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Does your finance area have a service
mentality? Or does it often seem at times that departments in
the company have to go out of their way to meet the needs of finance?
Here are some signs of a self-focused
finance area:
- A large number of special reports
needed for the finance department that require manual or special
effort to pull together.
- Many reports just used in finance
and not useful for the rest of the company.
- At larger companies, the corporate
finance office stays put in the home office and rarely ventures
out to the field.
- Systems that are very seamless
for finance, but dysfunctional for other parts of the company.
- No metrics in place to measure
the service that finance provides
Fortunately, times are changing.
Entire companies are becoming more customer focused. They are
looking at customer service metrics that they would never have
tracked before or changing the metrics to reflect what the customer
wants instead.
For example, at Home Depot, they
used to measure their customer service phone-in area by the number
of phone calls that they handled and how quickly calls were answered.
The result- customer service representatives hurried through phone
calls, but was the customer really happy? Did anything come out
of the phone calls?
Instead, they changed their focus
and instead emphasizing generating additional sales through this
customer service area. Phone rep compensation was changed so they
received overrides on additional sales generated. Instead of watching
the clock to see how quickly they could roll on to the next call,
they paid more attention to the customers. Instead of how fast
can we get done the idea became how can I help you. Even a giant
like Home Depot found new growth.
The same can apply to finance.
It starts with a shift in focus- a service mentality- asking how
can finance help you?
A case history is earlier in my
career when I was CFO of a pharmaceutical firm, coming in one
year after an acquisition where plants and product lines had been
acquired, but the finance and IT infrastructure had to be set
up from scratch. Things were not going well and the company was
fighting for survival. Finance had played a role, but quickly
we changed the whole culture in how finance operated.
- The computer system was a nice
financially oriented package, but did not meet the needs of
the rest of the company. We shifted the focused and asked people
in sales and operations what they needed from the system. We
looked at how they wanted to be able to process orders or batches,
rather than having the system tell them how they had to operate.
We eventually made it much more user friendly, bringing in some
add-on packages that fit the pharmaceutical business. Finally
people felt they were listened to.
- Purchasing was almost ground
to a halt with suppliers cutting the company off. Bills were
paid late and vendors could not get a straight answer, if any
at all, on when they could get paid. Promises were not kept.
Rather than avoid the vendors, we called each key one up and
got an understanding of their situation. Then in return for
resuming shipping, we worked out a payment plan over time that
paid the old bills off at 100%. Rather than being a company
to avoid, within a couple years, we became a preferred customer
of the chemical firms, often getting the first shot at new ingredients.
Instead of hindering purchasing, finance make it easier for
purchasing to do their work.
- Customers were starting to shy
away from doing business with the firm, expecting that our firm
would not last for very long. Plus, we did not have a good track
record of fulfilling orders, which was a killer in this business,
since the next competitor with the same product was only a phone
call away. When calling the customers on collection calls (which
had been piling up as customers were sitting on bills), we took
the opportunity to ask them how we could help and let them know
about the positive changes taking place. In other words, we
were here to stay.
- Management was not getting served
well by finance because the cost accounting system was very
weak. Pricing of product became more of a guessing game. Turn
the clock forward two years and the picture was different. We
had developed a strong system with a better method of allocating
costs to fit the business. Management had a high confidence
in the program and used it to properly price products and improve
margins.
- Investors and the banks were
left out in the cold too. Reports were very late and key information
like cash flow was left out. In addition, overoptimistic accounting
led to faulty allocations and overstated results. We gave them
the corrected picture, but also put a game plan together convincing
them to more than double down their investments. We also went
from being weeks late on the financials to producing flash month
end numbers the firs morning after month end.
Bottom line, the rest of the company
and outsiders were pretty unhappy with the service finance was
giving. We turned it around into a positive. Thanks to great investors
and banks and a new CEO, the turnaround moves we started gained
momentum and we went from losing $9 million on $8 million in sales
the year before we came to earning $28 million after tax on sales
of $52 million from the manufacturing operations just four years
later.
We didn't stop there. We made it
a habit to get together with heads of the different departments,
as well as outsiders, to keep learning new ways that finance could
be of service. As technology developed, we invested in new things
like a local area network, which opened up new ways for various
departments to operate more effectively.
In closing, look at your company
and ask this question- is finance working for the company or is
the company working for finance?
If the finance department doesn't
see itself as a service arm to the rest of the company, it could
be time for a change in attitude. And a change in service.
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