With a plethora of critical data at its disposal, your finance department is in a great position to benchmark its operations.
Plus, there are now more new technologies, real-time capabilities and advanced knowledge available for companies than ever before. That makes Finance even better equipped than in years past to set, monitor and reach realistic improvement goals.
You know every successful endeavor starts with an effective strategy. To create or improve your benchmarking strategy for any or all of your finance functions, make sure to heed these tips:
1. Enlist qualified experts
The truth is, most finance teams don’t inherently know how to go about benchmarking. Where do they start? What do they measure? What’s worth tracking and what’s not? It’s a complicated learning process that shouldn’t be done ad-lib.
As CFO, consider: Is there someone at your company who has valuable benchmarking experience and can walk your finance team through the basic process? (Perhaps you even are that person.) If no one comes to mind, could you bring in a third-party consultant to guide your team at the beginning?
Whether in house or external, an expert can help Finance focus in on which benchmarks are really core to your company’s objectives. And any external costs to bring in an expert could likely be made up for by the resulting process improvements.
2. Create company-specific targets
Of course, you want to monitor industry averages and keep an eye on how similarly situated companies are doing. But don’t let that drive your whole process.
When developing benchmarking targets, have your finance team discuss your niche, unique business strategy, company-specific operations, etc. Essentially, they should think about what makes your operations different from the average company and factor those aspects into your targets.
3. Stay continuous and consistent
It’s important to ensure that your team’s dedication to benchmarking doesn’t fade over time! Finance will be best equipped to know where it stands and spur positive change if benchmarking is a consistent, ongoing effort – not a one-off or “when we can” occurrence.
If your team makes irregular efforts (i.e., disregards benchmarking for some time, then jumps back in with fervor), they may end up making large, extensive changes that actually disturb your processes more than help them in the long term. But regarding benchmarking on a more regular basis will allow your team to make small, steady changes that add up over time.
4. Link findings to action
Once you have a series of benchmarks in full swing, how are you going to use them to better your finance functions, boost efficiency and lower costs?
To get the most out of your efforts and see a real ROI, it’s important to have your finance team regularly share and act on its benchmarking data. For example, you could set quarterly meetings with your team where they prepare a summary of their findings – and their improvement ideas based off of those findings. And together as a group, you can brainstorm quick fixes, as well as long-term initiatives.
