Improved forecasting, planning, budgeting and investor relations; just some of the areas in which many corporates now accept that their finance functions will have to improve their game in the wake of the credit crisis, according to a survey, Thriving, not just Surviving”, undertaken by CFO Research Services for KPMG International.

It shows that even in the early stages of the credit crisis, many businesses quickly realised that their finance functions had to improve their ability to challenge and support the business.

Over 80 percent of the survey’s 516 respondents felt this way; a response which translates into an urgent mandate for finance functions to seek to improve their influence over strategic decision-making at Board level.

In terms of the specifics needed to improve their standing at board level, better planning, forecasting and budgeting emerged as the most popular pick amongst 83 percent of respondents. With CFOs generally spending more time on investor relations, the survey also notes how finance functions in top performing companies see the timely reporting of business results to investors as more of a priority than the under-performers do.

Rodger Hill, Head of Financial Management at KPMG in the UK commented: “When we last ran this survey three years ago, there was a groundswell of opinion even then that finance functions should be more forward-looking, providing the insight and advice which would lead to more informed decision-making at Board level.

“Looking at these findings, you have to query whether this ever happened. We’re now seeing an even greater conviction that things need to improve. This tells you that plenty more companies have since realised where their shortcomings lie – but also that those who realised this three years ago, appear not to have done anything about it. What a shame that it has taken a crisis of this magnitude to finally shake people into life.”

The survey provides encouragement for those businesses now prepared to indulge in an overhaul of their finance function. Of those businesses surveyed which had undergone a finance function reorganisation over the past three years, 60 percent claimed it had resulted in better overall performance of their finance staff. While this might have been expected, the 55 percent who felt it improved the ability of their staff to focus on value-adding business support will have come as more of a pleasant surprise.

This issue of being more forward-looking is a recurrent one in any debate around finance function performance. Under-performers, says the report, can spend too much time downloading and reworking non-standard data in an attempt to supply meaningful information to business leadership. They also remain mired in the traditional control and compliance role which evolved in response to the accounting scandals of the early 2000s.

However, few modern, top performing organisations are happy with the idea of their CFO simply acting as a score-keeper or tracking the past. Best practice now suggests that the CFO and the finance function should be far better at influencing key business decisions – hence the demand for better forecasting and scenario planning capabilities. The current economic uncertainty has simply exacerbated the need for the right information at the right time, prompting more businesses to go down this best practice route.

The problem for any business looking to reinvent its finance function in this way will be talent; or the lack of it. Difficulty in finding and retaining skilled finance professionals was cited as the single biggest barrier to change within the function (55 percent of respondents). This explains why the overwhelming response was to deliver required skills via training as opposed to via recruitment. For example, 90 percent of respondents felt that they could improve finance’s influencing skills by training, not recruitment.

Rodger Hill continued: “All the best intentions for change could flounder if businesses do not have the right people to effect the necessary changes. Finance professionals who can assess situations, predict how they might pan out and who are unafraid to take responsibility for the sometimes painful messages which need to be communicated to management have always been in short supply. Right now, they are worth their weight in gold and should be freed from their day-to-day, backward-looking responsibilities in order to focus on the more insightful support which senior management craves.”

“This survey shows that the need for change is more pressing than ever before. Despite this, I fear that many organisations may still keep their powder dry, waiting to ride out what remains of the crisis before undertaking any sort of change. While I would not advocate wholesale change at such a delicate time, I think there is still much that can be done within finance now which can bolster a company’s defences against what remains of the crisis. Today’s finance function should look forward and focus on providing accurate and insightful enterprise-wide information. There is little or no sense in waiting for the crisis to end before making this happen.”