In some of our recent articles, we’ve looked at the very specific challenges that finance teams are dealing with on a daily basis. With clients of all sizes and in all sectors, throughout Europe, South America and Australia, we recently began to compile a list of the top ten broader, more generic problems that our clients are facing.
Regardless of company size or location, the results were remarkable only in their consistency. There was some difference in the weight, or priority attributed to each, but overall, the same problems were cited.
This is by no means a scientific survey, so, we thought we would share the results with you to see if you agree.
1. Budgetary Constraints
The majority of businesses today feel that they are facing fierce competition in their efforts to maintain or increase their market share. When this is compounded by reduced funding, the finance teams are under pressure to be even more strategic in determining what investments are to be made. They are also encountering an increased expectation that they will identify efficiencies and opportunities to ensure the continued competitiveness of the business.
CENTRIXE provides a powerful solution for the most complex budgeting and forecasting applications. CENTRIXE allows you to develop top-down and bottom-up budgets, forecasts and strategic plans, drill down to see the underlying information and generate reports. As standard inbuilt functionality, CENTRIXE includes scenario modelling, which allows the finance team to get answers to questions which directly affect profitability and competitiveness.
2. Finance as a Strategic Partner
A set of new challenges is presented by this transition away from the traditional role of finance as the collectors and keepers of company financial information to key business partners, tasked with providing internal and external information and expertise to support the management decision-making process. While finance teams welcome this more strategic role, they are challenged to maintain existing levels of service and ensure compliance with regulatory requirements.
CENTRIXE is multi-dimensional software providing complete financial functionality for consolidations, budgeting and management reporting. It can easily combine information from multiple sources and provides all the benefits of rapid reporting. By dramatically improving the turnaround time for reports and greatly improving accuracy and reliability, finance leaders are now free to focus on strategic initiatives that will bring direct benefits to their business.
3. Changing Regulatory Requirements
A changing regulatory environment can have an impact on finance teams both directly and indirectly. Not only must finance ensure compliance with changing financial reporting standards (often both domestically and internationally) but they are also frequently involved in responding to other regulatory demands. This can involve anything from extremely complicated carbon tax and trading emissions exchanges to analysing the cost of compliance with local environmental legislation.
CENTRIXE’s integrated reporting and analysis functions provide the ability to combine data from numerous sources into one. CENTRIXE integrates financial and non-financial data from any area of the business in an easy-to-use and familiar Excel interface, and can hold multiple versions and types of data, including restatements of historic data.
4. Technology
The pace of technological change is exponential. While technological advances can bring obvious advantages, they can also present increased financial risk. It is difficult for even the most tech savvy to stay informed about trends, pricing and emerging technologies, but making a decision as to what technologies should be adopted and prioritising investment could result in losing a competitive advantage. This situation is even more sensitive when it comes to investment in the back office, because operational needs are frequently seen as mission critical and are given priority.
Any investment in financial management software should be considered carefully. Scalability and true flexibility are essential to ensure that users can easily make changes to report formats and incorporate new reporting requirements without involving IT. CENTRIXE’s solutions allow users to adapt and respond to changing local requirements and eliminate the risk of duplication when data is taken from multiple sources. The cost and time savings resulting from automation of these processes provide a strong business case for investment in back office software.
5. Data overload
Closely tied to the technology issue is data overload. Depending on the levels of technology deployed across the business, decision makers are overwhelmed by the vast quantities of incoming data, giving rise to the expression “too much data, not enough information.” This data is often extracted from disparate sources and presented in different formats. For the finance team, this results in increased demand for analysis, stretching already thin resources even further.
CENTRIXE’s predictive modelling capacity allows finance teams to develop unlimited “what if” scenarios, facilitating the forecasting process and providing a basis for additional analysis. CENTRIXE’s business dashboards give you more control over your business and decision-making process by providing fast, relevant and reliable information to your management team. With on-time business insight, you can drive substantial performance management and gain a competitive advantage through increased responsiveness to rapidly changing conditions.
