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2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
The first 100 days of a CFOs appointment may determine not only the future of the CFOs position, but also the direction of the company. As such, getting the head of finances priorities in order plays a large part in setting the foundations for success. Much like a football manager, the CFO is a multi-tasking strategist supporting the club or company executive, while stewarding a united team of strong capable professionals towards profit and growth. This guide offers helpful tips and checklists to assist finance chiefs and CEOs through those challenging early days of this vital appointment. For non-finance directors, there are also some handy hints to help you nurture a smooth relationship with the new head of finance. The line-up 1 Kicking things off
04 06 08 10 12 14 The CFOs expanding role Managing expectations First impressions Managing stakeholders CFO Profile: Jim Buckle Stakeholder checklist
3 Smooth running
32 On top of back office operations 34 Ten qualities of an effective CFO 36 Managing the supply chain 38 CFO profile: Alex Woodward 40 IT management 42 Efficient and effective operations checklist
2 Taking control
CEO Football club chairman CFO Football manager Company employee Football team player
4 Pitch performance
46 Performance management 48 Infamous finance executives 50 Tax planning 52 Strategic planning processes 54 Managing operational performance checklist 56 Useful organisations and publications
18 20 22 24 26 28
Risk managment and compliance External reporting and audit Five reasons why CFOs get fired The risks beyond reporting CFO profile: Ann Firth Risk and compliance checklist
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
The first question you may ponder in any new job is what to wear on your first day. While a suit and tie may appear to be a safe bet for a CFO, dont forget to read the culture of the organisation. Making yourself approachable is key depending on the industry, more casual attire may win you more influence. The CEO should help communicate the company culture to the CFO.
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
Constant multi-tasking
The CFO has shed the dour, number-crunching stereotype because the role increasingly requires the head of finance to do and be many things at the same time. Being CFO is more flash than it was think how the slick appeal of the modern football manager has replaced the crusty image of a sheepskin-coated, pie-eating, Woodbine-smoking guvnor.
The term utility man has become something of a dirty phrase in recent years. But, for the modern CFO, no other moniker describes the role as accurately. These days, rather than being average across the board, the CFO needs to excel in a number of positions. Just a cursory look at the CVs of the UKs leading blue chip CFOs reveals commercial acumen, regulatory and communication excellence, along with corporate finance expertise.
Ten years ago, the finance function generally dealt with just that: finance. The CFO was seen as a safe pair of hands that kept the numbers in order and let the teams stars do the sexy stuff. Now, the corporate CFO is expected to look after a whole range of different areas. Strategy and targeting growth in new markets is a key component of the role. Given their comfort with the numbers, CFOs are ideally placed to spot trends and drive the business forward. Meanwhile, with the increased demands from regulators and stakeholders, managing risk has risen up the CFOs agenda enormously in the last few years. Compliance, previously consigned to the lower divisions of the CFOs attention, is also right up there. And CFOs of all sectors are affected. While financial services may labour under a wider range of regulation, there isnt a CFO in the land who is unaware of the need to meet the compliance challenge.
Shareholder activism and the increased reach of regulation have forced the CFOs door open to the demands of the businesss stakeholders. This can extend from basic investor relations to handling shareholder queries, liaising with investors and speaking to the press. The days of hiding behind the desk are over and the modern CFO needs to be a consummate public performer. And what of the top table? The CFOs place on the board is now more important than ever. Theyll need to hit the numbers, liaise with the nonexecs, provide wise counsel and communicate effectively with colleagues to ensure that their voice is heard. All in a days work? Its a game of two halves at least!
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
First of all, a successful CEO-CFO relationship relies on both parties being realistic about what they can expect from each other. For the CEO, there are certain qualities that he will expect his CFO to display. An important one is decisiveness: a lack of clear decision making can be critical to a businesss prospects. So, the CEO will expect the CFO to spot opportunities and risks, and take the necessary measures to pursue growth and protect the business.
No to yes men! At the top level, certain elements are taken for granted: the CFO will be expected to get the finance function into efficient shape, hit the numbers in the forecast and report to the board and shareholders in timely fashion, alongside the core finance aspects of the role. But the clever CEO will also expect his CFO to offer an invaluable service: challenging the companys strategy. The days of the yes man and his rubber stamp are over. Todays CFO must be in possession of the confidence to ask probing questions of the board and to offer alternative solutions. If the CEO doesnt expect, or indeed, demand this, then chances are something might be amiss.
