Systems & Reporting – Made Easy
Naresh Sakhrani, Principal on the East Coast, is a Sydney-based CFO with extensive experience in a variety of industries, including manufacturing, media, online and professional services. Here at The CFO Centre, we interviewed Naresh to delve into his knowledge around Systems & Reporting…
What is the definition of “Systems & Reporting”?
Reporting of information is a critical process in any organization. Information is used to let stakeholders know about their financials (P&L and Balance Sheet). They also use it to make good decision based on detailed analysis which zooms into their financials.
The reporting is complicated, and it often involves detailed financial analysis on sales and costs.
Those detailed analysis that are involved in management reporting include customers & products’ margins, mini P&L per product or per region or KPIs.
The CFO needs to treat the information as harvestable data which can be summarized and interpreted using strong accounting systems which sometimes include a Business Intelligence tool.
What is the difference between a Standard Accounting System and an Accounting System including Business Intelligence?
A standard accounting system will let you book your invoices and have visibility to your Company’s P&L and Balance Sheet.
An accounting system which includes Business Intelligence will let you zoom into your Sales and Costs and Slice and Dice your financials into every angle possible in order to make some important decisions about your customers, products or regions.
Why is Reporting & Systems important to all business owners?
From my own experience in the business environment, and from the clients we work with, I know business owners have a very high visibility of their customers and products, but they often do not have a detailed visibility of their sales and costs.
If all financials are broken down into customers, products and region, it enables the business owners to focus on customers or products which are less profitable and make some changes along the way in order to improve the overall margins of the company.
Do you have any tips or insights for owners / managers for introducing a good accounting & reporting system into their business?
I suggest that an external facilitator is used in the process who can guide the owner / managers, keep them accountable, challenge them, and assist in the formulation of implementing the best accounting system which will match all requirements from their business.
For example, our CFOs within The CFO Centre assist our clients with the Project Management process, from which a tender process will be implemented to select a couple of accounting systems. Demos will be scheduled with the different vendors in order to have a visibility on the capabilities of the systems and mostly the reporting.
Whilst it’s a good thing to challenge ourselves and evolve, make sure the Accounting System will give you good reports for your business.
Ensure your resources can be available for the different steps of the implementation: workshop on capturing all requirements from your teams, training, testing all modules before Go Live, administration and support.
After using the system for a couple of months, it is really important to make some improvements and fine-tune the system to match your exact requirements.
The ultimate outcome is to achieve fully-automated (scheduled reports which are sent automatically to business owners without any manual intervention) reporting which has been customised to fit your business.
At The CFO Centre we often introduce and chair the monthly management meeting for our clients, covering the strategic, financial and operational matters of the business. Our clients find it an effective way to keep on track and to hear from their part-time CFO as to how the reporting based on financial performance translates into decision making.
Lastly, I encourage business owners and managers to make the time for Reporting and Systems as it will pay dividends (figuratively and literally). One must be open to the Systems implementation, Reporting process changes and enjoy the journey!
Strategic Mangement – A Simple Guide
David King, CEO, Eastern Australia and NZ, is a Newcastle-based CFO with extensive experience in a variety of industries, including manufacturing, industrial, property and professional services. Here at The CFO Centre, we interviewed David and tapped into his knowledge on Strategic Management…
What is the definition of “Strategic Management”?
It’s a process that allows the business owner or manager to clarify their purpose, their goals and their vision, from which a Strategic Plan (sometimes called a Business Plan or Business Strategy) can be formulated and implemented. The on-going monitoring and tweaking of the Plan gives the business the best chance of delivering on the owner’s long-term goals and Vision.
Strategic Management is not about trying to predict the future, there’s no crystal ball! Rather it’s about preparing for the future and knowing the steps the business will have to take to achieve its goals and objectives and to remain competitive.
What is the difference between Strategic Management and Strategic Planning?
Both terms are used interchangeably. I personally prefer the reference ‘Strategic Management’ as it encapsulates the on-going implementation and evaluation process, which is vital, rather than just the planning stage itself.
Strategic Management or Planning answers the key questions:
- Where is the organisation at the moment? (The SWOT analysis – strengths, weaknesses, opportunities and threats – is useful here)
- Where does the owner want to go? (Purpose, Vision and Goals)
- What does the business need to look like to support the above?
- How can the company get to this point? (Consider the long term strategic plan)
Why is Strategic Management important to all business owners?
