In today’s competitive business landscape, financial management is about much more than balancing books and cutting costs. For small and medium-sized enterprises (SMEs), finance teams can be game-changers when involved in strategic decision making and business partnering.
Too often, SMEs think of finance as a support function, missing out on the value they can provide when given a more central, strategic role.
By embedding finance teams into the broader decision-making process and ensuring they act as business partners across departments, SMEs can drive better outcomes, achieve their mission more efficiently, and grow faster.
Let’s explore how finance teams can influence strategic decision making and why SMEs need to leverage this to maximise success.
The Traditional View of Finance vs. the Modern Approach
Historically, finance departments were seen as back-office functions focused on cost control, accounting, and compliance. Their role was to ensure that spending didn’t exceed income and that financial reports were accurate and submitted on time.
However, in today’s dynamic environment, businesses need more than just efficient cash flow management. They need forward-thinking, proactive financial insights that guide major business decisions.
Enter the concept of strategic decision making—the process by which businesses set long-term goals and determine the best strategies to achieve them. Finance plays a crucial role here by providing the data and insights that shape these decisions.
Instead of just focusing on historical performance, modern finance teams are forecasting future trends, assessing risks, and identifying opportunities for growth.
When finance teams take an active role in strategic decision making, they move from being gatekeepers of budgets to becoming key partners in defining the direction of the business.
How Finance Influences Strategic Decision Making
Data-Driven Insights
Finance teams have access to vast amounts of data, from revenue patterns to operational expenses. By analysing this data, they can identify trends, inefficiencies, and opportunities that may not be visible to other departments.
For example, finance can spot where money is being wasted or identify underperforming products or services. By turning raw data into actionable insights, they can guide decisions on where to cut costs, where to invest more, and how to allocate resources to achieve the best return.
Scenario Planning and Forecasting
A key aspect of strategic decision making is planning for the future. Finance teams can develop financial models to forecast the impact of various decisions, such as launching a new product or entering a new market.
This is especially important for SMEs, which often have limited resources and need to carefully evaluate the risks and rewards of every major move. By preparing scenarios—such as best-case, worst-case, and most likely outcomes—finance helps decision-makers understand the potential financial consequences and choose the most informed path forward.
Risk Management
Business leaders need to make decisions that maximise opportunity while minimising risk. Finance teams, with their ability to assess financial risks and market volatility, are essential in guiding risk management efforts.
Whether it’s determining the optimal level of debt, ensuring sufficient liquidity, or evaluating the financial health of potential partners or clients, finance teams play a key role in helping businesses make smart, risk-aware decisions.
Aligning Financial Goals with Business Objectives
Strategic decision making requires that financial goals align with broader business objectives. Finance teams ensure that the financial health of the company is not jeopardised by ambitious business plans.
For instance, a marketing department may want to launch a large campaign, but without a clear financial strategy, this could lead to overspending. Finance teams work to ensure that growth plans are supported by sound financial strategies, balancing ambition with sustainability.
Performance Measurement and Accountability
Once a strategic plan is in place, finance helps track progress and measure performance. By establishing KPIs and other financial metrics, finance teams provide the tools necessary for management to assess whether the business is on track to meet its goals.
This not only ensures accountability but also allows for real-time adjustments to the strategy if things are not going as planned.
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Business Partnering: Integrating Finance Across the Organisation
For finance teams to play a role in strategic decision making, they must move beyond traditional departmental boundaries and become true business partners.
Business partnering means embedding finance into the operations of the company, working closely with sales, marketing, product development, and other key areas to ensure that financial insights are considered at every stage of the decision-making process.
SMEs often face resource constraints, which can limit their ability to hire dedicated finance staff for every department.
However, even in a lean team, finance can take a proactive role by:
• Collaborating on budgets and financial forecasts with department heads.
• Providing real-time financial insights that inform operational decisions.
• Offering financial training and support to non-financial managers so they better understand the implications of their decisions.
This level of business partnering ensures that finance is not a siloed function but a fully integrated part of the business strategy.
Why SMEs Need Finance in Strategic Decision Making
The benefits of involving finance in strategic decision making are numerous, but for SMEs, these advantages are especially critical. SMEs often have tighter margins, fewer resources, and greater exposure to risk than larger enterprises. Making even one poor strategic decision can have significant consequences, which is why having finance involved at every step is crucial.
Some key benefits include:
• Better resource allocation: Finance can ensure that every penny is used efficiently, supporting the areas of the business that will yield the greatest return.
• Improved risk management: SMEs are more vulnerable to market fluctuations, and finance can help mitigate risks by guiding sound financial decisions.
• Faster growth: With finance actively supporting growth initiatives, SMEs can scale more effectively while keeping costs under control.
• Long-term sustainability: Finance teams help SMEs build strategies that are not just focused on immediate gains but also on long-term viability and profitability.
FAQs
1. What exactly is strategic decision making?
Strategic decision making involves setting long-term goals and determining the best strategies to achieve them. It requires considering factors like market trends, competition, financial health, and risk.
2. How does finance contribute to strategic decision making?
Finance provides data-driven insights, forecasts, risk assessments, and performance tracking, helping leaders make informed decisions that align with both financial and business objectives.
3. Can finance teams help even in small SMEs?
Absolutely. Whether through hiring a dedicated finance manager or outsourcing financial expertise, SMEs of all sizes benefit from integrating finance into strategic decision making.
4. How can finance improve business partnering in SMEs?
By collaborating with other departments, offering insights, and providing training, finance teams can help ensure that financial considerations are part of every decision made across the company.
5. What are the risks of not involving finance in strategic decisions?
Without finance, SMEs risk making uninformed decisions that could lead to overspending, missed opportunities, and financial instability.
Author Spotlight
Carl Wakeford, ACA
Carl began his career within the Big Four where he spent four years auditing many public and private sector organisations, and qualifying as a Chartered Accountant. With a passion for business resilience, Carl specialised in risk consultancy, helping organisations strengthen financial processes and controls. Since leaving the Big Four, Carl has worked within multinational commercial finance teams, fast paced start-ups, the charity sector, and is now the CEO of FinOps Partners.
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