An important quality that the CFO should display is decisiveness, as a lack of clear decision making can be critical to a businesss prospects
Mr Righ t?
CEO For this job, we need someone who is responsible. CFO Im the one you want. In my last job, every time anything went wrong, they said I was responsible.
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
Its Friday! The end of the CFOs first week. To celebrate, why not meet with the financial reporting team to get to grips with any disclosure issues and find out what needs to be done before the auditors come? Its hardly a job for a Monday!
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
In your first few days, start to identify the stakeholders, assess their importance and decide on what they will want to hear. The range of stakeholders varies from company to company
A CFO had just read the story of Cinderella to his four-yearold daughter for the first time. The little girl was fascinated by the story, especially the part where the pumpkin turns into a golden coach. Suddenly she piped up, Daddy, when the pumpkin turned into a golden coach, would that be classed as income or a long-term capital gain?
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
A degree in English and the editorship of the university magazine might not be the obvious background for an accountant, but along with his work in the media, it has been useful for Jim Buckle, CFO at Lovefilm, one of Europes leading home entertainment businesses. Jim trained at KPMG and then, after stints at the BBC and Dell Computers, his career took an unexpected turn with a couple of dotcom start-ups. One resulted in the all too common closure, but the other with a successful sale when News International bought Propertyfinder.com. Arriving at Lovefilm in April 2006, this varied experience proved invaluable to him. This really pulls together the threads of what Ive done previously, he says. On the one hand were an online media business, which is where my experience at Propertyfinder is useful. On the other, were very metrics focused, concerned about how many discs we get out in a day, which is the kind of thing that I worked on at Dell. Jim arrived at Venture Capital-backed Lovefilm just as it was merging with another company called Video Island that offered the same service. Every member of the new management team had to produce their first 30-, 60- and 90-day plan.
We had a whole integration process to go through. We needed to decide which warehouse to close, which software platform to use and which staff to lose, says Jim. Although he was hitting the ground running, he was determined to find out as much as possible about the business before he started making changes. The challenge is to really listen you need to know the strategy and the key metrics, as well as what people in the organisation want to do and where the finance function fits into that, he explains. There are always some people who really know how things work and so you need to identify them quickly they might be quite junior. Lovefilm is now profitable but at Propertyfinder, which never made money, Jim had to manage cashflow very tightly, only paying suppliers if there was at least 200,000 in the bank. Profitable or not, as a CFO or CEO youre always wearing two hats. With investors or the media, you need to be positive, but when youre thinking about cash flow you should consider the possible negatives. So, does Jim, who is 41 and married with twins, love film himself? Hes certainly not a film buff but, as he points out, its important to relate to what you do without getting so fanatical that you cant see the wood for the trees. Running is how he relaxes, he reveals, adding: Thats when I get some of my best ideas.
The challenge is to really listen there are always people who know how things work and you need to identify them quickly
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
Develop finance vision and strategy Align with corporate strategy Inputs from leading practices and current state of finance
Gain an understanding of the relative Carry out an evaluation of finance resources strengths and weaknesses of current Leadership team CFO organisations resources Other finance resources (quality and members) Ensure CFO organisation fully Develop communication strategy understands vision and strategy Websites; email; town hall meetings; conference through calls; cascade management; blogs Monitoring and feedback mechanisms Ensure alignment of leadership team Set personal goals and objectives Align compensation and incentives Monitoring and feedback mechanisms 90 days
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
In spite of what the CFO or CEO may have heard, the auditors are there to help the business. So, make contact with them early on by asking them to prepare a briefing pack of upcoming changes in regulatory reporting requirements.
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
Risky business
All CFOs experienced enough to remember the pre-Enron days would agree that the rules about due diligence have changed and that risk and compliance increasingly demands their time.
