Controller’s Handbookwritten by Krish Srinivasan         June 2011
About the AuthorKrishnamachari (Krish) Srinivasan is a Commerce graduate, aqualified Chartered Accountant and a Cost Accoun...
PrefaceDuring my career, while moving up the ranks to become a CFO,I always had this desire to put down my ideas, suggesti...
To my parents,         and in particular my Dad,        my mentors and colleagues,           and my wife and sons.Thank yo...
Contents     I. Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7   II. Respo...
XI. Crisis Prevention and Management . . . . . . . . . . 38   XII. Supporting Other Functions. . . . . . . . . . . . . . ....
I                       RoleIt is important at the outset to define the role of a con-troller in todays corporate world. Lo...
I. Role                          Controller’s Handbookcompany along with the CEO/Unit Head. He mustlook to facilitate busi...
I. Role                         Controller’s Handbooklimiting themselves to pure number crunching andbook keeping in many ...
II          ResponsibilitiesWhile the controller plays an active and participa-tive role in running the business, his resp...
II. Responsibilities            Controller’s Handbookthe areas where primary responsibility rests with thecontroller. In a...
II. Responsibilities            Controller’s HandbookHis responsibility also extends to ensuring that theactual capital sp...
III                  AttitudeIt is important that the Controller nurture a posi-tive orientation to the business while mai...
III. Attitude                   Controller’s Handbookwell. Critical review of the processes is required toprevent financial...
IV              LeadershipA controller is expected to lead from the front, whenit comes to professionalism, ethics and adh...
IV. Leadership                   Controller’s Handbookmay be encouraged to innovate and own initiativeswhile the latter, t...
V    Conflict ManagementIn every company functional conflicts are inevitable.This is caused by the individual view points an...
V. Conflict Management            Controller’s Handbookas possible with a business view point.For example, air lifting of r...
V. Conflict Management           Controller’s Handbookto explain the reasons for the disagreement insteadof holding persona...
V. Conflict Management        Controller’s Handbooksure that material issues are documented properlyand instructed his team...
VI  Functional Key StringsThe controller must at all times be completely focusedon the key elements of business: Sales, ma...
VI. Functional Key Strings      Controller’s Handbookproducts, business group and sales mix by countryneed to be understoo...
VI. Functional Key Strings     Controller’s Handbookevaluating credit risks for new customers.Fixed assets and capital exp...
VII      Team Building and         ManagementThe success of any organization or a leader dependson the team. As the saying...
VII. Team Building              Controller’s HandbookHence it is important that the Controller builds a goodteam with qual...
VII. Team Building              Controller’s Handbookthe management. Normally staff can be at four levels,e.g. Tell, Sell, ...
VII. Team Building              Controller’s Handbookallow them to contribute their own. Discuss witheach employee to help...
VIII              TechnologyToday’s world is filled with gadgets and software. Therole of a Finance professional has change...
VIII. Technology                Controller’s Handbooklike Sales accounting, inventory, purchases, financialaccounting, prod...
VIII. Technology              Controller’s Handbookinformation with input from your product knowledge.In countries like In...
IX
IX. Tax & Cross-Border          Controller’s Handbook            Tax Laws and            Cross-Border            Transacti...
IX. Tax & Cross-Border           Controller’s HandbookIt is advisable to review all the transactions withrelated companies...
X  Commercial Awareness   and Business SenseControllers are expected to have a good knowledge ofcommercial law and be able...
X. Business Sense                 Controller’s Handbooktion. It is important for long term arrangements to beproperly docu...
X. Business Sense               Controller’s Handbookpletely vetted by their legal support and so it is theresponsibility ...
X. Business Sense            Controller’s Handbookbusiness decisions, closer attention to key dimen-sions of implementatio...
XI    Crisis Prevention and        ManagementAvoiding a crisis is of course the best way in everyfunction. However, the Co...
XI. Crisis Prevention            Controller’s Handbookcrisis can happen in any area, the best way to avoidit is by regular...
XI. Crisis Prevention           Controller’s Handbookthe problem. Maintain your calm and ensure proper& complete analysis ...
XII        Supporting Other           FunctionsThe role of a Controller does not stop with Financefunction alone in the cu...
XII. Support                    Controller’s Handbookwith the heads of other functions like production,purchase, marketing...
XII. Support                    Controller’s HandbookThe more the controller spends time with people fromother functions l...
XIII                   ControlIt is a known fact that the Controller is the consciencekeeper of the stake holders and is e...
