1 August 2022 | Financial Planning & Analysis

Strategic Finance: Evolution of The Finance Function

The old approach to finance is broken.

It’s a passive and reactive process that limits finance teams and your company.

Traditionally, the finance team’s job is to monitor how a company’s money is being spent and ensure it doesn’t run out of money.

But what if, instead, the finance team focused on using data and strategy to determine the best way to use a company’s resources to grow the business and reach its goals?

That’s what strategic finance is all about.

Strategic financial management turns the finance function into a proactive process that’s forward-looking.

In this guide, we’ll transform how you view the finance function in your company and show you how to modernize your financial team, tools, and processes.

What is Strategic Finance?

Strategic finance is a forward-looking approach to finance that puts the long-term goals and growth of the company at the forefront of financial decision-making.

While traditional finance asks “what happened,” strategic finance asks “what do we want to happen” and “what’s going to happen?”.

traditional finance vs strategic finance

Additionally, strategic finance brings every department into the finance process by using a combination of operational (e.g. customer acquisition, sales pipeline, etc.) and financial data (gross margin, runway, etc.).

The decisions made by marketing, sales, engineering, and every other part of your business have financial implications. Unfortunately, those decisions are often made without input from the finance department.

representation of finance department separate from other departments

As a result of this fractured process, finance leaders are in a difficult position.

Finance is tasked with ensuring the company’s financial future, yet the day-to-day decisions that affect the business’s long-term growth are often made without their input.

The opposite is also true.

Marketing, sales, customer service, and departments have insights that can help the finance team make more informed decisions.

Whether it’s adding context for forecasts, providing analysis for revenue goals, or other insights, the teams that drive revenue and expenses should be included in the financial planning process.

Unfortunately, that’s often not the case.

Strategic finance solves the problem by bridging the gap between the finance team and other parts of the business. We’ll show you how a little later in this guide.

But for now, let’s talk about the difference between strategic finance and FP&A.

Strategic Finance vs. FP&A

Sometimes, strategic finance and FP&A are used interchangeably.

While FP&A is part of strategic finance, they’re not the same.

In fact, in many ways, strategic finance is the evolution of FP&A.

Financial planning and analysis (FP&A) involves planning, budgeting, forecasting, and analyzing your company’s finances to ensure the financial health of your business.

Depending on your company’s size and stage, you might get by with just an FP&A function.

However, FP&A falls short of strategic finance in a few areas that could be holding your finance team (and company) back:

Lack of Collaboration

FP&A is often a siloed process primarily carried out by the finance team.

With FP&A, budgeting, planning, reporting, and forecasting are typically managed in spreadsheets or legacy tools that only the finance team understands.

As you can imagine, that makes collaboration difficult—if not impossible.

Strategic finance combines data that’s typically scattered across multiple sources—marketing, sales, payroll, revenue, and expenses—into one source that all stakeholders can access and understand.

Not Forward-Looking Enough

A lot of the FP&A process is driven by historical financial reports (e.g., cash flow statements, P&L, and balance sheets).

Here’s the problem.

Finance teams spend significant time consolidating and reconciling data for these reports but very little on analysis and growth planning.

While reporting is important, your team’s time is better spent on forward-looking activities that will push the company forward, like strategic analysis.

And according to data from Spendesk, finance teams aren’t spending nearly enough time on growth-related tasks.

Spendesk’s report found that only 40% of finance professionals spend most of their time on tasks that add value and contribute to company growth.

Strategic finance takes the opposite approach.

Automating time-consuming FP&A tasks (thanks to tools like Finmark) allows finance leaders to spend more time on the company’s long-term growth goals and vision.

More Tactical Than Strategic

As we alluded to in the previous section, FP&A involves a lot of daily and monthly tasks.

From comparing budgets vs. actuals to reconciling and reforecasting, FP&A is a tactical process.

Those activities are necessary, but you also need to zoom out and look at the bigger picture.

That’s where strategic finance comes into play.

Rather than just focusing on the monthly budget, strategic finance involves stepping back and analyzing how all the pieces of your budget will impact the long-term success of your company.

six puzzle pieces representing company departments

For instance, if your startup aims to raise a Series B round in 12 months, what’s your strategy to achieve that?

Do you need to grow MRR to a certain amount to increase your valuation to get better terms?

If so, what’s required from marketing to reach those goals? Do you need to explore new acquisition channels to increase your lead volume?

Do you need more sales reps to close the deals with these new leads?

Will the influx of new customers require you to hire more customer success specialists to support them and answer questions?

That one example requires finance, HR, marketing, sales, and customer success to work together to create a cohesive strategy.

Once that strategy is created, you can move forward with budgets, forecasts, and other tactical to-do’s. But without an initial strategy, you risk wandering around aimlessly and just hoping for the best.

And hope is not a strategy.

Scattered Systems

Here’s how finance works at many companies today:

The finance team uses its own tool and spreadsheets to manage the financial plan, budgeting, and forecasting.

The HR team uses separate tools for payroll and managing employees.