From my own experience in the business environment, and from the clients we work with, I know how easy it is to get “stuck in the trenches” with the day-to-day operational stuff. Business owners have so many balls to juggle that time and focus for strategic management may never be made.
However this is the reason why strategic management is so important. It enables the business to evolve and strengthen, so the owner and/or managers can focus on the things that really matter and put steps in place to make the business less reliant on them for lots of the “other stuff”. Long-term success rarely happens without sound planning and execution, whether that’s to grow, sell or pass the business to the next generation.
What are the factors which are involved?
There are typically five stages in the Strategic Management process which involve utilising a balanced scorecard:
- Clarify your Purpose, Vision and Goals
- Gather and analyse information – both internal and external
- Formulate a Strategy (and KPIs)
- Implement Your Strategy – Asking questions like what, who or when.
- Monitor and evaluate – remain agile.
Do you have any tips or insights for owners / managers for introducing strategic analysis into their business?
I suggest that an external facilitator is used in the process who can guide the owner / managers, keep them accountable, challenge them, and assist in the formulation of the Strategic Plan. For example, our CFO’s within The CFO Centre assist our clients with the Strategic Management process from which financial forecasts and KPI’s can be set and monitored. We often hear our clients talk of the comfort and motivation that comes from the strategic clarity unlocked by the process!
Whilst it’s a good thing to challenge ourselves and evolve, make sure the Strategic Plan is achievable and realistic with clear action steps and time-frames. Ensure the available resources (people, funding, systems etc) can deliver on the Strategic Plan, or that the Plan includes steps to bolstering the necessary resources.
Monitoring progress against the Strategic Plan, and tweaking the Plan when necessary, is really important. The last thing you want is to see the Plan gather dust on a shelf and not be a key document in the running of the business.
At The CFO Centre we often introduce and chair the monthly management meeting for our clients, covering the strategic, financial and operational matters of the business. Our clients find it an effective way to keep on track and to hear from their part-time CFO as to how the execution of the Strategic Plan translates into financial performance.
Lastly, I encourage business owners and managers to make the time for Strategic Management as it will pay dividends (figuratively and literally). One must be open to the process and enjoy the journey!
Julian Crawford, portfolio CFO at The CFO Centre in Sydney
(part of the CFO Centre Group)
The flexibility and opportunity that portfolio working allows suits me very well as I’m able to plan my own diary to balance my personal and professional commitments.
Julian Crawford first heard about the CFO Centre a couple of years ago from a friend of his who had been working with them for a while in the south of England and really enjoying it. He followed up when he got back to Australia and was pleased to find the group was really starting to grow in Eastern Australia. It felt like a good time to join as he’d been watching the emergence of the virtual C-Suite for the past few years as work styles and practices were evolving .
Julian’s original career was in assurance and consulting at PWC in the UK, Europe and Australia and then more recently as a Director with EY in Sydney. With his children transitioning from school to university, it seemed like a great time to take up a portfolio lifestyle – leveraging his core Chartered Accounting qualification alongside his business and consulting experience gained over his various roles throughout his career to date.
In the past year, Julian has built up a diverse group of clients with a range of sizes ($2M-$25M revenue) across different sectors (professional services, agriculture, manufacturing, education).
“I really like the variety of the businesses, their challenges and opportunities and the people who work in them. I particularly enjoy being able to be one step removed from the office politics of each business but at the same time regarded as a core member of the leadership team.”
A fresh start with the flexibility for visits to see his children. Sounds like the perfect balance.
Could the CFO Centre give you the lifestyle you crave? Call us – https://www.cfocentre.com.au/join-the-team/
Allan Robb, portfolio CFO at the CFO Centre in Australia
(part of the CFO Centre Group)
Allan joined The CFO Centre in Queensland in late 2018, having previously worked in CFO roles in larger corporates and SMEs. His background as a CFO with extensive experience across a range of industries meant that he was ideally suited to The CFO Centre portfolio approach.
“I decided that corporate roles were no longer for me, and before committing to The CFO Centre explored various options including the independent route. The CFO Centre was able to offer not only a broad support network, but was able to provide a range of tools, resources and methodologies which could be used to add immediate value for clients.”
Allan is building a strong client base in Queensland, with clients in industries including intelligent transport systems, software as a service, health, IT, finance, and insurance. He enjoys helping businesses that need specialist CFO advice to overcome the inevitable challenges that most businesses face. He also values being a part of a growing team that has extensive support networks though the CFO Centre global network of portfolio CFOs.
