Benchmarking finance teams crucial to business success: HLB Mann Judd Sydney

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Most businesses don’t focus on benchmarking the performance of their finance team, even though their performance can hold the key to future success of the business, says Tony Kabrovski, business advisory partner at HLB Mann Judd Sydney.

He says more managing directors, shareholders and key decision makers need to benchmark the performance of their finance teams, and put their function under a magnifying glass.

“It is no longer enough for the finance team to just ‘know the numbers’. Real scrutiny is required,’’ he says.

“The speed at which financial information is made available to owners and managers, and the rate that the information is available, is a key performance indicator and can have a marked impact on the decision making process.”

Citing the example of a poultry business he has been working with, he says the move to weekly financial reporting of accounts, from a monthly reporting system, boosted the ability of the business to make accurate stock decisions, and has improved the businesses bottom line.

“The poultry business is a fresh food business, and it is necessary to know how margins are tracking on almost a real time basis. When there is excess stock it is necessary to consider alternative strategies to offload that excess stock, without resorting to significant discounting.

“Since the business adopted a weekly reporting structure, it has had the information it needs to make these time sensitive decisions promptly.

“The business is able to focus on key drivers such as pricing, head count and stock delivery and make timely decisions.

“It is a matter of being more responsive to market demand. If the business sees the price of poultry going up that week, it needs to increase production. Weekly reporting has made this possible.”

He says there are three key issues to consider, when evaluating the effectiveness of the finance team. Does it:

  • Produce forward thinking financial information to enable proactive decision making
  • Identify the key business drivers and measures that matter to the overall success of the business
  • Demonstrate and communicate to management the capabilities and capacity of the finance team

“A strong and effective finance team is the cornerstone of a successful business,” Mr Kabrovski says.

“Many business owners haven’t articulated their expectations of their finance teams, or questioned the information that is made available, and the time frame that the information is provided in.

“Steve March, the chair of Balfour Beatty, had it right, when he said ‘the two most compelling attributes of a finance director, are nothing to do with numbers – they are an absolute fascination with the wealth creation process and an extremely high emotional intelligence’ – they are attributes that more CEOs and shareholders should be demanding of their finance team,” Mr Kabrovski concludes.

HLB Mann Judd Sydney is a firm of accountants and business and financial advisers, and a member of the HLB Mann Judd Australasian Association.

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For more information please contact:

Tony Kabrovski – Phone: 02 9020 4109

26 March 2014