Finance trends: Modernizing finance in private companies is based on a survey of Canadian CFOs and finance leaders conducted in the summer of 2016. The report examines the current roles of finance, and the capabilities both CEOs and CFOs expect their finance teams to have within the next few years. The report also offers a framework to help CFOs evaluate their finance teams' current capabilities and identify the core competencies they will need to help their companies successfully manage a disruptive event.

1. Finance trends
Modernizing finance
in private companies

2. So where is finance today?
On average, CFOs/
finance leaders
spend almost
one- quarter of their
time on reporting
financial position and
operations—more
time than they spend
on any other activity
87%
Almost nine out of
10 finance teams
(87%) struggle to
keep up with their
current workload
1/4 85%
Of CFOs/finance
leaders believe their
CEOs place a high
priority on the finance
team providing
insights to senior
management
Source: Deloitte Canadian CFO/Finance leader survey, 2016

3. Where would finance like to be?
More than 9/10 of
CFOs/finance leaders
believe improved
tools for forecasting,
reporting and/or
budgeting would be
effective in helping
them achieve
greater success
94%
Of CFOs/finance
leaders feel that
automating manual
tasks would be
effective in helping
them achieve
greater success
9/10 92%
Of CFOs/finance
leaders say better
aligned skills in
the finance team
are needed
Source: Deloitte Canadian CFO/Finance leader survey, 2016

4. Private company growth
The evolution of a typical private
company begins with a start- up
stage, where growth is slow,
but steady. This is followed by
a stage of rapid growth in the
first five years of operation, after
which the growth curve levels off
as the company reaches maturity.
Many private company finance
leaders anticipate the need for
their teams to mature and acquire
greater competencies as the
business grows.

5. Leading private companies are
investing to modernize finance
All private companies can
build finance’s capabilities by
focusing on three critical needs:
1. Improving the efficiency
of reporting
2. Providing better
operational insights
3. Building a stronger, more
client-focused finance team

6. Reporting to stakeholders
consumes so much of finance’s
time because of:
Automation
Most teams still rely
heavily on manual
journal entries
Disparate systems
Many companies
use multiple
disparate systems
in the financial close
and reporting cycle
Lack of
communication
People involved in the
reporting process are
often unclear about
the work done by
others and how their
work interrelates
1 Improving the efficiency
of reporting

7. Overuse of spreadsheets
Almost all CFOs and their
teams use spreadsheets for
financial reporting,
forecasting, and providing
financial insights—while
useful tools, as businesses
grow and become more
complex, there is increased
risk of corruption, version
control and general errors.
1 Improving the efficiency
of reporting
Solutions are available
A growing number of
finance teams are replacing
spreadsheets with cloud- based
software, planning and
forecasting tools, and
data visualization tools to
automatically generate data
and provide end users with
the ability to drill down into
that information.

8. Solutions are feasible
The tools available to connect
the financial process across
the organization have changed
dramatically in recent years.
Finance leaders who research and
assess the options currently available
will likely find that the time, effort
and money needed to implement
tools to automate processes, embed
control, and empower end users is
significantly less than they expect.
1 Improving the efficiency
of reporting
Questions to consider:
1. What is your finance
systems strategy?
2. Is this system right for me?
3. When should I adopt?
4. How do I implement?

9. Private company finance teams
produce volumes of static
spreadsheet reports as different
users want information about
different aspects of the business.
It takes a significant amount of
manual effort to adapt/revise
each report to meet users’ needs.
2 Providing better operational
insights into the business

10. 2 Providing better operational
insights into the business
Data visualization tools can be used to bridge
the translation gap between finance and the
business owner and other leaders and allow
for business conversations.
These tools enable finance teams to reposition
and repurpose the data they collect to present
it in a way that is more meaningful and clearly
present the business’s performance drivers in
a user friendly, more meaningful manner.