Referee! The clever CFO will be aware that the issue of risk management is already built into the job. While the current trend might be for a separate risk management function, which might appease those wishing to see corporations hog-tied by watertight rules, the finance function is still the keeper of the risk register for most blue-chips. And this should mean that risk management is an integral part of business operations, not a box-ticking function in a separate office. Ask most investors and they will tell you that they dont need to know about every possible risk facing the company, from falling sales to product recalls, executive departures to hurricanes. They simply want to know that the CFO is flagging up to the board the real risks the business is currently running, with adequate controls in place to mitigate against them. Of course, every game needs a referee and your average CFO these days is serving a number of arbitrators. There is now an unprecedented range of regulators in the corporate world imposing their will on companies. There are now rulebooks covering corporate governance, pension liabilities, share schemes, audit and financial reporting, to name a few. So while the CFO may not know every last sub-clause in the laws of the game, it is his responsibility to ensure that someone on the team does. Knowing the drill But does this rules-driven approach benefit the companies labouring under the regulations? Most CFOs would say no. To many finance chiefs, the issue of compliance has become the biggest single headache they face. And that emphasises the need for two things: a well-drilled in-house finance team with the necessary technical expertise to cover the main risks; and a properly informed roster of professional advisors at the CFOs disposal, ready to tackle any compliance issue that may arise. There are many detailed aspects to most regulations, and for the CFO to understand them intimately simply isnt feasible. So the CFO needs to ensure that his advisors are fully aware of the issues the business faces in order to provide timely and accurate solutions to technical problems. With a strong defence behind him, the CFO can focus on leading the attack on the competition.
Its fair to say that the responsibility for risk management across a whole range of issues lies firmly with the CFO. This person is the safe pair of hands marshalling the companys defences against various corporate threats. And its not just financial issues. Consider what one FTSE100 CFO has to say on the subject: People need to realise that all these longterm risks can affect the business. Naturally, its hard to get off the moving train when its going well, but there are some long-term consequences and risks that you have to mitigate. And that might mean taking a short-term hit on profits in order to look long term and achieve proper results. That shows the true character of the company and how it conducts itself.
So, todays CFO needs to square the circle of instilling adequate controls and risk management measures, with allowing operational managers to spot and pursue opportunities. No CFO today can afford to ignore the letter of the law and the expectations of shareholders, analysts and investors on this issue.
No CFO today can afford to ignore the letter of the law and the expectations of shareholders, analysts and investors on this issue
Grappling with tax issues can make a significant difference to the bottom line. Around Day 60, ensure that the appropriate tax planning is in place and start to consider future tax planning strategies. The CEO will want to know what approach the business will take on tax matters and it may be worth communicating these issues to the board.
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
Modern regulation makes the proactive auditor worth their weight in gold. New CFOs should ask themselves whether their auditors are fully focused on spotting potential bumps in the road
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
As we have seen in the postEnron environment, when it comes to reporting, risk and compliance have emerged as key considerations for CFOs. In this area there are reporting and auditing processes in place (see page 18). But the compliance risks do not end beyond the filing of results. Today, compliance pervades almost every aspect of the business world from tax filings and financial covenants to data protection laws and health and safety measures. And its the role of the CFO to have an awareness of everything. Take tax, for example. CFOs need to ensure tax filings are being completed on time and that appropriate details are being provided. They also need to have a thorough awareness of any relevant exemptions. Tax breaks are available to businesses complying with certain strictures relating to things such as IT investment and energy usage. But to qualify
for these exemptions, you have to comply with the rules (see page 50 for more details about tax). Key questions Issues of compliance and risk will surround most of the financial arrangements a company has in place. There are several questions a CFO must answer in the first 30 days. What debts do you have? How are repayments organised? What happens if you fail to meet your obligations? Have any covenants been agreed with lenders? Borrow from a bank and youll almost certainly have covenants imposed upon your business. These might require you to maintain a particular degree of profitability or revenue generation, and you breach these agreements at your peril. Make an error with regard to covenant compliance and the lender will be able to re-dictate payment terms.
There are several questions a CFO must answer in the first 30 days. What debts do you have? How are repayments organised? Have any covenants been agreed with the lenders?
Its similar to making a player undertake a medical before signing him. Unearth a serious injury and you can call the deal off. But if the player has a less serious problem, there may an opportunity to restructure things.
The risks dont end with reporting figures correctly. CFOs and CEOs are increasingly expected to ensure that privacy, equal opportunities and health and safety policies are in place. The CFO should meet with the head of counsel to confirm that the business is adhering to these policies and to get the status of vital regulatory filings.
