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BighamConsulting's blog: Why CFO's should have their heads in the Cloud. - Views ( 159682 ) -article by: BighamConsulting

BighamConsultings' BLOG ( 18 articles!)

Why CFO's should have their heads in the Cloud. - Views ( 553 )
Why CFO's should have their heads in the Cloud.

Why CFO's should have their heads in the Cloud.

Author: BighamConsulting , Last Modified, 2021-01-19 03:13:17

Category: business Keywords: Why-your-CFO-should-have-Online-Accounting-or-Cloud-reporting

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Why CFO's should have their heads in the Cloud.

Why CFO's should have their heads in the Cloud.

It's all about perspective which in turn breads insight..

The above data visualisation, one of my old favourites was featured in the board pack of a property management company I support. The Charts, produced in MS Excel, double up as both a nice snapshot of the ledgers and a Heat Map highlighting problematic areas for cash collection.

Cash collection of course is typical of just one issue affecting many organisations and the 80 / 20 Pareto Rule usually applies. 20% of your ledger accounts probably cause 80% of your cash flow issues, and so it is the 80% that pay on time who generally finance those that do not.

We all know that Cash Flow is the life blood of all small and medium sized businesses and so we are lucky that modern cloud based data visualisation technologies offer CFO's and Business Owners data driven actionable insights into not only your debtors ledger but if implemented properly your entire organisations performance, what we management consultants call enterprise performance.

Growth Companies are at Particular Risk

The Sales Ledger is the basic data source for preparing effective cash flow reports and cash flow forecast models. I have worked with many companies that lacked insight into their current and future cash positions and consequently struggled to meet liabilities as they fell due.

Ironically the more successful a business becomes and the faster it grows in the early stages, particularly when adding new credit customers, the more likely it is to over trade. Funding expanding operations to meet growing customer orders requires sufficient working capital and the measurement of creditor or Cash Out Flow headroom!

Tuthfully implementing intelligent buisness intelligence finance reporting solutions is never straight forward but typically require CFO's or owners to maintain financial control using some sort of Finance and Performance Reporting system. A good F&PM solution captures both the financial and non financial data necessary to manage and stay on top of a healthy working capital position.

Time to Lower the Cost of Capital

It for example it would be easy for a property company manager to issue new sales invoices, in an attempt to cover up or mask an underlying cash collection problem. Data visualisations can make the issue of ageing accumulating debtor balances more transparent. This requires managers to move away from opaque inadequate reporting and control systems.

It is also a causal factor creating a need to raise short term debt or enter sub-optimal debt agreements for short term funding. Putting the business on the back foot when it comes to negotiating banking terms serves to accentuate the debt burden and increase the real risk of insolvency.

Luckily today we have access to technologies that are in many cases low cost to acquire and operate. Finance and Reporting Implementations can be configured relatively quickly compared to the legacy systems of yesteryear but be aware that cheap off the shelf packages are rarely the best solution as one size rarely fits all.

When to Bring in the Consultants

If this is so, it might also be useful for the business to utilise the services of a CFO Agenda consultant. So called Finance and Performance Management consultants are experts in designing Finance and Performance Management (F&PM) solutions tailored to your organisations unique reporting requirements.

Thankfully gone are the days where a power-point report needed to be produced every time the CFO wanted to check the financial or operating position of a business. This was slow, repetitive and costly. Such a manual process typically required reinventing the wheel each time a report was consumed. CFO's must move on.

I recall one particularly impressive Finance meeting at Accenture, the room full of quite senior finance people, reviewing operating performance. The presentation, on oracle E-Financials Suite, was simultaneously broadcast and delivered to multiple locations, forecast updates being made live in real time.

This sparked my interest in developing finance tools for the cloud. Cloud based secure reporting systems that CFO's or entire teams could access from anywhere at any time made sense to me, this was the future. The only trouble was the cost of Accenture style reporting solutions could be prohibitive for SME organisations.

Today it is possible to implement sophisticated collaboration tools to facilitate teamwork in real time, internationally. Collaboration systems typically incorporate the best of modern social networking technologies and include features we are all used to, such as messaging and status communications.

The system below incorporates a reporting interface built in HTML5 and CSS3, modern browser friendly technologies and completely mobile responsive, wrapped in a bootstrap like framework. Data interchange is based on AJAX and PHP. Data modelling is achieved using MySQL. All powerful opensource technologies.


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