A modern CFO will often be on a similar pay-scale to the CEO (although often reduced equity)
They will be driving strategy, raising money and talking up the value, explain performance to shareholders and banks, negotiate possible acquisitions etc
In some ways they have as much or more to add for the shareholders as the CEO, which can lead to tension between CEO and finance
The Controller therefore has to take on the Operational Finance Director role. Some or a large part of this team may be outsourced as has a “standardised accounting process”. The significance of this role is not always rewarded by Finance Director equity as does not report to CEO.
Both could be seen as CEO and CFO in waiting.
Typical CFO organizational structure CFO Corp Development IR and Strategy Group Controller Finance & Planning Legal Tax and Treasury Invoicing Control and Transaction processing Planning Projects (systems Implementation etc)
Invoicing => Often companies provide non standard terms and conditions as a rule rather than exception. This is difficult to manage in most billing systems.
Monthly management reporting => Group Finance and Planning. Finance is assessed by the quality and speed of its management reports. Often issues with significant offline reporting in excel including Consolidation.
Collection of outstanding receivables => Group Finance. Cash is king.
… need the people because there will always be conflicting time consuming projects needing Control input
Complex legal entity, tax structure, transfer pricing, VAT compliance,
System implementations (including BI and Workflow) –”help” from IT
Shared service, preferred supplier lists, payment terms, ”business” language
Audit (including internal and interim)
Recruitment and stabilisation
Due diligence – centralised contracts, key management/
Strong documentation, procedures, policies, support for G/L
Rationalise chart of accounts, sensible account structures
Effective internal communication – number of meetings, email usage
Rationalise and Group management of all entity bank accounts
Balance of team Cost reports Expense claims Supplier payments Budgets, forecasts Mgt team Board reports Group Analysis CEO/CFO/Shareholders Local compliance Statutory audit Local needs Too small for office Manager and accountant Language issues Group or Shared Service Local Joint ventures Financial Analysis
Lack of integrated systems Changes in cost centres or revenue lines of business through restructuring causes significant re-work New acquisitions or disposals Time consuming lengthy budgeting/ re- forecasting and audit process Not enough thought in budget or actual process to match budget vs actual – defined rules Invoicing process very manual Payroll process not sufficient detail to analyse by employee Lack of integrated banking to trace receipts/ payments Help, finance is sinking IT department does not want to help
Shared Service Team prepares the journal entries for prepayments, expense provisions and revenue accruals, based on the data provided by Control team.
Once journal entry booked into the finance system, the Control team verifies the same and posts.
Inter Company entries will be updated by Shared Service team, based on the invoices received from other entities ONLY in reported currency. The same will be reconciled and will follow up with other entities for the differences.
Once Trial Balance finalized for the month, Shared Service team will prepare the Reporting Package in Group format and send to Control for approval.