Every finance director faces similar challenges, these include:
1. Producing reporting packs efficiently and on time
2. Managing costs across the business
3. Controlling other departments’ budgets
Every Finance Director has the responsibility of providing the company’s statutory reporting. They also need to be able to compile monthly, quarterly and annual reports quickly and accurately. Given this is such an important part of their job, it makes sense to give them the tools to do this as efficiently and quickly as possible. Automating as much of this regular workload as possible makes compiling quick, easy and reproducible. It also releases the FD to work on improving other areas of the business which add real value to the operation.
Given Finance Directors are responsible for costs and cost control, they are more data and metric-driven than any others in the business. They track sales, operational and marketing costs closely to make sure they are getting the right activity for the expenditure they are being asked to approve. They need to use tools to track costs and to control the rate that expenditure is made, department by department. In part, this is cashflow management and the MD will be watching this very closely.
Controlling other departments’ budgets
Central to an FDs’ job is the control of costs, especially high spending departments’ costs. Some costs are predictable – staff costs, for example – but significant one-off costs are especially important to monitor and approve. Recruitment of new staff typically requires financial approval. Intelligent purchase of raw materials can significantly increase margin as buying at the right time saves money and achieves better terms.
Every commercial business ultimately measures success in terms of net income. Without the cushion of positive net income, businesses cannot exist in the long term. It is the role of the FD to ensure that their department and others run efficiently to minimise costs and help maintain a positive net income for the business to operate.
Additionally, with the systems of today taking care of the day to day accounting function, there is the expectation on Finance Directors’ role to provide more to the business. They may well be expected to contribute to strategy, as well as controlling, reporting and budgeting.
A good Managing Director will use their Finance Director to evaluate and comment on business options – like delivering greater efficiency through an ERP system – and to raise additional capital when required.
One of the big advantages of using an ERP system like SAP Business One is the greater efficiency it delivers across the whole business. The Finance Director knows he can quickly quantify all aspects of the business. For example, making monthly reporting packs and being able to close periods that much quicker and easier.
But there are other important aspects of working from a single, integrated database. Not only is speed and flexibility increased, there is the added benefit that business implications can be realised much quicker. Purchasing raw materials can be done at more advantageous times, for example. From an income perspective, an integrated system means that sales (both forecasts and actual sales) show up in the system immediately so the business always has an up to date financial position to work from.
An important element in having total control of a business is the control that SAP Business One can give a Finance Director. Having a high level view of the business allows them to make decisions in light of all possible factors, not just those they currently have close to hand.
