Everyones Talking About Commercial Finance

Everyone’s Talking About Commercial Finance Everyone’s Talking About Commercial Finance 14 Nov 2013 Paul Buchan But what is it? After publishing an article on  commercial accountancy and the changing perception of hiring managers, I received a plethora of responses from those voicing their opinions on the matter. The accountancy profession diversification is certainly very topical at the moment. After speaking with many of you who read my last article, I’ve made some key observations that I’ll elaborate on within this article. Fundamentally, there has been a significant change in accountancy, and one of those is the growing demand of the commercial accountant. The Accountancy Evolution Whilst the profession has changed dramatically since 2007, there’s debate on whether the “Accountancy Evolution” actually started way before the most recent recession. Whether it was the 70s, 80s or 90s that they qualified, many accountants have noticed a significant change in the accountancy profession. In the 1970s, accountants became much more ingrained in what we now call “business partnering”, and there was a drive toward financial empowerment of decision-makers. The 1980s heralded a technological evolution which saw many companies transition to computer based platforms. Accountants were able to work much more accurately, efficiently and cost effectively, whilst adding IT to their repertoire. Additionally, the 80s introduced shared services models to accountants, developing their project management and business transformation skills. Even today there are qualified accountants who are orientated towards managing large-scale shared service centres. Hit by a crippling recession, the 1990s brought further technological advancements and a greater awareness of how decision-making influences financial outcomes. Accountants also become more commercial in the 90s, challenged with achieving commercial success, meeting international reporting standards and aligning themselves with trade and industry bodies, such as the CCAB. After the millennium, the perception of value evolved which impacted accountant’s commercial decision making. Many industries replaced traditional models of cost, margin and profit with pricing models based on a specific product or service value. In order to understand these values, accountants utilised sophisticated modelling techniques to accurately cost tangible products and intangible services. Whilst when the commercial accountancy evolution started remains a contention topic, it is without doubt that the accountancy is an ever-evolving discipline that is dynamic to economic and market conditions. What is Commercial Accounting? Whilst there are various mechanisms of a traditional finance structure, accountants do not need to be involved with sales and margin pricing to be a “Commercial Accountant”. Nor do they need to have extensive knowledge of corporate finance, acquisitions, disposals or even financial modelling to be “commercial” in their outlook. From working with many accountants over the years, my personal view is that commercial accountants utilise their knowledge to enhance and develop their offering to the business or customer. This knowledge provides insight into the commercial benefit of decision making and clarity on how to improve performance, whilst also enhancing the corporate offering. To provide some context, an audit, risk and compliance professional who uses their knowledge to improve the financial performance of a business or client, whilst recommending changes to process that creates cost savings, clearly provides commercial benefits. Fundamentally, commercial accountants have the ability to set out a strategy to achieve the desired outcome. Whether it is to increase market share, or streamline business process, commercial accountants are key to the process. It’s open to debate, however I believe accountants without a commercial understanding will struggle in this evolving industry. When I speak with hiring managers, they’re looking for an accountant that will challenge assumptions and add commercial value to their business. Non-commercial accountants need to wake up and realise the change, or there’s a risk they will be left behind. Being commercial is much more than putting it at the front of a job title, it’s a mind-set issue. I would strongly encourage accountancy professionals to develop their commercial understanding in order to stay ahead in the fast changing accountancy world.