XIII. Control                   Controller’s Handbookneeds to have immaculate credibility and track record.Hence a Control...
XIII. Control                   Controller’s Handbook    Wherever, the Controller suspects something illog-ical, he must p...
XIV            Do’s & Dont’sA Finance Controller has to maintain a clean trackrecord and maintain high integrity. No emplo...
XIV. Do’s & Dont’s               Controller’s Handbookconstant scrutiny and we have to live up to what wesay. The Controll...
XIV. Do’s & Dont’s              Controller’s HandbookWith each email communication you can build or spoilyour image. Hence...
XV    Financial ProjectionsAs the Finance Manager/Finance Controller you willbe involved in preparing some financial projec...
XV. Financial Projections        Controller’s Handbookinformation is shareable (as generally approved bythe management) an...
XV. Financial Projections      Controller’s Handbookthe recipient and discuss with your functional headbefore sending it t...
XVI            Management            ExpectationsManagement everywhere is always looking for 100% in-tegrity and commitmen...
XVI. Management Expectations    Controller’s Handbooksensitive aspects of the business. The managementwill expect the Fina...
XVI. Management Expectations   Controller’s HandbookYou are what you project yourself as. People rec-ognize brilliance and...
XVII       Time ManagementAs you might have observed from the above para-graphs, a Finance Manager/Controller is expected ...
XVII. Time Management            Controller’s Handbookskill is very important to juggle with all these expecta-tions and w...
XVII. Time Management           Controller’s Handbookvendor invoices daily as and when received, reviewwork constantly wit...
XVIII            Relationship            ManagementWe all have seen that every organization has grownbecause of nurturing ...
XVIII. Relationship Management   Controller’s Handbookgeneral public. As a Finance Controller, we also needto learn the ar...
XVIII. Relationship Management   Controller’s Handbookpath to a majority of their colleagues. Kindly remem-ber that as the...
XIX          Career PlanningEach one of us is interested to grow and expect thecompany to recognize our performance & cont...
XIX. Career Planning            Controller’s Handbookfunctions to play a key role in the growth of the orga-nization. We h...
XIX. Career Planning           Controller’s Handbooksome introspection (a SWOT) and plan your careermoves by yourself. Ask...
XX         Fitness & Stress           ManagementOur role in an organization is that of a support func-tion and it is purel...
XX. Stress                       Controller’s Handbookissues – obesity, back aches, eye related problems,headaches and man...
XXI             ConclusionThe views expressed in this document are based onmy personal experience and I hope you’ve benefit...
Controller’s Handbookcorporate executive. Success is defined differentlyby each of us; in my opinion, you are successful ify...
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A Controllers Handbook

  1. 1. Controller’s Handbookwritten by Krish Srinivasan June 2011
  2. 2. About the AuthorKrishnamachari (Krish) Srinivasan is a Commerce graduate, aqualified Chartered Accountant and a Cost Accountant from India.He has worked in various organizations like SAIL, Xerox, Greaves,Stahl group, & Bilcare and has over 28 years of corporate experience.He has held positions at the CFO VP Finance levels for the past14 years in the Specialty Chemicals and Pharmaceutical packagingindustries, in India, Gulf & Singapore. Currently he is the Directorand Head of Biz Consulting division at Global 9 Resources PteLtd, Singapore. Global 9 provides CFO-level expertise in sourcingbanking facilities, MIS structuring, Strategic Financial Planning,Working Capital and Cash flow review system, profit improvementreviews, turn around strategies among other services like payrollprocessing, accounting, secretarial services, personal and corporatetax support etc. The firm aims to leverage Krish’s rich wealth ofknowledge and experience to help SMEs & budding entrepreneursbuild a professional and profitable organization.
  3. 3. PrefaceDuring my career, while moving up the ranks to become a CFO,I always had this desire to put down my ideas, suggestions, best-practices and thoughts into a, so others may benefit from myexperience. In the hustle and bustle of corporate world, I noticednot many have the time or patience to train young Controllers.The ambitious learn through trial and error, while others seekassistance from coaches and consultants who in most cases do nothave the first hand knowledge of having moved up from being aController to the top. This led me to write this handbook throughwhich I hope to ease the stress of having to figure things out your-self and make the whole experience a lot more enriching.Please keep in mind that whatever I have stated below is frommy own personal experiences and may or may not be immediatelyapplicable to your situation. So adapt the message as you see fitand stay abreast of latest trends in the practice. Note: The maleform HE has been used throughout this book purely for convenience.The content is applicable to both men and women alike.
