When a CFO, or Treasurer, takes over his department, he is perhaps faced with the tedious task of feeling like a tool for the company to use, feeling that he is being placed as a side effect of the business, and even sometimes being a bureaucracy. necessary and obligatory, parallel to the main activity of the business.
Our proposal is that this can change radically, if we conceptualize our department, as a center generating benefits, and that it enhances and increases business possibilities.
We propose to transform ourselves from a prompter on the scene, to a necessary and important actor.
Why……. What is more important, “make money or have money” ……..
HAVE! ………………..
We financiers already know that earning money is not necessarily the same as having money in the company.
And when we say to have, we indicate not to have in excess (idle money), but having the minimum (JIT), to have external financial credibility, as to possess additional debt capacity.
Check-list of concepts necessary to start the transformation:
- Maximize the financial image perceived by third parties Target, manage and achieve reductions in financial costs Target and achieve reductions in administrative costs Establish true control over financial institutions Stimulate ongoing training of staff Achieve operation as a team, the department Determine the internal customer, and the protocol of their treatment Promote the possession and knowledge of related software and especially of financial simulators. Innovate, a magic tool
1 - Improve as much as possible the financial image perceived by third parties
Perhaps one of the first objectives is to improve our projected and perceived image as much as possible, as this will move our financial credibility by third parties.
We must weigh this in relation, for example, to:
-our intellectual capital in the company
-our collaborators (suppliers, etc)
-financial entities, who accompany us along the way (money providers…)
Of course measuring the improvement achieved in perception, using validating signs such as:
-improvement of the social climate
-increasing negotiating capacity with collaborators
-increasing the capacity of financial indebtedness, with the parallel possibility of reducing costs, by improving our "rating".
Protocol our information using tools such as the “February” report
- systematizing and improving our internal and external communication protocols, ascending, descending and lateral.
2 - Objective, manage and achieve reductions in financial costs
Both for the interests and commissions, as well as for the costs that the financial entities charge us for the banking services that we use.
For this, a study of the global vision of the contribution margin that we offer to banks is necessary. We recommend the creation of a CMI (Balanced Scorecard), which strictly defines our objectives and follows them over time, measuring achievements and deviations.
Regarding the WCC, our proposal perhaps goes through:
-establish the average balance of the previous year's financing, by products and their costs
-establish the objective of the average investment balance of the current year, speculating with the euribor evolution and setting a reduction as far as feasible, objectifying absolute and percentage costs.
3 - Objective and achieve reductions in administrative costs
Administrative processes, for perhaps reluctance and fear of change, is usually one of the last steps to take, and it being obvious that everything has "areas for improvement", we believe that a periodic BrainStorming that removes the chips from the board and returns them to order from the beginning, could be the necessary catharsis, (due to the consensus achieved) that facilitates new processes with cost reduction.
It is important and necessary that we have the necessary and proportional endowment of means, to the objectives agreed with the team.
Examples? ……
-zero papers -receive
computer data from our bank accounts
-automated bank reconciliation -do
not receive additional mail from the Bank, if we have already received the data electronically, etc.
4 - Establish true control over financial institutions
We should here measure the inefficiencies, and errors of the bank, as well as record the degree of recovery of euros by these controls to the bank.
In other words, we propose that errors be accounted for in their original expense headings, and the recovery accounts be expense accounts with a creditor sense, that subtracts from the initial concepts in their summation, but that gives us the result of our work in figures.
5 - Stimulate the continuous training of personnel
The planning and encouragement of staff training clearly establishes the difference between sensitization to the objective pursued and indifference due to ignorance.
By improving financial culture and knowledge, our effectiveness as a department moves proportionally upward.
We recommend measuring the hours dedicated to this matter, as a parameter.
6 - Achieve the functioning as a team of the department
Creating if it is feasible distinctive signs of belonging to the team, managing mentoring and coaching, trying to reconcile personal and professional life, as well as starting from the consensus of the department's objectives, both in quantitative and qualitative aspects.
Establish and facilitate continuous communication between the team
Establishing continuous and simple communication of the different objectives coinciding with the departmentally defined strategic plan.
Define those responsible or tutors for their execution, and check the monitoring.
Feed this tool as an expression of recognition of the environment rather than as a reprimand for achieving objectives.
Transform the department's day to day into an exciting adventure
Possibly we cannot do a specific job that we prefer, which we currently have, but what no one can take from us is the "way of developing it".
That said, "he AS he sees the work to be done" is the overriding question.
Being able to transform the day-to-day into an exciting adventure must be an objective of the team leader and the component group itself, managing the experience obtained in the highest positive tone.
7 -Determine the internal client, and the protocol of their treatment
Manage to focus our attention on the internal client:
-favoring, for example, sales, by offering financial alternatives to external customers
-supporting honestly and from the point of view of business ethics, the demand for information from financial entities
-protocolizing simple and continuous information, from our creation of value to the Management
- systematizing the rapid assessment of the viability of investment or other operations, proposed by different levels
- requesting, commenting and evaluating a periodic feed-back from our internal clients.
8 - Promote the possession and knowledge of related software and especially of financial simulators.
We all know that 80% of our time can sometimes be spent getting data, while 20% of the time or less, we spend on decisions. Having said this, we must devote our effort to simplifying the data collection processes as much as possible, not only for the controlled "outputs" but also for the "inputs" that we must condition.
Special mention here of the exhaustive controls of the corresponding PMC and PMP of the company.
9 - Innovate, a magic tool
It is important that we keep in mind, in the team's attitude, innovation as a
work methodology, and if it has not already been done, think of alternatives such as:
-Study change the paper discount for credit policies
-Think about "zero treasury" (JIT)
-Analyze the degree of leverage of the company, and propose serious alternatives to the Management, regarding financial philosophy
-Have a serious CMI and global on the Banking Map of the company, with a breakdown of financing, services and different prices for its synthetic analysis. Do not forget in this section the "quality" of the professionals and the different brands that serve us.
Final guarantee
If from reading this research article, you have not been fully satisfied, we personally offer to repair it or exchange it for another. If you also cannot find a way to apply it in practice, I would be flattered if you asked me for his views and doubts.
Finally if you are one of those who also think that everything has areas for improvement, and you remember or find any of this article, I will be happy to hear it and discuss it: helloarrobajesusdublino.com
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