It’s not difficult to understand why public sector organisations often view finance as a problem rather than as part of the solution. It’s certainly true that public bodies face a unique combination of budgetary constraints and regulatory scrutiny rarely experienced in the private sector.
When it comes to strategy and delivery, the best laid plans all too often run into a wall when the finance people step in and start throwing a balance sheet-shaped spanner into the works. Often without their own means to raise funds to funnel into planned projects and reliant on budgetary decisions made elsewhere, it’s easy to see why finance feels like a limiting factor.
Stepping back from this reveals something interesting, however. It exposes a gap between operations and finance. This in itself is nothing unusual. You don’t have to be a public sector body for strategy, marketing, operations and finance teams to all co-exist in their own separate bubbles, often bumping up against each other in delivery rather than aiding and abetting success collaboratively.
But in many ways, this makes even less sense in the public sector. Sure, the financial reins can feel that much tighter. But why, then, are strategies being formulated prior to or outside the involvement of financial teams? Surely that’s all the more reason for finance to sit at the centre of planning, to focus on delivery within the bounds of the possible?
Successful delivery in any area has to start with understanding what can be achieved, and then working out how. Finance can play a key role in both respects, not only in terms of keeping goals and ambitions realistic, but also in introducing a value-based approach to planning. Effective strategy is not just a matter of what you can and can’t do. It’s about working out how to achieve the best possible outcomes with the resources available.
Harnessing financial expertise as a strategic enabler within public sector organisations often requires both cultural and operational changes, starting with better alignment between operational and financial teams. But the benefits of making that shift can be significant, with at least three core benefits as follows;
Smarter Decision Making
Financial administration these days is heavily digitised and therefore awash with data. If you want to measure performance, value, output, efficiency, there is bound to be a financial metric for it. If you want someone with the expertise to interpret, evaluate, extrapolate and predict from the data, that’s what an accountant or finance professional does for a living.
Making strategic decisions through the lens of financial data and financial expertise gives you an evidence base to draw on when determining what works and what doesn’t. That can only lead to better planning, and therefore better outcomes.
Planning for Maximum Impact
One of the common consequences of operations and finance teams not working in harmony is what you might call the margarine spread effect. Operations teams try to pack too much into the strategic plan, the finance teams don’t want to tread on any toes by saying X, Y or Z have to be removed. So instead, a little bit of everything gets attempted, resources are spread too thinly, and outcomes fall well short of goals.
Instead of this kind of limp compromise, it’s much better to focus resources where they can have the biggest impact, and go all out to maximise achievements. Finance specialists can help you understand where budgets will stretch furthest, and then use them most effectively.
Tightening Discipline
Like it or not, public bodies cannot avoid the fact that they are under the microscope when it comes to spending, use of budgets and the value they deliver. Reporting to government is a integral part of public sector life. Keeping your house in order with regards to compliance and reporting arrangements is critical to protecting budgets, and is something financial professionals specialise in.
Financial specialists can help to introduce and maintain discipline in another sense, too. If the authorities that control your budgets are always looking for demonstration of value, then all decisions and actions should be taken with one eye on demonstrating it. That kind of value-focused discipline can be brought into strategic thinking by your finance team.
Speak to an expert
With a deep understanding of governmental regulations, compliance standards, and fiscal policies, Xeinadin specialises in providing comprehensive accountancy services tailored specifically for public sector organisations. To find out more, get in touch with our team today.