  4. 4. To my parents, and in particular my Dad, my mentors and colleagues, and my wife and sons.Thank you for your support through my career.
  5. 5. Contents I. Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 II. Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 III. Attitude . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 IV. Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 V. Conflict Management . . . . . . . . . . . . . . . . . . . . . . . . . 17 VI. Functional Key Strings . . . . . . . . . . . . . . . . . . . . . . . 21 VII. Team Building and Management . . . . . . . . . . . . . . 24VIII. Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 IX. Tax Laws and Cross-Border Transactions . . 32 X. Commercial Awareness and Business Sense . 34
  6. 6. XI. Crisis Prevention and Management . . . . . . . . . . 38 XII. Supporting Other Functions. . . . . . . . . . . . . . . . . . 41 XIII. Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 XIV. Do’s & Dont’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 XV. Financial Projections . . . . . . . . . . . . . . . . . . . . . . . . 50 XVI. Management Expectations. . . . . . . . . . . . . . . . . . . . 53XVII. Time Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56XVIII. Relationship Management . . . . . . . . . . . . . . . . . . . . 59 XIX. Career Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 XX. Fitness & Stress Management . . . . . . . . . . . . . . . . 65 XXI. Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
  7. 7. I RoleIt is important at the outset to define the role of a con-troller in todays corporate world. Long gone are thedays where he was expected to be a mere book keeper.The role has evolved to that of a business manager,participating in the day to day management of the
  8. 8. I. Role Controller’s Handbookcompany along with the CEO/Unit Head. He mustlook to facilitate business growth rather than justbeing a spoke in the wheel. As an enabler, he mustbalance between aggressive business strategies andcorporate governance. Thus the role of a Controllerhas changed from transaction processing to decisionsupport. He has to be the business conscience of thecompany and help to grow corporate values.The controller must take responsibilities in, (a) con-trolling and reporting and (b) strategic planning anddecision support. With respect to the former, he hasto adopt a systematic, organized and structured ap-proach to ensure that controlling and reporting arequalitative and consistent with the policies of thecompany and reporting standards. As for the latter,wearing the strategic hat, he has to evolve ideas, par-ticipate in business meetings, sales & logistics reviewsand facilitate market development.Today’s fast changing world demands a controllerpossess acute knowledge about the business, marketsituation, competitors, products & services, and re-sourcing.You may have observed Finance Controllers
  9. 9. I. Role Controller’s Handbooklimiting themselves to pure number crunching andbook keeping in many companies; while this maypartly be due to the company’s culture, the main rea-son ought to be how the Finance Controller draws theboundaries of his role. You are what you project your-self to be. By redefining your role to that of a maturedbusiness manager, you change how people perceiveyou and your job scope . This benefits your employerbut more importantly helps accelerate your careeras well. Like Einstein said, a mind that has beenstretched will never return to its original dimension!
  10. 10. II ResponsibilitiesWhile the controller plays an active and participa-tive role in running the business, his responsibilitieskeep growing in today’s complex business situations.Financial Accounting, Management Accounting, Tax-ation, Secretarial, Legal and Treasury are some of
  11. 11. II. Responsibilities Controller’s Handbookthe areas where primary responsibility rests with thecontroller. In addition, he has to ensure that financialaccounting is strictly in accordance with the locallaws/accounting standards and is accurate throughappropriate reconciliations. He is also responsible fordrafting the chart of accounts, policies and proceduresfor business processes, developing control systems tomonitor day-to-day transactions, developing systemsto monitor & manage exceptions, recruiting qualified& competent staff, developing control mechanisms toadhere to corporate governance standards such asthe Sarbanes-Oxley (SOX) act etc.A controller is also responsible for preparing budgetswhich include a well structured sales budget by prod-uct, region and business group, an operations budgetto meet with the sales budget to ensure smooth anduninterrupted supplies and a cash flow budget. Hethen must summarise them in a financial documentto show the budgeted profits by division and countryto cover a rolling 3 year period. This would allow himto estimate the capital required to grow the businessand evaluate the alternatives for financial viabilitybefore presenting the same to the Board for approval.
