Hot Topics for CFOs and Controllers
The responsibilities and challenges facing CFOs and controllers are continually mounting. Today's roundtable allowed attendees to address what was on their minds. Topics for possible discussion included:
- Cash management
- Cost cutting
- Time saving techniques
- Benchmarking
- Outsourcing
- Downsizing
- HR issues
- Vendor/customer relations
- Financial dashboards
Outsourcing
What resources have you found to be helpful overseas?
It was suggested the first step would be the Detroit Regional Chamber of Commerce. They have an import/export group that can walk you through the process and are very helpful. Another attendee thought overseas companies typically have good relationships with the American Chamber of Commerce, and they may be useful. The U.S. Department of Commerce, Automation Alley, and Oakland, Wayne, and surrounding counties have also developed resources to assist in outsourcing. Trade associations that support specific industries should also be consulted.
Is outsourcing worth it with the current value of the dollar and exchange rates?
Through traditional outsourcing arrangements, less money is being made than in the recent past. One attendee suggested "hedging contracts," and noted there are multiple facets to explore in this area. Examples could be looking ahead at the length of the contract and building adjustments in to the contract, or breaking down contracts into components and hedging only a portion. The key to hedging successfully is to find the right banking partner. Another attendee recommended identifying other considerations, such as letters of credit and financing, so there are no surprises in the end. In closing discussion on the topic of outsourcing, another attendee suggested looking at currency devaluation as an exporting opportunity for U.S. exports to Canada or Europe.
Success Stories
Roundtable moderators, Tim Hilligoss of Clayton & McKervey, P.C. and Mike LaLonde of Expense Reduction Analysis, asked for CFO/controllers success stories on any of the opening topics.
Success Story #1:
Manufacturer has success by restructuring their workforce
With 50 people on the plant floor, overtime was identified as a problem. With the help of an outside consultant, studies were conducted on labor hours, the running time of machinery, and overtime. The recommendation was to reschedule the work shifts to a four-day work week and run the machinery 24 hours per day to optimize equipment usage. The impact to the bottom line was tremendous. However, the work force was used to earning about 25 percent of their income through overtime hours. To balance the reduction in pay, raises were given for the first time in four years and employees also receive bonus checks, based on profitability at the end of each month.
Beyond profitability, this manufacturer sees other benefits:
- Going into international markets, they are now prepared to compete profitably
- Sales people have been challenged to discontinue business with non-profitable customers and spend more time and quality effort with profitable clients
Success Story #2:
Service provider builds success by evaluating job descriptions
Over the last two years, a group of management internally assessed staff and determined who had a "customer face" and who had technical skills. (Note – most of this company's staff had been there long enough to accurately assess track records.) The management team found in many instances the individuals' strengths did not fit their job responsibilities. Most everyone in the company saw their job descriptions slightly modified, dramatically changed, or they were let go. While resistance was strong at first, best practices in change management were employed. With time, staff realized they were happier. The bottom line was significantly improved and the company is now at an all new level of profitability.
Success Story #3:
Engineering firm succeeds with dashboard controls
With a relatively new controller on board, the ownership group of this engineering firm adopted the use of a financial dashboard to focus on profit drivers, sales pipeline, and other metrics. Whereas this data was not previously available, the owners can now better make swift and accurate decisions. Another attendee commented that the key to succeeding with dashboard controls is to not "drown in data" and choose key indicators, communicate them in a strong visual manner, and make sure they are used on a regular basis.
Several other attendees support using dashboards and suggested looking at the software being used to see if a solution is available. Microsoft, Great Plains, and other vendors may offer packages to customize the dashboard per employee and have data available for employees when they sign on their computer every morning. Some software packages offer a business portal where the data is customized by employee, using real-time data with links to charts, graphs, and other data. Important considerations that make dashboard reports a successful tool is a visual presentation with some type of traffic light indicator that shows what is OK and what needs attention. Buy-in on what measurables are important to track, and what the range is for acceptable/unacceptable amounts, and accountability.
Doing Business in Canada
The final area of discussion was Doing Business in Canada. A challenge attendees pointed out related to employees going in and out of Canada. With the devalued dollar, and higher security, border crossings are under much more scrutiny. To address this, attendees suggested carrying the right paperwork, such as a letter from the customer explaining the work being performed, or a purchase order. Terminology used in paperwork can also make a difference. One attendee pointed out the benefit of using the word "supervise" versus" produces." Other border crossing issues identified by attendees were withholding tax waivers, work permits, and the difficulty in obtaining H1B visas. The consensus was clear, Canada as well as our neighboring states, are looking for lost revenue and the issue of working abroad is going to become more prevalent for more companies.