6. Inventory Capacity and Output
Because of uncertainty in demand, companies are tending to carry smaller inventories. However, supply chain disruptions and fluctuating commodity prices make supply chain and logistics planning very difficult. The challenge here is to maintain an adequate stock level to enable responsiveness to customer demand, but without incurring additional costs for transportation and storage.
Accurate forecasting and demand planning saves businesses time and money and ensures the company is able to respond effectively to customer and market demand. But to do this well, information from multiple data sources must be integrated and validated. CENTRIXE provides you with sophisticated technology to address data integration and validation and link your operational activities to your business strategy.
7. Recruitment and Retention
Given the demands on most finance teams to meet filing requirements and ad hoc reporting requests, coupled with budgetary restraints, it’s not surprising that many struggle with recruiting and retaining high calibre finance professionals. Well-qualified, motivated individuals are in high demand, and as a result can be very mobile. The challenge is to provide an environment that strikes a balance between challenge, incentive and recognition.
With CENTRIXE, there are almost immediate and obvious benefits of using an automated solution for financial management. Because the process is significantly less time-consuming, finance professionals are given more time to delve into analytics and broaden their perspective from that of report producer to business partner and strategist. For many, this expanded role can be very rewarding, as it brings additional professional development opportunities. CENTRIXE liberates finance teams from the constant pressure of checking and validating data, eliminating duplicate versions of data and scrambling to meet deadlines.
8. Reactive v. Strategic culture
Building on the need to recruit and retain high calibre professionals, finance teams often bear the brunt of reactionary management, responding to whichever fire needs to be put out most immediately. This fire-fighting response detracts from the many other demands and requirements placed on the finance team, and inhibits longer-term planning, analysis and resource allocation.
CENTRIXE gives decision-makers timely, accurate and actionable information in a preferred format, greatly reducing pressure on the finance teams to produce multiple ad hoc reports. When an ad hoc report is needed over and above the regular reports, this is easily accommodated by CENTRIXE, because of its ease of use and flexibility. This frees members of the finance team to engage in more value-added activity such as forecasting and strategic planning.
9. Globalisation
Globalisation is a common theme that underpins many of the problems already raised. Complex regulatory and reporting regimes are often made even more challenging with currency conversions and consolidations at different levels of the business. Problems 1 – 8 above are all heightened in a global environment where understanding foreign cultures, buying habits and competitive analysis are all essential to success in a foreign market.
CENTRIXE provides automated currency conversions with exchange difference capture. CENTRIXE also provides legal and management consolidation, preparing all major standards (including UK an US GAAP, FRS 102 and IAS) from one source. CENTRIXE can be used to consolidate, based on a legal structure, geographic or industry structure. And if CENTRIXE’s Inter Company Balancing module is being used, the consolidation process can take care of all eliminations at both intra and inter-group levels.
10. A climate of uncertainty
Uncertainty can take many forms – from political change to upturns and downturns in the economy, from the price of a barrel of oil to industry (de)regulation. Managing and forecasting during a period of uncertainty places an added strain on finance teams. Many businesses will continue to rely on cost-control measures and efficiencies to maintain profitability, some will become risk-averse and many will refuse to engage in long-term planning, believing that a short-term focus is dictated by rapidly changing circumstances.
CENTRIXE’s forecasting software allows you to forecast and reforecast, based on integrated and validated data, giving you instant access to information to make modifications easily as conditions change. This reforecasting can be formalised into a rolling forecast process – forecasting within a defined time span, perhaps 12, 18 or 24 months. As each reporting period is closed the forecast is updated with the latest actual results and rolled forward by one period. Information obtained from each closed period is incorporated into the next forecast, giving decision-makers timely insight into cash flow, revenues and expenditures, and the ability to make mid-course adjustments to maintain profitability. Everyone involved in the forecasting process can see comprehensive, updated information and make informed decisions, based on reliable information, reflecting changes in your business environment.