Marketing uses different tools and spreadsheets for marketing automation, tracking customer acquisition, and other activities.

The same goes for sales, customer success, and every other department.

strategic finance at the center of company tech stack

These tools have valuable data that can help you build your financial strategy, create better forecasts, and improve your workflow.

Whether it’s employee salary/benefits data, marketing funnel performance, pipeline, customer retention, or other metrics, these data points paint a complete picture of your company’s financial standings today and help you plan for the future.

Unfortunately, too many companies miss out on this because they’re not practicing strategic finance.

The finance team simply sees the month-end numbers (e.g., revenue generated from marketing and sales, departmental spending, total payroll, etc.) and uses that as a basis for financial decisions.

As a result, all of the context of what happened to get to the month-end-numbers gets overlooked or ignored, leaving finance teams with an incomplete set of data.

On top of that, gathering these data points is a slow and grueling process that involves sending emails back and forth and manually inputting data into spreadsheets.

Strategic finance solves this problem by having one system that all your other tools feed into.

Payroll, marketing, CRM, revenue, and other data sources integrate directly with your finance software to automate updating your actuals.

On top of that, it allows finance to see data in real-time rather than waiting until the end of the month.

Why is Strategic Finance Important?

There’s a common saying for founders—At some point, you need to transition from working in your business to on your business.

You can say the same about the finance function.

In the early stages of a company, the finance department is often dedicated to transactional backward-looking tasks like month-end-close, budgeting, and AP/AR.

While these tasks are required to keep the business running smoothly, they eat up a lot of time.

When you’re inundated with the company’s daily and monthly financial needs, it’s difficult to zoom out and see the big picture.

With strategic finance, your finance team (and the entire company) knows what they’re working towards and how to reach the end-goal.

That way, you have context when you look at your cash flow, P&L, marketing spend, and other financial reports. It becomes easier to answer questions like:

Without a strategic finance function in your company, you’ll answer these questions based on short-term needs.

However, when you start thinking more strategically about your company’s finances, you might answer these questions differently.

Who’s Responsible For Strategic Finance?

While strategic finance is a collaborative effort, it needs to be led by someone.

The person (or team) responsible for strategic finance depends on the size and structure of your company.

Some larger organizations have a dedicated strategic finance team, while others may have a single person in charge.

If you want to implement strategic finance at your company, here are some options for who can lead it and potential roles to hire.

CFO or Head of Finance

In many cases, strategic finance is led by a CFO or head of finance.

Since this role sits at the top of the finance team, it makes sense for them to oversee the strategy.

This is often the case in small to medium-sized companies with smaller finance teams.

Dedicated Strategic Finance Person

Some companies have a dedicated person (or team) in charge of strategic finance. These strategic finance roles are often narrowed to focus on the forward-looking goals of the company.

They’re not involved with preparing financial statements, reconciling budgets, or similar tasks. Instead, they spend most of their time analyzing data and planning for the future.

Here’s a job description for a Director of Strategic Finance position to give you an idea of the tasks this role is typically responsible for.

Some common job titles for strategic finance positions include:


If you’re a newer startup without a dedicated finance team, that doesn’t mean you should neglect strategic finance.

A strategic finance approach can still be handy when the CEO manages financial planning.

You may not have the skillset of a dedicated finance person, but you can still think about the big picture of your company’s future.

For instance, if you’re a seed stage company that plans to raise a Series A round within the next year or two, you need to think strategically about your decisions to get there.

Outsourced CFO

While some founders can handle parts of strategic finance on their own, the reality is that financial expertise comes in handy.

Outsourced CFOs (or fractional CFOs) can be an excellent solution for companies that don’t have an in-house finance team but want the benefits that come with a CFO.

An outsourced CFO can handle all your FP&A needs and guide you towards your long-term goals (i.e., strategic finance).

Pro tip: If you’re looking for an outsourced CFO service, we have a network of partners exclusively for Finmark customers!

How to Shift To Strategic Finance

At this point, you’re probably thinking, “This sounds great! But how do I start?”

We get it.

If you’ve had a particular way of doing financial planning for years, making a change can be intimidating.

However, taking a strategic finance approach isn’t as difficult as you might think, and it’s well worth it.

Here’s how to start.

Change The Culture

A key part of strategic finance is that the finance team needs to stop being viewed as a cost center and start being used as a strategic growth partner.

In many companies, finance is seen as the department that manages the budget, approves and rejects spending requests, and pays vendors.

In reality, finance is much more than that, particularly when it comes to financial planning.

For strategic finance to work, the finance team needs to become a resource that helps the business make better decisions by looking at growth through a financial lens.

Often this requires a culture shift.

Finance can no longer be a siloed part of your business left to your CFO and FP&A team.

hands shaking representing finance department and revenue generating departments working together

Every department responsible for generating revenue or expenses needs to work with finance and collaborate more than most companies are used to.

This change should start from the top.

The C-Suite has to set a companywide expectation that certain decisions must be made with insights from the finance department.

