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Centralized or Distributed finance organization for global company?

Like most companies these days, we're global, with subs in Hong Kong, UK, France, Germany and soon to be other geos as well. I have highly capable accounting staff, insourced and outsourced, at each location, but no finance presence. All of our corp fin is consolidated in our US HQ, with different folks supporting different regions. It's efficient having us all in one place in the same time zone, but I can see how it might be better for the local entities to have that talent locally in their time zone, language, etc. Of course we'd still need staff at HQ as well to do rollups as well if we de-centralized. However, at the end of the day, I only care about what's best and most effective for the company and will drive best performance. Any insights would be appreciated.

Answers

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

More towards distributed, compared to the approach you describe.

You need talented active business partners on the ground, but;
You need to have the advocate (for the local and the corp) in the main office.

To the extent that you can, I'd push the function out to the regions, and make sure that the link to the core stays secure.

KP

Topic Expert
Patrick Dunne
Title: Chief Financial Officer
Company: Milk Source
(Chief Financial Officer, Milk Source) |

I have consolidated operations and have managed in both. I have typically preferred a centralized environment, but for more complex businesses decentralization has its advantages. For example, in a consulting business, we did most activities in the US, but had a European regional office to deal with statutory and other accounting/finance issues specific to that region. In a manufacturing organization, we had a decentralized organization to deal with local issues (costing/tax/statutory issues). In a decentralized environment, I was able to have certain projects/models started at the end of my day and have it passed around the globe and completed by the time I got in the next morning. If you have the right talent, this can definitely be an advantage.

With all that being said, I think complexity of the business is the key factor.

Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

As finance is a function that supports business development, I would rather a decentralized approach with roll-up to HQ. Additionally a good finance manager could identify a problem and correct prior to it becoming a major issue that is not easy to unwind. The answer relates to how you use your finance resource, I.e. subject matter experts or solely for reporting.

Deanna Miller
Title: Chief Financial Officer
Company: Professional Plumbing Group
(Chief Financial Officer, Professional Plumbing Group) |

Where are your key decision makers? In the BU I just moved from, the key commercial decision makers are located in regional offices. Each one has a finance director co-located with them to support the management team and be actively engaged in business development. However, in a different BU in the same company, the key decision makers are all located in the US despite operations and sales around the world. Their finance support are located with them. In both organizations, the finance team reports directly through the finance organization to ensure compliance with corporate standards. However, the day to day interaction is with the business.

david waltz
Title: Assistant Treasurer
Company: Integrys Energy Group
(Assistant Treasurer, Integrys Energy Group) |

My suggestion is that you separate the concept of geography from that of organization. With the ever increasing variety of technology and communication tools, location becomes irrelevant. When our company underwent an M&A transaction in 2007, we created a centralized treasury function even though the personnel are geographically dispersed, so it is possible.

Topic Expert
Linda Wright
Title: Consultant
Company: Wright Consulting
(Consultant, Wright Consulting) |

I worked for a similar multi-national and used a centralized model with specific staff assigned as "relationship managers" to specific locations. They were charged with monthly or more frequent concalls bringing subject matter experts (credit, risk, other parts of my organization) into these calls. As needed, they also traveled internationally--but at least annually. The model worked very well and insured career development and path for the managers. Remotely, they might not have had as many options.

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