Corporate Finance Challenges Webinar

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Corporate Finance Challenges WebinarThis webinar examines the most critical challenges faced by accounting and finance teams as they strive to improve the productivity of their staff and the effectiveness of their operations. The content focuses on offering practical insights and peer benchmark data from a recent survey of thousands of financial professionals on their greatest obstacles and plans to improve results. In this webinar, presenters share how financial leaders are streamlining key financial processes such as order-to-cash, budgeting, financial reporting and planning, order management and fulfillment, procure-to-pay, and financial reporting and period close.

This Corporate Finance Challenges Webinar video is from the Proformative webinar "The Biggest Challenges Facing Finance" held on July 11, 2012.  The webinar features a presentation from Tom Kelly, Managing Directory, T-Edward, Inc.

 

Corporate Finance Challenges Webinar

 

On that note, what I want to do here today is I'll be talking the first part of the presentation about a survey that was done by The Institute of National Accounting, the INA. If you go to the website, I'm pretty sure you can find it, or I'm sure Proformative can send out the actual link to get the details of the study. But what it focused on were the biggest challenges facing finance. The survey was sent out, I think, at the end of last year in December to over, I think, 50,000 members of the INA.

To get into a little bit of the demographics on it, just to set level here, from an industry standpoint, almost 30% came in from manufacturing, you can see there up on the left-hand side, finance, business services, etc. From an industry type standpoint, whether you're a publicly traded, privately held, non profit, obviously, the biggest piece came in on the privately held side, with the publicly traded encompassed almost 30% of respondents.

Location and job title, most of the locations, obviously, were the Americas, and then The Middle East, Africa, Asian Pacific, and Europe, and then from a job title standpoint, accountants, surprise, surprise, direct their controllers where the largest respondents, and you can read on down the line there, as you made it. So from a demographic standpoint, it was a very, very large survey. I think it's fairly well represented in terms of size of companies, locations of companies, types of companies.

Now, with that, from a revenue standpoint you're looking at, obviously, a well spread out mix of revenue, and even employee count. Organizations respond to this with less than 50 employees and over 10,000 employees. So it's a well stretched out population sample.

So let's talk about some of the questions that they asked. And one of the things they wanted to point out is productivity. What has productivity increases over the past three years been? What they found out is, while it may [inaudible 00:02:13] productivity with manufacturing workers is improving, productivity is, obviously, a very top concern of accounting and finance departments. You can see that it's shown here that 70% of the survey respondents reported productivity increases in the area in the last three years and with half of those reported that productivity in industry, their increases were greater than 5%. So productivity has been a focus, and productivity has been improving and we'll get into some of the details as to why we think the productivity has been improving.

In summary, what organizations seem to have seem to have done is taken a step back, looked at their business processes, and improved them. This can be done from a methodology standpoint to kind of scope out, "How should the process be working?" But if you look at the next segment there, "Improvement in Technology." and I know I am kind of a real big believer in the cloud, but the ease of use I think with some of the technology, and the, I think, barriers to getting that technology, as they start to come down, I think organizations, large and small, are able to take big advantage of what's out there.

We're talking about things that could be just a microcosm within an organization. Take traveling expense as an example. For those of us out there that are still using Excel  spreadsheets and pushing paper around, there are probably ten companies, and I'm sure the number increases every day of organizations that just focus on taking that one microcosm of a process within the finance function and improving it from all facets. Not just how it works in a methodology standpoint, but how the automation of that works. So even going to zero paper in this area has been accomplished by many organizations.

Next, the survey looked at the permanence of this change in productivity. So we can make improvements in productivity by adding a lot of resources to a problem, but then the question is, "What is the sustainability of that?" The changes in productivity in the finance and accounting functions organizations are not, in most cases, temporary, as was indicated by the respondents. One quarter of the respondents indicated that the changes in productivity were permanent, and another half indicated that they were the
start of a long term trend.

