Importance of a Strong Finance Team for Accounting and Seeking Capital

What is a finance team?

A finance team is a department within your organization that handles all functions related to your company’s financial well-being. Generally, a finance team is responsible for various tasks, including the following: 

• Accounting
• Recordkeeping
• Administrative work 
• Managing cash flow
• Capital funds acquisition and management

Perhaps most importantly, a finance team can teach business owners and leaders how to grow their operations effectively.

Alex Osmichenko, founder of IT Monks, emphasized that a good accounting and finance team can bring structure and clarity to business decisions. “Their work ensures that services are priced correctly, helps make the right investments and provides financial security for the company’s future, even in difficult times,” Osmichenko explained. “The impact of finance specialists is reflected in every decision a company makes.”

Henry Criss, CEO of Fraum Center for Restorative Health, noted that building a strong finance team requires a focused hiring process. “Building a strong finance team starts with hiring for both technical expertise and strategic thinking,” Criss explained. “Continuous development and integrating finance into leadership conversations ensure that financial insights shape the organization’s future, not just its reports.”

Roles and responsibilities of a finance department

Depending on your business’s size, your finance team may include multiple groups specializing in various financial tasks. Their roles and responsibilities often include the following: 

• Handling accounting and bookkeeping duties: A professional or group of professionals will handle accounting tasks, including accounts payable and accounts receivable processes, invoicing, using one of the best accounting software solutions, running accounting reports and more. Companies often hire a bookkeeper specifically to record daily transactions, including sales and expenses. 
• Forecasting the business budget: A finance team is essential for budget planning and can provide vital feedback on the business expansion you’ll need to maintain efficiency. This information allows you to prepare for significant costs well in advance. The team can also advise you on how spending impacts long-term business success based on patterns they’ve recorded from the organization’s transactions.
• Making long-term investments: A finance team can act as an advisory board for all business investment decisions, helping you choose the best routes to achieve high profit margins. Additionally, they can find and attract business investors and issue shares, ensuring there’s sufficient capital for long-term growth.
• Paying taxes: Your finance team will handle the business’s tax obligations and ideally build and maintain strong relationships with government entities. They should continually monitor legal changes that may impact your industry.
• Analyzing financial data: A finance team analyzes accounting data and creates comprehensive statements to measure business growth. These statements often track key funding sources. 
• Tracking cash flow: The finance team monitors cash flow statements — records that detail transactions with vendors and creditors — along with their respective payment dates. Managing cash flow properly ensures sufficient funds are available for daily operations.
• Advising leaders: The finance team has access to a wealth of knowledge to advise business leaders and managers when making strategic decisions. It can recommend the best projects to undertake, how much of your business’s earnings should be distributed as dividends and which markets to pursue.

Importance of a strong finance team

The right accounting and finance team can grow your company in ways you’ve never imagined. Here are some top reasons why a strong finance team can help you achieve greater success. 

A finance team uses detailed financials to inform the big picture.

While you may know the direction you want your business to take, a finance team has the expertise to break down your long-term vision into practical steps with a realistic timeline. These financial professionals use detailed, current analytics to provide an intricate overview of your organization’s financial health. 

A savvy finance team can also spot potential problem areas and help you correct them before they significantly impact the bottom line. For example, say your company has steady sales, but the astute chief financial officer notices that the percentage of sales from existing customers has fallen. While new customer sales have masked the shortfall, there may be a service issue, product quality problem or sales funnel failure preventing you from earning repeat business. 

Once the issue is fixed, the company can benefit from increased sales revenue from both new and existing customers.

A finance team knows when outside capital is needed for growth.

Standard financial statements prepared by your bookkeeping team or an outside accountant can tell you if a capital infusion is necessary to address a cash flow shortfall. However, it typically takes an internal financial expert to identify when additional funding sources are required for growth.

Your finance professional can also determine how much funding you realistically need, helping to control finance costs and enabling a successful growth initiative.

A finance team identifies cost savings to boost profits.

In-house finance teams are constantly looking for ways to improve profits. For example, they may analyze your raw material costs and boost cash flow by negotiating suppliers’ credit terms or they may recommend eliminating an underutilized employee benefit. Cutting business expenses and identifying new avenues for sales are essential strategies a finance team can implement to enhance your company’s profitability.

A finance team signals responsible financial governance.

Having a talented finance team in place signals to others that you’re proactive about responsibly managing your business’s finances. Demonstrating financial responsibility can help attract investors, gain lender approval and secure favorable vendor terms for leased equipment and payment agreements.

A finance team allows founders to focus on core competencies.

Unless you founded a finance-related company, your passion and expertise likely don’t revolve around money management. Adding an experienced and honest finance team significantly reduces financial responsibilities beyond final discussions, reviews and approvals. This assistance allows you to concentrate your time and effort on your company’s core business, establish a positive and productive company culture and focus on areas where you excel.

How a finance team improves lending chances

A finance team is particularly crucial if you’re seeking one of the best business loans or are exploring alternative lending options. Lenders rely on your company’s financial reporting abilities when considering your application and will scrutinize the quality and accuracy of your statements. A strong finance team provides accurate, clear reporting and high-quality information, increasing the likelihood of your application being accepted. 

In contrast, if you apply for a business loan and provide spotty, inaccurate or incomplete financial data, the likelihood of finding a high-quality, willing lender will be low. 

Ryan Kunkel, president of Third Road Management, emphasized that financial statement quality is critical to obtaining financing. “The accuracy, timeliness and quality of your financial statements are critical for securing optimal terms on outside capital,” Kunkel explained. “These statements build trust and credibility that are crucial for closing deals and securing optimal rates, such as when seeking additional investment from private equity firms and/or preparing for succession planning.”

If you’re a new business or haven’t yet assembled an accounting and finance team, hiring the right financial professionals should be a top priority. Building a finance team has ripple effects on your profitability, your ability to borrow money and your daily stress level. While you may find yourself preoccupied with the big picture, remember it’s the small details that will get you there — and a good finance team always has its eyes on those details.