“I believe that one of the real strengths of The CFO Centre for our clients is that clients are able to access a depth of experience and resources that go well beyond their CFO, including a local team, Regional Director, CEO, and a global network of CFOs and other business professionals, many of whom are located in jurisdictions the business is either operating in, exporting to or importing from.”
Allan also believes that another key strength of The CFO Centre is that the recruitment screening process is very comprehensive, which ensures not only are all CFOs screened for technical capability, but also cultural fit, attitude, client focus, as well as ethics. “This leads to a consistently high quality of CFOs across the organisation.”
Allan enjoys the work/life balance that comes with portfolio CFO work, and when not working he is likely to be spending time with family and friends, reading, travelling, and hiking.
Would you like this kind of balance in your life? Get in touch – https://www.cfocentre.com.au/join-the-team/
Andrew de Bruyn, portfolio CFO at the CFO Centre Australia
(part of the CFO Centre Group)
Andrew is a qualified Chartered Accountant who trained with BDO and has many years of senior financial experience, as CFO and Finance Manager, across diverse industries including FMCG, fashion clothing, diamond mining, and manufacturing.
When Andrew’s contract came to an end with the company he was working with he was looking for a new avenue, something outside of the daily grind of corporate life. At the time he was living and working in South Africa and, when approached by the FD Centre in Johannesburg (part of the CFO Centre Group), the timing couldn’t have been better. Andrew met with the Johannesburg Regional Director and decided to give it a try.
And he’s so glad he did! Andrew doesn’t miss corporate life in the slightest.
Andrew really enjoys the flexibility that portfolio working offers, as well as the stimulation of working with different personalities across a variety of industries. He finds he is able to add real value to his clients which is really appreciated by the business owners he works with, and he’s now working less hours, through choice, and has more time to spend with his family.
Are you looking to make a change? Get in touch – https://www.cfocentre.com.au/join-the-team/
Cash Flow Management; Cash is King.
Nick Crawford, Regional Director and Chief Financial Officer in Sydney, is qualified as a chartered accountant with extensive experience as a CFO in multiple different sectors. With over 20years’ experience as a CFO, we at The CFO Centre decided to question his knowledge on cash flow management.
What is the definition of Cash Flow?
There are two ways of looking at cash flow; in a set of annual accounts, you have a statement of cash flow and all it does is look backwards – it’s used to see how the business uses their money. In terms of our business (The CFO Centre), it’s a management term which measures, as one would expect, the inputs and outputs of the business. So, since the CFO centre is paid by a customer and uses that money to pay employees, suppliers etc. cash flow is the lifeblood of the business and, in the context that we’re talking about, it’s a tool that management use to make sure that that business keeps going.
No cash, no business.
How can having a good cash flow impact a business?
A good cash flow can impact a business in a couple of ways. Cash management is often very stressful for particular entrepreneurs who’ve set up a B2B (business to business/client). In Australia, a typical client is somebody who’s had a good idea, they’ve taken their business and is turning over 5, 10, 15, 20 million dollars but if they don’t have a sophisticated finance team behind them the ability to pay bills is a major concern. Therefore, having a tool that they can utilise, that states to them clearly where the cash-issues have come in and how to fix them, they can be confident in that their business will survive.
If you look at a business such as Facebook, for a number of years they made no profit. People believed in the platform and were pumping gas (funding) into it so, it kept going and look at where it is now. On the other hand, businesses who make profits but have no cash struggle because they can’t pay the staff, suppliers or invest money into the business. Very quickly, they’ll deteriorate due to the cash flow management issues. Cash is king and ultimately a business can’t survive unless it’s got positive cash flow.
What are the best tools and strategies for managing cash flow?
In terms of a strategic perspective, you’ve got to be robust but sensible. There’s no point in kidding yourself, it’s about using it as a tool to identify when potentially you’re going to hit a pitfall and you need to be able to deal with it. The other thing is also to be able to use it effectively. We’ve come across a number of people who use cash flow as a tool and then want to hide, bury their heads in the sand and not use it because it doesn’t give them the answer that they want to see, instead it identifies a cash flow problem.
What it might mean is you’ve got to go do something different; you may ask your bank for an overdraft facility, you might have to go to an invoice discounting facility to get cash quicker, if you’re in the growth stage of your business you might end up going to an external investor. So, it’s supplemented by other factors, like raising finance to make sure that you can keep your business going.