  12. 12. II. Responsibilities Controller’s HandbookHis responsibility also extends to ensuring that theactual capital spending is within the approved budgetand monitor cost/time overruns.He is also expected to make sure that the company’scash flow for short, medium and long terms are suffi-ciently arranged through bank loans or other financialproducts. If the company has a separate CorporateTreasury department the Controller may work closelywith them to make sure that the business is fundedproperly to meet the budget/financial plans. He isalso directly responsible for preparing managementaccounts/reports and reviewing the same by com-paring the actual with those of budgeted numbers.He has to drive a systematically run Sales & Opera-tions review for financial planning every month for arolling 24 month period and identify the decisions tobe taken by the senior management team to enablethe company to achieve their long term plans in aproactive manner. Financial planning, funding, taxplanning, cost management and control are other keyresponsibilities of the Controller. All audit, tax andlegal matters have to be carefully handled to ensurethat the laws of the land are complied with.
  13. 13. III AttitudeIt is important that the Controller nurture a posi-tive orientation to the business while maintainingfinancial stability and enforcing control mechanisms.Making sure the latter is kept up to date and the staffare well trained on the subject is of importance as
  14. 14. III. Attitude Controller’s Handbookwell. Critical review of the processes is required toprevent financial incidents by willful offenders. Wherecontrols inhibit a timely response to market, a logicalvia-media solution needs to be found.In the event of a process lapse, evaluate the reasonsand make sure concerned persons receive additionaltraining to fill knowledge gaps. Avoid personal re-marks at all costs. An environment that encouragespeople to be honest and highlight issues upfront needsto be fostered. For instance, finance team membersmust refrain from opinionated remarks on abnormalclaims while reviewing expense claims. Instead suchissues may be confidentially highlighted to the em-ployee’s superior who can evaluate the situation be-fore deciding on whether it can be approved. If timepermits, sensitive issues need to be handled by theController himself. Being the conscience keeper of thecompany, the Controller has to be on top of all ethi-cal matters, maintain personal integrity, and monitor& control integrity issues working with HR and thefunctional managers.
  15. 15. IV LeadershipA controller is expected to lead from the front, whenit comes to professionalism, ethics and adherenceto best-practices. Based on the company situation,he has to alternate between transformative and con-trolling styles of leadership. Under the former, staff
  16. 16. IV. Leadership Controller’s Handbookmay be encouraged to innovate and own initiativeswhile the latter, to be adopted in more trying times, isneeded in project management situations to achievetough deadlines and targets.The focus may be on working smart as against work-ing hard. Staff need to be encouraged to ask questionsand duly recognized for good deliveries. Private discus-sions can be had with under-performing staff to helpthem overcome impediments to their performance.Encourage a “NO SURPRISE” culture by asking peo-ple to share good and bad news boldly upfront. Bean impartial leader, treating all staff equally and ontheir merits. This in turn will earn you their respectand help avoid personality conflicts within the team.Be proactive in resolving conflicts amongst staff andpromote an environment of mutual respect. Lead yourteam by demonstrating how to make improvementsat work by simplifying the work process, by automa-tion and by eliminating unwanted or duplicate controlmeasures.
  17. 17. V Conflict ManagementIn every company functional conflicts are inevitable.This is caused by the individual view points and per-spectives of the respective functions on the samesubject or transaction. However, for the benefit of theorganization the conflict needs to be resolved as soon
  18. 18. V. Conflict Management Controller’s Handbookas possible with a business view point.For example, air lifting of raw material is a restrictedtransaction in most organizations. However, in or-der to service a specific customer order or to meeta supply-chain emergency, import of raw materialsby air may be necessary. Instead of getting hungup on the topic, the concerned department heads –say Finance and Supply Chain heads can analyzethe cause and make sure that symptoms pointingto systemic errors are attended to in order to avoidrepeating the mistake. In order to get the businessgoing, they need to listen to each others view pointand once convinced proceed to release the order forimport of raw material by air. Steps need to be takento ensure such conflicts are only exceptional and donot become a regular feature. This is possible if andonly if the respective functional heads look into fix-ing the root cause of the problem and make sure thatthe customer ultimate gets the finished goods on time.There are times when on the basis of good corpo-rate principles one of the functions may not agreewith the other. What is important in this scenario is
  19. 19. V. Conflict Management Controller’s Handbookto explain the reasons for the disagreement insteadof holding personal grievances against each other.Please note that it is better to resolve conflicts faceto face than exchanging emails/over a phone call un-less geographically the two persons are located apart.Email exchanges in such a situation may be avoidedas the tone can be misread and the real substancemay not explained properly when an argument begins.Always trust your colleague unless you have reasonsto believe otherwise.I will share one such event which I experienced. One ofthe operations head was willing to sign off for writing-off certain quantity of a key component as the systemwas showing that stock was available but physicallynot traceable. As the value was high and also be-cause enough effort had not been taken to reconcilethe stock, I temporarily allowed for fresh issue ofmaterial without write-off for finding out the real prob-lem. Upon investigation, it was found that as scrapaccounting was not properly done the system wasshowing availability of stock which stopped furtherissue of material. This was explained to the opera-tions head who understood the importance of making
  20. 20. V. Conflict Management Controller’s Handbooksure that material issues are documented properlyand instructed his team accordingly.