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
Like her previous job with news agency Reuters, Ann Firths current employer has a strong international dimension. But moving from the commercial to the voluntary sector has presented challenges. Corporate structures are usually well defined whereas here there is a more collaborative approach a company CEO can impose his or her authority but its different with an Non-governmental organisation (NGO), says Ann, 47, who joined Plan International, a worldwide child-centred development organisation in 2006 and is now Director of Finance. We also work more closely with grass roots staff who are in tune with the culture of their own country whereas companies do not have to adapt as much. Communication is very different. Plan uses three different languages. Some of its local branches have no internet and the office phone in Liberia, for instance, is a mobile. Seventeen fundraising operations around the world send money through to Plans head office where Ann has to ensure that it is managed and used to deliver programmes cost effectively. To achieve efficiencies and consistency, finance within this expenditure arm has been reorganised so that it is managed globally rather than by individual countries.
At the start it was really about devising longterm strategies for the function while doing basic business planning, she explains. I also wanted to hear the views, experience and recommendations of the staff. You get an opportunity to do this early on because people know that you have a certain level of ignorance and you havent been involved in previous issues. Its much more difficult later, when youre line managing them and are setting them targets. Targets are increasingly important as NGOs become more commercialised, competitive and professional, Ann explains. Another priority in a diverse, worldwide organisation has been to maintain a certain profile while doing this initial research. I wanted to ensure that the finance function was seen to be out there and taking a lead, says Ann. But she has learned to manage expectations. When people feed back problems, you want to be seen to be responsive and take these issues into the plan but you cant do it all. You want to be ambitious without over-promising. The job inevitably includes travel to visit offices around the world but here again there are differences compared to life in a corporation. We went on a family holiday to Guatemala recently, says the mother of four. Plan has a programme there and it was great to be able to show my children what were doing.
I wanted to ensure that the finance function was seen to be out there and taking a lead
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
60 days
Enterprise Risk Management (ERM) Ensure organisation has appropriate Ascertain responsibility for ERM and consider ERM practices in place, including whether this is appropriate Standard & Poors requirements Organise a briefing on ERM practices, gain an understanding of key risks and mitigating controls
90 days
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
Dont panic !!
The major difference between a thing that might go wrong and a thing that cannot possibly go wrong is that when a thing that cannot possibly go wrong goes wrong, it usually turns out to be impossible to get at or repair. Douglas Adams
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
As we have discussed, CFOs and their teams have come under growing pressure to contribute more value to the business at a more strategic level. But while this may be the case, a CFO neglects the less glamorous back office operations at their peril. The new CFO will look at operations and see what efficiencies can be made but limit the amount of personal time he or she needs to give to this task without compromising the quality of that operation. There are two ways a CFO can attempt to free up the time they need for more strategic activities. They can either invest more money internally to improve and streamline their operations or they can bring in an outside company to run the day-to-day, non-strategic part of their department. By your 90th day, you will want to make a clear assessment on the level of resources at hand to handle back office operations so that you can make a decision on what levels of investment to make.
Transaction processing The finance teams traditional role of transaction processing is one case in point. The first port of call for the CFO is to make sure the appropriate policies and procedures are in place, find out if there are any ongoing issues involving the payment of suppliers or getting paid by customers. Further on in the first 100 days, the CFO will want to meet with the head of accounting and establish what resources and level of skills are employed to meet this function. In addition, the CFO might compare against other industry benchmarks and leading practices. With a stronger grasp on how the business is faring and what lies in store for it in the future, the CFO will at this point also assess the extent to which the current system of transaction processing will meet the businesss needs in coming years.
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
Its essential to ensure that your business is receiving the highest quality products and services at the best possible price. But its just as important not to get bogged down in the details. When it comes to managing the supply chain, it pays to have a strong team in place.
The successful management of supply chains has never been more critical to organisational performance than it is today and that reflects a number of recent trends. First and foremost, businesses are becoming increasingly global. Even modest-sized firms can now boast a worldwide roster of suppliers, partners and customers. But dealing in overseas markets will always present unique challenges. Each country will, for example, have its own nuances with regard to the legal and financial regulations youre obliged to abide by and these may be very different to the practices youve grown used to in the UK. A major responsibility of the CFO is to ensure that his or her team is fully aware of, and prepared for, any differences that may emerge.