For instance, hiring plans, marketing campaigns, and pricing changes all have financial implications.

The finance team can look at historical data and forecast various scenarios to see the long-term impact of these major decisions.

To put it plainly, finance needs to be involved before decisions are made—not after.

Choose The Right Tools

One of the biggest reasons finance teams are often siloed is a knowledge gap.

CFOs and FP&A professionals understand complex financial concepts completely foreign to non-finance people. And the spreadsheets and tools finance teams use are often inaccessible to other departments.

Spreadsheets with hundreds (or even thousands) of rows and complex formulas can be intimidating to people who don’t work in finance daily.

As a result, getting other stakeholders to update information in your financial plan or even look at it is like pulling teeth.

It’s not that marketing, sales, engineering, and other teams don’t want to understand the company’s financial situation. The issue is the information isn’t presented in a way that’s easy to digest.

To create a more collaborative and integrated finance process, you need a tool that’s advanced enough for the finance team to do their job and simple enough for non-finance people to use and understand.

Shameless plug: That’s exactly what we’ve built with Finmark!

finmark dashboard

Finmark has the flexibility of a spreadsheet (custom formulas and variables, in-line editing, and even a Google Sheets integration) with a much smoother UI, and a powerful engine that makes building financial models and managing your financial plan more intuitive.

It also allows you to automate the most time-consuming FP&A tasks like updating actuals and building reports so you can focus on being strategic.

Finmark is also easy for people outside of finance to use and understand. You can build, collaborate, analyze, and present your finances in one tool.

If you’re ready to embrace strategic finance, there’s no better tool than Finnmark to enable your team.

That’s the end of my pitch, but you can try Finmark out free here!

Think Long(er) Term

Strategic finance requires you to think in terms of years, not weeks or months.

Monthly budgets and forecasts are important, but strategic finance revolves around the long-term goals of your company and what you need to do to achieve them.

Whether it’s an expansion, fundraising, an IPO, or something else, strategic finance weighs your decisions against the big-picture goal for your company and your trajectory.

With every major decision (strategic hires, major marketing campaigns, fundraising, etc.), think about how it affects your end goal.

traditional finance timeline vs strategic finance timeline

Create Processes

You may need to establish new processes to take a more strategic approach to your company’s finances.

Processes help everyone stay on the same page and establish expectations for financial decision-making.

Here’s an example of some of the processes it’s helpful to detail:

Define Long-Term Goals and Objectives

Remember what we mentioned about thinking long-term? The first step with a strategic finance approach is clearly defining your company’s long-term goals and objectives.

Get all the key decision-makers together and map out what you want to achieve with your company over the next 1-3 years.

Those goals will become the foundation of your financial plan.

Meet Regularly

Collaboration is at the heart of strategic finance.

However, in many cases, the finance department only meets with other teams in preparation for the month-end close, to present a report, or if they have a specific question about spending and budgeting.

This leads finance to be seen more as auditors and accountants than as a strategic partner.

To avoid that, set up regular meetings focused on strategy, collaboration, and planning—not just presenting reports and reviewing spreadsheets.

These collaborative meetings should focus on:

Establish a Feedback Loop

Similar to having regular meetings, it’s also helpful to establish a feedback loop.

Is there a clear process for department heads to share insights with finance that could influence the financial plan, budget, and strategic decisions?

If the finance team notices an opportunity to double down on a certain revenue driver, who should they contact?

Clear and open communication can work wonders as you shift towards a more strategic financial approach.

Dedicate time to Data Analysis

While strategizing is important, it’s also important to analyze how you’re performing.

When we say data analysis, we don’t mean just pulling data into a report.

Data analysis is about looking at all your data points, contextualizing them, and spotting opportunities based on your findings.

Since the finance team can become inundated with less strategic tasks, it’s important to set aside time to focus on analysis.

Establish Guidelines For Making Changes

Things change. The plan you originally outlined last year may no longer apply in two years (2020, anyone?).

It’s helpful to set guidelines for making changes to your strategy. Some important questions you should answer are:

Setting guidelines that answer the questions above will reduce confusion and make decision-making easier when things don’t go as planned.

Strategic Finance Is Not The Future

While some of the concepts and ideas in this article might be new to some companies, the reality is that strategic finance isn’t something that’s coming in the future.

Businesses that want to be around long-term need to take a more strategic approach with their finances today. Plus, many of the most successful companies we all know and love already apply strategic finance in some form.

This guide isn’t meant just to be something you read and contemplate.

It’s a “get started” guide to urge you to make changes now or risk becoming another failed startup that ran out of money.

Dominique Jackson

This content is presented “as is,” and is not intended to provide tax, legal or financial advice. Please consult your advisor with any questions.

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Historically financial modeling has been hard, complicated, and inaccurate. But financials are the lifeblood of any company. They’re too important to be ignored or outsourced. They should be a core part of every founder’s job. This doesn’t have to be scary. And you don’t have to do it alone. The Finmark Blog is here to educate founders on key financial metrics, startup best practices, and everything else to give you the confidence to drive your business forward.

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