Why finance, operations, people and contracts need to work together
The beginning of a new financial year is often treated as a finance exercise.
Annual accounts need to be finalised. Budgets are approved. Reporting files are rolled forward and attention turns to the year ahead.
These tasks are important, but a new financial year should involve more than updating spreadsheets and financial targets.
It is also an opportunity to step back and consider whether the business’s contracts, people, systems and operational plans support what has been included in the budget.
A budget may set the financial direction, but the way the business operates will determine whether it can be delivered.
Closing the previous year is only part of the process
End-of-year reporting provides more than a set of historical numbers for accountants, auditors, boards or other stakeholders.
It can reveal where the business performed differently from expectations and, more importantly, why.
Were revenue targets missed because demand was lower than expected, or because the business did not have the capacity to deliver the work?
Did costs increase because of market conditions, or because contracts, purchasing arrangements and internal processes were not reviewed?
Was cash flow under pressure because the business was unprofitable, or because invoicing, debtor collection and payment timing were poorly aligned?
The financial results show what happened. Understanding the operational decisions behind those results helps leadership teams decide what needs to change.
Review contracts before assumptions become problems
The beginning of the financial year is a useful time to review key client, supplier, property and service contracts.
This includes considering:
- Pricing and fee structures
- CPI or annual indexation clauses
- Contract renewal and notice periods
- Supplier cost increases
- Minimum commitments and service levels
- Payment terms
- Whether the commercial arrangement remains sustainable
Businesses can lose margin gradually when supplier costs and employment expenses increase but client pricing remains unchanged.
A budget that assumes improved profitability may not be achievable if the underlying contracts do not support it. Reviewing these arrangements early allows leadership teams to renegotiate terms, update pricing or plan for changes before financial pressure builds.
People costs need to reflect operational reality
For many businesses, people are one of the largest investments and the largest areas of financial risk.
New financial year planning should consider more than base salaries. Relevant award changes, market salary reviews, superannuation obligations, payroll tax, workers compensation, leave entitlements and future recruitment may all affect the true cost of employing a team.
The operational questions are equally important.
Does the business have the right capability to deliver its plans? Is the workload sustainable? Are responsibilities clear? Will additional revenue require more people or can existing processes be improved?
Reducing a staffing budget may improve the forecast on paper, but it can work against the business if the team no longer has the capacity to meet service expectations or deliver the planned revenue.
Test whether operations can deliver the budget
Financial and operational planning should not happen separately.
If the budget includes revenue growth, there should be a clear understanding of how that growth will be achieved. This may involve additional team capacity, stronger systems, revised pricing, improved sales activity or changes to service delivery.
The same applies to cost reductions. A target to reduce expenses needs to be supported by specific operational actions, not simply entered into the budget as a lower number.
Leadership teams should consider:
- Whether the current team can deliver the revenue plan
- Whether systems can support the expected level of growth
- How quickly new clients or projects can be onboarded
- Whether pricing reflects the full cost of delivery
- Which processes are creating delays or unnecessary work
- Whether cash flow timing reflects how the business actually operates
When these questions are answered, the budget becomes a practical business plan rather than a financial document that is reviewed only when results fall behind expectations.
Finance and operations should not work in separate lanes
Strong financial leadership is not limited to producing accurate reports.
It involves understanding how the business works, connecting financial outcomes to operational decisions and helping leadership teams anticipate what is coming next.
At Truerock, we bring an operational lens to financial leadership. Our approach is informed by extensive experience across both finance and operations. We do not look at financial results in isolation. We consider the people, contracts, systems and day-to-day decisions behind the numbers.
This broader perspective helps us identify whether a financial issue is genuinely about cost, cash flow or profitability, or whether the underlying cause sits elsewhere in the business.
Questions to take into the new financial year
As the year begins, leadership teams should ask:
- Do our current contracts and pricing reflect the true cost of delivery?
- Have all known employment and supplier cost changes been included in the budget?
- Do we have the operational capacity to achieve our revenue targets?
- Are our systems producing timely and reliable information?
- Which contracts or commercial commitments are approaching renewal?
- Does our reporting help us make decisions or simply explain what has already happened?
The new financial year is an opportunity to create greater clarity across the whole business.
The budget is an important starting point, but it should be connected to the decisions, resources and operating structure required to deliver it.
When finance and operations work together, leadership teams are better equipped to identify risks earlier, make informed decisions and move into the year ahead with greater confidence.