Outsourcing Globalisation aside, there have been other fundamental changes to what we perceive supply chains to be. Question most CFOs on this topic as recently as 10 years ago and, chances are, they would simply have recounted a list of organisations providing basic goods and utilities. As the naughties have advanced, times have changed. Outsourcing has risen exponentially. Today, supply chains are as much about services as they are about goods. In fact, its not unusual for companies to completely hand over responsibility for a particular business function such as HR, IT or even marketing to a third party.
The successful management of supply chain has never been more critical to organisational performance than it is today and that reflects a number of recent trends
When it comes to efficiency, by Day 90 the CFO and CEO should start looking at other businesses and compare their benchmarks and practices with their own business. Are yours the best ones for the company right now?
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
As soon as he had completed his training at KPMG London Alex Woodward left Britain for Spain and the firms Valencia office. I spent three years of my childhood on the island of Cyprus so I felt a strong attraction to the Mediterranean environment in Valencia the minute I walked off the plane, he recalls. Alex, 44, now lives in Barcelona with his Spanish wife and their four children. As Group Administration & Finance Director for Spanish group Abertis Airports, which runs Luton, Belfast and Cardiff airports in the UK. He works between Barcelona and Luton. Alexs Anglo-Spanish lifestyle is ideally suited to the challenges he has faced in his professional life since he arrived in February 2008 as Abertis had bought Cardiff-based airports group TBI plc less than four years previously. Theres still a lot of integration work to be done as the head office has been moved from Cardiff to Luton and now most of the senior positions are going to Barcelona where corporate Abertis is based, explains Alex. Its about getting to grips with two different approaches. The Spanish style is very direct English people might even mistakenly think it rude whereas in the UK people tend to be less naturally assertive. I was recruited because, having lived in Spain for 17 years, I can wear both hats.
The British approach to problem solving is more structured, Alex finds: Many Spanish tend to jump straight into the detail, so Ive frequently found myself saying: Stop and explain this to me from the beginning. I want the team to see the wood for the trees. As UK companies face an increasing number of acquisitions by foreign groups, he advises anyone in this situation to try to identify the management styles of their new teams or bosses and to be ready to work with them. Its not typical with Spanish companies to have an induction course, for instance, he says. You have to ask the right questions. Theres often no one to give you the global picture so you have to pick it out it from what youve learnt from different people. Currently Alex spends four days in Luton and the rest of the week in Barcelona. I made a positive decision when I first arrived to immerse myself in Spanish culture. I speak Spanish to my wife and friends, and only speak English to my children. This makes it possible to be able to change between Spanish and English mode at work whenever necessary.
You have to ask the right questions. Theres often no one to give you the global picture so you have to pick it out from what youve learnt from different people
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
Systems savvy
While the CFO is not required to go at the businesss IT equipment with a screwdriver and a pair of tweezers, ensuring that the companys systems are managed effectively has fallen under the CFOs responsibility.
One of the most significant areas of an organisation that CFOs are now finding themselves responsible for is IT, as CIOs and IT Directors increasingly begin to report directly the CFO. The data that these departments produce concerning sales, costs, margins and staff productivity are essential for financial management. Just as a football manager gets more observations about the teams performance and advice on improving it than he can necessarily handle for a CFO too much uncoordinated data can also be counterproductive. In order to manage and interpret this data and ensure that IT systems are working with optimal efficiency, CFOs often assume a CIO role and get involved in the operations of the IT department as it relates not only to Finance but to every other aspect of the organisation.
Constructing the game plan It is necessary for the CFO to meet with the IT department and establish what level of his input is required and assess whether adequate resources for the management of that team are in place. Furthermore, it is essential not to lose sight of the wood for the trees. In other words, the CFO must understand each function of the IT operation, while bearing in mind the overall picture and its contribution to the organisation. The architecture is every bit as important as the individual applications. This means that the bread and butter core transaction processing needs to work smoothly, of course, but the CFO needs to keep an eye to the future.
At a conference held by IT research specialists Gartner, 40 percent of attendees said that most traditional IT organisations will be closed down by 2012, as each department becomes an IT specialist in its own right. While changes in technology take place and IT functions migrate into individual departments, the CFO must adapt to meet the needs and working practices of their new environments. As the person with overall responsibility for this, they must be ahead of the game.
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
Q : How can you tell when a CFOs getting soft? When he actually listens to A: Marketing before saying no.
