This article was first published in the March 2016 Singapore edition of Accounting and Business magazine.

With SMEs comprising 99% of businesses in Singapore, they are not only a crucial source of employment but also key to the growth of the economy. CFOs and their finance functions have increasingly important roles to play, especially where SMEs with high growth potential are concerned.

ACCA’s report, Ready for growth? A checklist for CFOs of high-potential businesses, examines how the finance function in high-growth SMEs has evolved, using eight case studies of businesses that experienced over 70% growth in three years. One of the key findings is that there is a clear symbiosis between business growth and the evolution of the finance function. The function was also almost always found to extend beyond operational tasks and processes during – and especially after – periods of high growth, often becoming a strategic business partner. In fact, the finance function and business growth could symbiotically support each other, accelerating growth while developing the role of the finance function.

The finance function plays an integral part in ensuring the business takes full advantage of opportunities for growth, without compromising the future of the organisation. CFOs have a responsibility to ensure financial health and discipline so that the company can continue growing in a sustainable fashion in the future. Being forced to adopt a more reactive approach operationally, often at high speed, means that processes are not as smooth as they might have been.

To combat this, the finance function must integrate across the key business development areas. SMEs require CFOs who are willing and able to monitor and control high growth as it unfolds, as well as forecasting future trends and new directions.

CFOs are undoubtedly an essential element in the strategic decision-making of any high-growth business. For SMEs, however, their importance in not only exploiting periods of accelerated growth but also protecting the business from the associated stresses and strains cannot be overstated. The CFO also plays a key role in interpreting the big numbers and trends in the market. In very open and compact economies like Singapore, the ability to sense changes in strategic trends, the readiness to embrace these changes and the ability to steer organisations to innovate to address these changes can all help to ensure survival.

In order to harness the full potential of their finance functions, CFOs of high-growth SMEs should realise that the finance function has shifted from purely being a bookkeeping and processing service to a role of a business adviser and key partner to the organisation as a whole. They must also understand the financial data throughout their business and make this easily digestible and accessible to relevant departments. More importantly, they need to ensure that all teams are adequately trained. CFOs should also possess a good grasp of how to distribute, reinvest and save business revenue in order to ensure that their functions are optimally positioned towards growth and managing high growth.

The case studies highlighted in the report indicate that the finance function played a central role in the business planning of most of them. They had evolved significantly alongside the growth, diversification and restructuring of the business, as had their roles and strategic importance since the early stages. In most instances, the CFOs provided their input directly into business plans and provided key information on current and future financial risks and opportunities, which in turn influenced the strategic decisions taken with regard to opportunities for business acquisitions and diversification. With the CFO and the finance function sitting at the heart of a business’s strategy, operations and performance, the CFO’s role is therefore integral to corporate success; it is not, in reality, a separate function.

To enable the finance function to reach its full potential, CFOs must implement strong financial management, with a comprehensive bird’s-eye view over how the finance function interacts with operations and informs strategy.

Gabriel Low is Southeast Asia CFO of GEA Westfalia Separator (SEA)