Given the competitive challenges facing companies, the Finance function must exceed its regulatory remit and undergo a transformation in order to assist senior management in the strategic financial and operational management of the company. The aim is to maximize cash flow and the profitability of capital employed, to advance towards the target of profitable growth.
The volatility of the financial and commodities markets, combined with shrinking operational margins, is reducing companies' investment capacity. This means shareholders now expect a higher return on risk for situations of normal volatility.
Accordingly, the Finance function must expand its remit, beyond its control tasks, in two main areas:
- Assisting the management in the execution of strategic plans
- Working more closely with operational teams, with the aim of influencing value-creation levers
Chief Financial Officers (CFOs) face six key strategical challenges:
- How should the strategic plan be rolled out in terms of finance?
- How can CFOs position themselves as major players in the transformation and the creation of value?
- How can good investment decisions be made and their performance tracked throughout their life cycle, to optimize the return on capital employed?
- How should the right management framework be defined, to optimize the company’s financial performance?
- Are the right mechanisms in place to identify operational risks in time, value them correctly, and deal with them quickly?
- How can information be controlled, to ensure the exhaustiveness and accuracy of the financial indicators for value creation?
When seeking out a sustainable competitive advantage, the operational challenges are:
- Securing and improving direct margins
- Increasing financial and operational forecasting capacity
- Controlling operating costs
- Speeding up free cash-flow generation
How can Argon Consulting help you?
- Executing the strategic plan, which includes defining the key-value creation indicators for suppliers, cascading them to operations, and managing the transformation
- Managing the investment cycle, which involves defining the methodology for measuring the expected creation of value, the discount rates used, and the stages of performance measurement throughout its life cycle
- Managing the company’s financial performance
- Managing balance sheet risk (operational risks impacting the financial balance sheet), through the definition and implementation of analysis tools
- Performing an Operational Control diagnostic and defining a vision that responds to the expectations of decision-makers and the Finance Department (organization, skills, processes, systems)
- Revising reporting to simplify and optimize it: diagnostic of existing reporting and recommendations (elimination or creation of reports, potential synergies between functions, automation)
- Developing and implementing an operational performance management system, including management processes, and operational and financial indicators (this system will be developed in collaboration with the Finance and Operations Departments)
- Identifying cash flow maximization levers, by analyzing the end-to-end processes of Order-to-Cash, Procurement-to-Pay, and Invest-to-Cash