ACCA SBL Course - Chapter 20: Finance and Strategy

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In this class on finance and strategy, the focus is on how the finance function has changed over recent years and how it may continue to evolve. The discussion begins with the transformation of the finance function, noting how advancements in technology have shifted the roles of accountants and finance professionals. Communication within organizations has become easier, aided by tools like cloud storage, which simplifies file management and real-time data access.

Modern accounting software has improved significantly in terms of accuracy, efficiency, and speed compared to older versions. This software supports accountants in accessing larger amounts of data and enhances their ability to perform tasks, such as tax planning with innovative software solutions. Moreover, mobile technology allows finance professionals to work from virtually anywhere, contributing to a more flexible work environment.

The class contrasts the traditional role of finance departments, which focused largely on generating reports and managing transactions, with today’s more integrated and strategic roles. Accountants now serve as data analysts rather than just number crunchers, utilizing big data to provide insights into business trends and patterns. The advancement of technology like AI and blockchain is suggested to further change the accounting landscape, potentially automating many traditional tasks and altering the structure of finance departments.

The potential future of finance roles is also discussed, indicating that traditional accounting positions may diminish as tasks become automated. This shift could lead to finance professionals taking on more advisory roles within organizations, contributing to strategic planning and operational tasks. The text raises questions about the direction of finance departments and hints at a future where finance functions are integrated into broader operational roles within businesses.

Next, the class addresses the concept of outsourcing finance functions. Businesses might find benefits such as cost savings and access to specialized expertise, but they also risk losing control over sensitive information and the ability to make quick decisions. Alternatively, shared services can consolidate resources, potentially enhancing expertise but also raising concerns about local knowledge and decision-making speed.

The influence of shareholders and stakeholders on finance functions is highlighted, emphasizing that different groups have varying expectations from finance departments. The finance department's role is essential for calculating payroll, managing supplier payments, and maintaining financial stability.

In discussing financing strategies, the class underscores the importance of balancing debt and equity. The structure of financing affects the cost of capital and impacts business decisions, including expansion opportunities. High levels of debt can limit financial flexibility and increase business risks, making it crucial for companies to manage their gearing levels carefully.

The characteristics of sources of finance, such as ordinary shares and preference shares, are briefly reviewed. Ordinary shares allow for voting rights but provide returns at the discretion of directors. Preference shares offer guaranteed returns but come with their own set of advantages and disadvantages. Overall, the content emphasizes that the finance function is undergoing significant changes and will continue to adapt in response to technological advancements and evolving business needs.


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