From Bookkeeping to Boardroom: Building a Strategic Finance Function

As a portfolio finance director, one of my key responsibilities is ensuring my client’s finance function operates as a strategic contributor to the business's overall success. This means the function must have the right support, people, and systems in place to perform effectively. However, challenges can arise when resources are inadequate or when there's a lack of clarity about what the function needs to fulfil its role effectively. 

Maslow's hierarchy of needs is one of the most recognisable concepts in psychology, arranging human needs in a five-level pyramid from basic survival (food, water, shelter) through safety, belonging, and esteem, to self-actualisation at the top. The core idea is that people generally focus on lower-level needs before pursuing higher ones— seeking food and safety before worrying about self-actualisation. 

I believe the same principles can be applied to a company's finance function. Just as individuals cannot focus on self-actualisation if their basic needs are unmet, a finance function cannot serve the business strategically unless its foundational needs are secure. 

This is where a Finance Hierarchy of Needs—modelled on Maslow's hierarchy—provides a helpful framework for understanding how finance creates value, why shortcuts rarely work, and how ensuring each foundational level is stable enables the finance function to perform effectively and add strategic value to the business. 

Level 1: Transaction Processing & Bookkeeping 

At the base of the hierarchy sits transaction processing and bookkeeping—the unglamorous but essential work of recording what actually happens in the business. This includes sales invoices, purchase invoices, expenses, and payroll; bank and card transactions; consistent coding to a well-designed chart of accounts; and basic statutory and tax compliance. When this layer is weak, data becomes incomplete, inconsistent, or delayed. Without reliable raw data, the levels above cannot be built credibly. 

Level 2: Regular Reconciliations & Controls  

Bookkeeping alone is not enough—the next level is about verification and control. This includes bank, credit card, loan, and balance sheet reconciliations; ensuring debtors and creditors align with supporting detail; reviewing and maintaining control accounts; and identifying and correcting errors promptly. 

Without reconciliations, management information becomes opinion rather than fact, making this reconciliation work essential to ensure confidence in the integrity of financial data. 

Level 3: Management Information 

Once the data is accurate and controlled, finance can produce meaningful management information. This includes monthly (or more frequent) management accounts; profit and loss, balance sheet, and cash flow reporting; KPI dashboards and variance analysis; and a timely, repeatable month-end close. 

With this information, management gains clear visibility on performance, trends, and financial position. 

Level 4: Performance Analysis, Budgeting & Forecasting 

With solid management information in place, finance can move beyond reporting into insight and foresight. This includes analysis of performance drivers such as margin, volume, pricing, and cost behaviour; annual budgets with clear ownership and assumptions; rolling forecasts and regular cash flow updates; and scenario and sensitivity analysis. 

This level provides an understanding of why things have happened and what will happen next - crucial for informed decision-making rather than decisions based on assumptions. 

Level 5: Strategy – Finance as a Value Creator 

At the top of the hierarchy is strategy, where the finance function becomes a partner to leadership. This includes long-term financial modelling and strategic planning; capital allocation and investment decision-making; business case evaluation using ROI, NPV, and IRR; and funding strategy, risk management, and planning for scale. 

At this level, finance is no longer focused on the past but can shape the future of the business. 

The Critical Insight 

The most common mistake organisations make is trying to jump straight to the top of the pyramid. Strategy without forecasts is guesswork; forecasts without management information are fiction; management information without reconciliations is unreliable; and reconciliations without good bookkeeping are impossible. When leaders feel their finance function isn't strategic enough, the issue is often a lack of foundational support. 

Viewing the finance function through this framework helps clarify the need to invest in systems, processes, and finance leadership. It sets realistic expectations about what finance can deliver and demonstrates how a CFO, FD, or Portfolio FD is an enabler of growth, not an overhead. 

Where does your finance function sit on this hierarchy? If you're struggling to get strategic value from finance—or know someone who is—I'd welcome a conversation about how to build the right foundations. As a Portfolio Finance Director, I help businesses across all sectors achieve their objectives by delivering robust financial controls, clear management reporting, and strategic guidance. With a flexible approach tailored to each client's needs, I transform complex financial data into actionable insights that drive better decisions and improved profitability. Please do not hesitate to contact me to discuss how I can help.