and helping them achieve their desired outcomes. In return they’re willing to pay a premium for this, and will likely buy additional items and services from the retailer over time.

So why is it, that in the context of professional services do we often miss the target in relation to being ‘easy to do business with’, or making our advice ‘easy to use’?  After all, as with personal life often it’s this ‘ease’ that creates positive customer feedback, repeat business, and customer loyalty.

How much time do we spend really understanding the client’s desired outcomes? How our advice will be used? The audience and users for that advice?

And even if we do spend time understanding these, and other key issues, how often during the creation of the advice do we come back and check our advice against them?

So what can we do about this?

Often the answers are all around us if we look for them. Think about your favourite brand, or shop, or airline.  What is it that they do that keeps you coming back?  How do they understand your needs?  Your desired outcomes?  And how do they adapt their service to you?

Finding ways to really understand your client’s desired outcomes is fundamental to commerciality as it links to some of the other habits such as: agreeing the scope; creating practical solutions; and communicating for impact.

So, just step back for a few moments and think about the last few engagements you’ve worked on.  How easy do you think your client found it to use and apply the advice you gave?

If you can’t answer this question quickly and easily, then it may be that a focus on habit 1, understanding your client’s desired outcomes, is a good starting point for you to increase your commerciality.

How good is your 'line of sight'?

How good is your ‘line of sight’?

From experience, many in-house legal, finance, contracting teams often feel, and often are, peripheral players in their organisation. Common complaints include, “we’re not involved early enough”, and “we’re always fighting a rearguard action to protect the company”.

Yet increasingly c-suites view functional teams as key enablers to value creation and innovation. Yet being a peripheral player can often undermine achieving this.

Moving in from the periphery can take considerable time but there are things that you can do to improve the situation.

Central to most businesses is their strategy, but often when you’re on the periphery, there can be many individual links to get back to that strategy.

Just think, how long is it before your whole team is briefed on the strategy (if at all)?  How many layers does it go through to get to your team? And what is the impact of the ‘lag’ and ‘distortion’ that this all potentially creates?

When it comes to enacting the strategy, are you able to articulate why you’re going down the particular route? If you can’t then how can you brief, and get value for money from the external advisers without being able to?

Creating a strong 2-way ‘line of sight’ from your organisation’s strategy to individual actions is fundamental, yet many functional professionals feel uncomfortable in this area, and would struggle to give a three minute or 30 minute presentation on the organisation’s strategy?

Without this ability, it’s unlikely that you will be able to deliver optimal advice and solutions that support the organisations strategy. Equally it makes it even more difficult for your external advisers to provide advice that is meaningful in the context of what you’re trying to achieve and which meets your desire for value for money.

Creating your, or your teams, ‘line of sight’ is a key activity that can have a disproportionate impact both for you and your team but also in demonstrating to the wider organisation your commerciality.