At The CFO Centre we have a model that demonstrates numerous brick walls that you’ll hit whilst in the different stages of your business. When you hit the second brick wall, cash flow would be a major issue because it consumes a lot of cash and often, you invest before you get the return. It’s imperative that people use a good cash flow tool to save money, to look at and predict the future but also manage within their means or identify the need to go out and find extra resources to get them through that process.
What you think is the best way of calculating cash flow for an SME that’s scaling up?
Cash inflows versus cash outflows.
It’s using the information you’ve got, typically the SMEs are not great at forecasting forward, a lot of it might just be what’s in front of them. It might be taking the invoices that roll to them and the invoices that they’ve got to pay, their payroll and using those to put together a realistic plan. It’s more about using the information around you and being sensible about it.
what’s the difference between a cash flow forecast and a cash flow statement?
A cash flow statement is something people put in their accounts. It’s a requirement, in Australia, for a company of a certain size to have to put a cash flow statement in. Basically, it takes the financial period that you’re looking at – which is split traditionally and historically – and you have to state what you did with the cash between the previous year and this year. ‘I paid employees, bought fixed assets, I invested in a that etc.’
A cash flow forecast is a forward-looking tool. The tax accountants and the accountants will do the cash flow statement (which is looking historically), whereas cash flow forecast is a forward-looking tool, but both are useful in knowing to grow the business.
Have you come across any examples of how clients have needed help with their cash flow?
Our Christmas holidays and our summer holidays coincide, so we have a period where if you’re a service-based business like The CFO Centre, you might not earn money for four weeks; but you’ll still have to pay staff, rent and ongoing bills. It creates a problem around March and April because of the quarterly tax (GST) – it’s like you’ve not had any money for two months and now you’ve got these big bills to pay back.
In terms of SMEs, I’ve come across some where they’ve not used cash flow as a tool; they’ve just continued to pay what’s needed when they’ve got money in the bank, they don’t foresee the problems coming along. Often the major problem is the ATO, if they did not pay the ATO they find themselves with a difficult issue that they can’t fix; they end up burying their heads in the sand and hope it will go away – it doesn’t. I’ve had clients where I’ve had to dig them out of a deep hole with the ATO, which showed me how vital cash flow management is needed by every client that we deal with.
I have one client who gets paid in advance, so they have positive cash flow. They’re probably the only one as they get their money up-front, it’s a different sort of cash flow management – it’s about investment to make sure you maximise the returns you get on your cash balances. Most of the businesses we work with do the service and get paid afterwards, so cash flow management is just a key management tool, particularly in the space that we, as The CFO Centre, work in.
What’s the best bit of advice you can give to small business owners to improve their cash flow management?
I think, in a lot of instances, they don’t usually do it, I think it’s a tool that people choose not to or maybe don’t have the skill set to use accurately. I think the best sort of advice would be to follow what the forecast is telling you. You can’t just ignore a problem, you need to react to what the issues are with the best solution (borrowing money from your bank, talk to people like us at The CFO Centre etc.).
It’s no different to us as individuals, when you get to a point when you want to go out on a Friday night and you’ve no money, you can’t do it. Businesses will not have a good cash flow management if their cash positioning and financial management is under-performing. Again, cash is king, if you do not have enough cash or the strategies in place to predict issues like low cash flow, then you need to look into solutions that line-up with your business plan and payment methods.
Andrew Bell, Portfolio CFO at the CFO Centre, Western Australia
(part of The CFO Centre Group)
Andrew Bell has an enviable CV. With 25+ years working with fast-growing companies, he’d worked his way up from Graduate Accountant to an ASX 300 CFO and Company Secretary. But, in Nov 16, he wasn’t feeling quite as fulfilled as he thought he would as the politics in the corporate environment were preventing him from enjoying his roles.
Andrew took time to consider what it was that he enjoyed about his career and concluded that he loved working directly with owners and entrepreneurs to develop and improve their businesses. He made the decision to join the CFO Centre and now feels that he is putting his experience to good use as he is able to make a real difference to his clients’ businesses.
“The CFO Centre has provided me with the opportunity to work with multiple growing and developing companies over the past 2 + years for mutual benefit and great job satisfaction.”
He’s also a great advocate for the team-based approach at the CFO Centre. He visits his clients regularly and enjoys mentoring and coaching staff within the finance functions. There’s also a great team spirit amongst the CFOs where they share their knowledge and assist with client situations which creates a great learning environment for everyone.
Are you searching for a more fulfilling role?
Are you open to a discussion about joining our team?
We’d love to hear from you – https://www.cfocentre.com.au/join-the-team/