When does finance need additional capacity?

When is the current finance resourcing no longer sufficient?

The departure of the person responsible for finance, a major project or a demanding change can increase the finance organisation’s workload or alter the expertise required. A resource gap may also be a longer-standing situation in which finance capacity and capabilities no longer match the company’s needs.

Insufficient resourcing can weaken the quality of reporting, slow down projects and place pressure on key people. The following four situations illustrate when it is worth reassessing the current finance resourcing or capabilities.

When a key finance person leaves

When the person responsible for finance leaves, the organisation loses overall finance leadership responsibility and often valuable undocumented knowledge as well. Management loses a key partner supporting decision-making, but reporting, stakeholder cooperation and ongoing projects still need to continue.

Responsibilities are often distributed among other members of the finance organisation in addition to their existing work. Workload and responsibility increase, and people may be expected to make decisions for which they do not necessarily have the experience, authority or sufficient time.

I have started several finance leadership roles in situations where my predecessor had already left and no handover was possible. The initial phase was spent establishing the situation, dealing with urgent matters and bringing the overall position back under control. When finance processes and responsibilities had been well documented, taking over the role was considerably easier.

When a major project is added to business as usual

An ERP or finance-system implementation, a reporting redesign, an organisational change or another major project may require a substantial contribution for months alongside normal work. Project work often falls on the same people whose expertise is needed in day-to-day operations, and the project may also require capabilities that do not yet exist in the organisation.

As workload increases, something is postponed, done in a hurry or working days become longer. The risk of errors increases, while project delays increase costs and postpone the expected benefits.

The impact of major projects on the day-to-day work of finance has become familiar to me in many roles. When a project was added to normal work without additional resources, capable and committed people stretched a long way. Continuous extra workload nevertheless showed up in prioritisation, long working days and concern about whether everything could be completed to a sufficiently high standard.

When expertise is needed that the organisation does not have

Not every change requires only more working time. A change in company structure or the establishment of new legal entities, for example, can raise questions relating to accounting, financial statements, taxation and legal obligations.

The key is to identify what expertise already exists in the organisation and where complementary specialist knowledge is needed. If the need is not identified early enough, the effects of incomplete interpretations and solutions may only become visible later, for example in the financial statements or taxation.

In one of my roles, the company structure had been changed and new legal entities established. The necessary specialist expertise had not been used in all decisions. Some interpretations later proved incomplete or incorrect, and their effects were reflected in accounting, the financial statements and taxation.

When the company’s needs grow faster than the finance organisation

A lean finance organisation can serve a company well for a long time. As the business grows, more is also required from finance: reporting, processes, controls, regulatory obligations and support for the business.

If resourcing and capabilities do not develop at the same pace, time is easily consumed by essential tasks and there is little capacity left for development. The quality of reporting and the reliability of financial information may suffer, while continuous prioritisation and responsibilities outside people’s own areas of expertise place additional pressure on the team.

I have seen the impact of growth on finance resourcing in a company where finance had operated for a long time with very limited resources and, at times, with no in-house finance person at all. The business had grown, but finance operating practices had not developed at the same pace. The work began by documenting the current state: what needed to be resolved, in what order and on what timetable.

How can additional finance capacity be arranged?

Responsibility can be secured for a defined period. When the person responsible for finance leaves, an experienced finance leader can assume overall responsibility until the successor starts. This allows finance leadership, reporting and key stakeholder cooperation to continue without a prolonged gap in responsibility, and the successor can start from a more controlled situation.

Additional capacity can be directed where it is needed. In a major project, additional capacity can be assigned either to the project itself or to part of the normal workload. This allows the organisation’s key people to focus their time where their company-specific knowledge is most valuable.

Not all expertise needs to exist in-house. In a demanding change, the key is to identify early what expertise is required. The necessary specialists can be involved in planning and implementation, while the person responsible for finance coordinates the whole and ensures that the solutions are embedded in finance processes and reporting.

Growing needs do not always require a permanent additional resource. A fixed-term finance professional can assess the current state, address the most important gaps and build an operating model suited to the company’s needs. At the same time, the company can define what permanent finance resourcing and capabilities it will need going forward.

Additional finance capacity – cost or investment?

The cost of a fixed-term additional resource is easy to see; the cost of not adding capacity is harder to identify. The cost should therefore be compared with what the additional resource can achieve and what risks or costs it can help avoid. Continuity of operations, employee wellbeing and confidence in financial information are also part of the overall picture.

Apaja’s perspective

In finance leadership roles, I have experienced all the situations described in this article in different forms. I have seen how far a capable and committed organisation can stretch – and what prolonged stretching can cost.

Additional capacity does not solve everything. But when the finance organisation’s capacity or available expertise is not sufficient for the demands of the situation, I would rather bring in additional support early than spend time and money correcting the situation later.