So at least the leaders are feeling that they're addressing some of these concerns and they are making improvements, or they're starting to make improvements. The feeling is, based I guess on those results that they've seen, that the expected continued improvement or the permanence of that improvement is going to continue to improve or it will be set in stone, and they don't intend, or don't expect to go back to aptly having, perhaps, bad processes. Take the example of the traveling expense I just gave.

Somebody who's going to go on to the automated side of things and have their users using smart phones to fill out their traveling expense report, I don't think they're now going to now ask them to go back to filling out Excel spreadsheets. So some pretty interesting things are happening out there as far as the permanence of productivity.

So, obviously, there's this big need for productivity improvement. So what's the extent that is increasing the productivity? What is the priority, not only in the organization, but, perhaps, even in your individual goals? Many CFOs, and sometimes many of the competing priorities that are also addressed, only 10% of organizations indicate that increase in productivity was the highest priority, although, literally half of it considered it to be one of their top three priorities. So that's kind of an interesting perspective, in that you have, kind of, two competing pieces there.

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Last, before I get into some of the examples that I've experienced personally, what are the investments of the potential to increase productivity? In other words, where do you want to put your time and effort? I do think the first thing here, automation of business processes is pretty important. I think in the past where we may have had great ideas about how we wanted to do things, the next step was always, "Okay, what vehicle, what apparatus?" I'm not trying to use the words "software" or "technology," what is it that we're going to do to put in place that's going to enable this strategy, or idea. Like I said earlier, I think what we're starting to find is the ubiquitous nature of technology today is really allowing organizations to take some giant leap forward. A giant leap forward with minimal investment, frankly, in terms of what some of the costs is.

So at a very high level, that's what the report had. The report's over about 30 pages. I suggest if you want to get the real details of it that you go to the INA website. Like I said, Ernie and the folks at Proformative may provide you with the link to get even more insight into the survey.

So let's talk, now, about the ever changing roll of finance. We have our financial person here in the middle, looking a little scared, a little overburdened, and kind of surrounding himself here with the many things that are happening. Right? So organizations out there that are in the software industry, or provide services, you may have to manage recurring revenue. I can't tell you how complex it is to manage recurring revenue. Not just from a billing standpoint, but being able to get the information to the customer, have the customer to make a payment, make sure all that works flawlessly, so we don't have any disconnects in the process to the point of recognizing that revenue. So there are a lot of things that are going on just in that one particular area.

The resources; many of the organizations, as we can see with the unemployment reports these days, the resources are really stretched pretty thin. Many people both in large and small companies are having to wear many, many different hats, managing very complex pricing models. So not just from a revenue recognition standpoint, or  recurring billing, but organizations are starting to have more and more complex pricing modules. Think of the boat companies or the airline industries, or whatever, it can get pretty complex out there.

Real-time reporting, I think what organizations in finance if they're really going to be successful, they only have to be like NASA was in the old days, in that you need to be able to them everything they need to know, they being whether it's a salesperson or a service person, or whatever, almost on a real-time basis so that they can make the right decisions.

Then global support, security, compliance, as we have the ever changing pallet of things that are happening to us across the continuum. Whether you're in the U.S., or Europe, or whatever, there are many, many things, and ideas, and laws, and regulations that we have to make sure we adhere to, to make sure they we're a compliant organization in a day-in-day-out basis.

So this is a picture of Ernie in his early days. I apologize, Ernie. I'm not sure who that is, it's not me. But in any event, what we are having to go through in this world of  finance these days is being not what organizations need. We need to have well-rounded financial planners, you name it. Many of the things I've talked about, even up to this point, managing resources, managing the complexity of regulations, managing the complexity of certain things within our processes. It's no longer one plus one equals two. There's a lot more that goes on on a day-to-day basis from everybody in the finance. So you have to be, maybe for lack of a better term, almost a general manager in some sense to really make sure you're adding value to the organization and is part of the initial team you're part of, but then, the groups that you support . . ."

End partial: Corporate Finance Challenges Webinar

 

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