Finance is like the brakes of a car

The reason is not very intuitive.

After all, a brake makes a car slow down or stop altogether.

Finance is like the brakes of a car, not because it makes the car go slower or stop, but because it makes the driver know confidently that they can go as fast as they can.

If you don’t trust the brakes of a car you are never going to really get to the top speed of the car. A strong Finance department does that for CEOs, investors, and the entire company.

Finance can identify when the car is going too fast and raise a flag. How? Through reporting, especially live reporting.

If the department is well managed, Finance can identify expenses that are getting off track. That’s the actuals versus budget report.

The function can also know ahead of time when the road might be bumpy, e.g., lots of ‘bumps’ in spend, and avoid death by a thousand paper cuts.

It is also connected to the gas tank (runway) and can let the company know a better speed at which to cruise. With this information it might also be able to start looking to refuel: the investors, banks, and financial institutions.

Finance gives confidence to the driver because it provides the driver with the information they need to drive fast, get to a new destination (i.e. milestone), and have the company running like a well-oiled machine.

If founders, CEOs, and investors understand this, they will partner with finance and use it as a tool to maximize the speed and coverage that they want their company to be at.

Now, if Finance really makes everything -and everyone- slow down without a reason as to why, it becomes dead weight.

If that happens, it’s time to change the brakes.