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
Assessing the performance of key players is as important for CFOs as it is for a football manager. So, the CFO needs to assume a major role in helping to drive operational performance. Meeting unit heads within the organisation in order to get their feedback on the quality of support that they are receiving from the Finance Department should be high on the list of priorities for any incoming CFO. He or she will need to assess whether key performance indicators (KPIs) and other management information are appropriate and timely. Establishing whether the quality of decision support provided and the level of involvement is adequate is another important task.
External benchmarking is a useful tool you may want to identify what other companies of a similar size and sector are using. Determining this will enable a CFO to see what practical measures are relevant. These methods might include activity-based management, value-based management which are aimed at growing the value of the organisation and its assets and balanced scorecards. These measure whether the various operational activities of the organisation are aligned with its overall objectives, vision and strategy.
Top tactics It may well be the case that all three of these methods, plus others, could be useful to the organisation. But identifying best practice here and then deciding what can be used within the CFOs own organisation is only half the story adapting these methods to that organisations own needs and then gaining buy-in from the staff that will implement them is also vital. Reviewing the basic structure of the organisation to ensure that it has the right decision support both in terms of reporting lines and properly trained specialist departments is also important. The CFO will need to consider whether Finance has the right skill sets and experience appropriate to senior decision support roles. Developing training programmes and encouraging staff to think beyond their traditional, purely financial roles, to focus on broader indicators and goals might also be part of the CFOs winning strategy.
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
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2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
When it comes to tax, an incoming CFOs chief priority will be to meet with the head of Tax and make sure that payment deadlines are met and that compliance is being suitably adhered to. It will also pay to check that the head of Tax is up to date on tax regulations and has any forthcoming changes to the law firmly on the radar. With Her Majestys Revenue & Customs (HMRC) involved in numerous test case battles with the European Court of Justice, there is a degree of flux and uncertainty in the UKs tax system, which could potentially cost UK businesses. Other demands on the CFOs time may preclude him from thinking too much about tax planning until later in the first 100 days. But effective tax planning can save a company significant amounts of money by mitigating its tax liabilities.
Strategic thinking As strategic planning comes to the foreground of the CFOs agenda, any new development in the business, such as a divestment of assets, staff incentive schemes or setting up an office overseas, may well come with an unexpected tax bill attached. This could affect cash flow and undermine the CFOs reputation for smooth financial management. Business processes throughout the company have implications for tax, ranging from purchasing to staff remuneration, so its essential that the CFO is aware of the policy and practice in all these different areas. Changes in these processes as well as a companys performance or structure may alter the tax liability. Therefore, anticipating and managing such changes is important to the financial performance of the company.
Later on in your first 100 days you may wish to raise tax as an issue on the boardroom agenda, as CFOs are increasingly called upon to communicate tax to fellow board members
Before you complete your first 100 days, make sure your team leaders are on board with your strategy. Establish personal goals and objectives and align these with compensation and incentives.
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
Indeed, you overlook strategic planning at your peril. Attempt to achieve too much too soon and the results can be near catastrophic. Within most organisations, the entire executive team has some responsibility for strategic planning. But, more often than not, its the CFO that has to fulfil the most difficult role. He or she has to strike a balance. On the one hand, the CFO has to deal with the businesss divisional heads, who will want to spend big to achieve optimum success as quickly as possible. On the other, theres the CEO and non-executive team who will demand to see tangible results for every penny invested. Reconciling these expectations is the real challenge.
During the CFOs first 100 days progress in strategic planning will become increasingly important. For many CEOs, a strategic business partnership with their CFO is what they want most from the relationship. However, when it comes to strategic planning, the early days are particularly vital in developing a complete picture of the processes and structures already in place and getting you to that stage where you are able to provide full strategic support to the executive team. As we have seen, the best starting point is to schedule in meetings with fellow
The whole point of strategic planning is to use your resources as effectively as possible. Keep an eye on your debt and equity levels and dont let the ratio between these two metrics exceed a level with which youre comfortable
Q: How do you create a small business? Manage a big one A: very badly.
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
60 days
90 days
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG net network work of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
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2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
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The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Disclaimer All gures were correct at the time when the publication went to print. Credits Main photography by Drew Gardner; proles photography by Johanna Ward.
2009 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member rm of the KPMG network of independent member rms afliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the United Kingdom. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Designed and produced by Wardour Publication number: 309-772 Publication date: April 2009
2010 KPMG LLP , a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.