11. Many finance leaders have a hard time:
1. Developing and retaining their
current team members
2. Finding the right people,
at the right price, to fill gaps
3 Building a stronger, more
client-focused finance team

12. Tactics to build a strong team include:
1. Better performance management processes—
including clear performance goals that team
members are also evaluated against and stretch
targets for each level/role
2. An increased focus on talent development
and continuous learning—including a formal
learning and growth plan for each level/role
3. Clear succession planning
3 Building a stronger, more
client-focused finance team

13. As the business grows
Canadian private companies tend to grow rapidly
in their first five years of operation, after which
they often lose momentum. However, many
private companies create a new growth cycle
through a disruptive event.

14. An unexpected change
in market conditions
Every private company will face a major
disruptive event at some point in time
A major acquisition or
divestiture opportunity
Transition to
a public company
The need for new financing
through private equity
Transition of ownership

15. Finance can’t afford
to wait to consider
how to deal with
disruptive events
When private companies encounter
disruptive events, the finance team’s
capabilities will often determine its
success in managing those events.
If unprepared, finance can become
a bottleneck to the business,
limiting, and potentially degrading,
its ability to capitalize on the event,
potentially resulting in a devaluation
of enterprise value.

16. Finance can’t afford
to wait to consider
how to deal with
disruptive events
These events can arise suddenly,
and companies often have a limited
amount of time to take advantage
of them.
87% of finance teams already struggle
to keep up with their current workload.
Dealing with disruptive events has the
potential to significantly increase the
demands on finance.

17. Finance can’t afford
to wait to consider
how to deal with
disruptive events
Companies need to determine—
well in advance—what they need
to do to become “event ready”
and then take the steps to build
the required capabilities.

18. Finance has a key role to play
in successfully managing
disruptive events
Disruptive events put pressure on
companies and their finance teams,
quickly revealing any weaknesses in
people and processes—particularly
with respect to the allocation of time
and effort required to deal with these
new demands. To be prepared, finance
leaders need to perform an impact
analysis and readiness assessment
well before a disruptive event arises.

19. Readiness assessment
and impact analysis
The readiness assessment
should include the likelihood
of the scenario occurring and
an assessment of the time, effort
and financial investment required
to deal with the new demands
that will impact the financial
processes, technology and talent.
The CFO/finance leader will then
need to determine where the
gaps exist and which can be
improved upon now.
The path between the concept
and reality of the event is
always shorter than expected.
It is always better to perform
the impact assessment
and perform the tactical
elements required to move
the finance team into a better
state to be able to deal with
an event in advance.

20. But how many finance
teams are actually
preparing themselves?
Unfortunately, many companies
believe they can wait until
a disruptive event is on the horizon
before investing to build their
finance team’s capabilities—and
building those capabilities almost
always takes longer than expected.

21. Having a plan to modernize the
finance function is important
under normal growth cycles.
But when disruption occurs,
a mature finance team isn’t
just important—it’s critical.

22. Read the full report
Finance trends
Modernizing finance in private companies
www.deloitte.ca/financetrends
www.deloitte.ca
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Contact
Michael Goodfellow
Partner, Audit Advisory
+1 (416) 643 8027
mgoodfellow@deloitte.ca
Bruce Chin
Partner, Audit Advisory
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brchin@deloitte.ca
Mike Runia
Partner, Deloitte Private
+1 (613) 751 6693
mrunia@deloitte.ca
Mark Wayland
Partner, Deloitte Private
+1 (416) 601 6074
mawayland@deloitte.ca
Hitesh Peshavaria
Partner, Audit Advisory
+1 (416) 874 4446
hpeshavaria@deloitte.ca
Brandon Weekes
Partner, Audit Advisory
+1 (416) 775 7203
bweekes@deloitte.ca
France Boudreau
Partner, Audit Advisory
+1 (514) 393 5170
fboudreau@deloitte.ca
Kari Lockhart
Partner, Audit Advisory
+1 (604) 640 4910
klockhart@deloitte.ca