  21. 21. VI Functional Key StringsThe controller must at all times be completely focusedon the key elements of business: Sales, margins, costs,profits, taxes and cash. Key reports on sales by coun-try, product group, and month need to be reviewedregularly alongside budgeted numbers. Margins by
  22. 22. VI. Functional Key Strings Controller’s Handbookproducts, business group and sales mix by countryneed to be understood with variances analysed. Costsmust be controlled at the point of expenditure andstaff may be instructed to highlight any abnormal& unbudgeted expenditure before they are incurred.Costs need to be analysed by cost centre for bettercontrol. Taxation rules whether direct or indirect haveto be well understood for compliance and better taxplanning. It is important to be abreast of all changesin local tax laws and international taxation.Owners and stakeholders look for EBITDA, net profitand cash. Much focus is required on working capitalmanagement – viz inventory control, collection of re-ceivables and managing payables. Working capital isone single large area where the Controller can play avery vital role in ensuring that company’s funds arenot blocked too much in inventory and receivables.Even the best managed companies constantly chal-lenge their inventory turns and credit managementprocesses to improve their bottom line. Regular in-teraction with marketing is required to know aboutbusiness trends with large customers and also dis-cuss credit exposures for large accounts as along for
  23. 23. VI. Functional Key Strings Controller’s Handbookevaluating credit risks for new customers.Fixed assets and capital expenditure control may bereviewed each time any capital expenditure is made.A proper Capital Expenditure approval process andprocedure may be established to make sure that thecompany evaluates the project from cash, profitabilityand business growth angles. A good controller is ex-pected to be thorough with the financial informationof the company pertaining to the past, present andfuture in comparison with budgets/projections.
  24. 24. VII Team Building and ManagementThe success of any organization or a leader dependson the team. As the saying goes, “The strength ofa chain is only as much as that of its weakest link”.
  25. 25. VII. Team Building Controller’s HandbookHence it is important that the Controller builds a goodteam with qualified, competent, positive-thinking andenthusiastic staff. It requires a lot of effort managesuch a bubbling team and care may be taken to en-courage questioning, idea generation, accountabilityand creative thinking. People may be empowered andallowed to experiment with ideas. Failures may beseen as lessons and it shall be shown at all timesthat that the buck stops with the leader. This putsadditional responsibility on the individual staff to bemore cautious but still keep innovating. Every em-ployee has a different mode of expression and hasvarying capabilities. Comparisons need to be avoidedbut good work can be appreciated in front of otherstaff. Employees have different motivation triggersand most people look for recognition in the form ofappreciation. Monetary rewards may be given onlyfor exemplary performance to make sure they earnit. It is important for every controller and managerto spend time with each staff reviewing his/her workon a monthly basis. Firstly, this will foster betterrelations with the team member, and secondly, thestaff gets feedback on a regular basis to help improvehis/her performance in line with the expectations of
  26. 26. VII. Team Building Controller’s Handbookthe management. Normally staff can be at four levels,e.g. Tell, Sell, Consult or Delegate. 1. Tell: The employee has to be given clear instruc- tions to “Tell” the Manager when faced with an issue 2. Sell: “Sell ideas and alternatives” to the em- ployee to solve his issues by himself 3. Consult: The employee has reached a stage wherein you are able to consult him for solutions to your issues 4. Delegate: The employee is now able to manage issues for you. Have a personal target to move each employee onelevel up at a time and contribute to his/her growthin the corporate ladder. Constructive criticism is finewith an open mind for ideas. Staff need be givenjob rotation at least once in 3 years to improve theirknowledge and competencies. While every care hasto be taken to retain good competent staff, do notfret when they leave for better growth opportunitieselsewhere. Set key objectives for each employee and
  27. 27. VII. Team Building Controller’s Handbookallow them to contribute their own. Discuss witheach employee to help align their individual functionalobjectives with the company’s overall objectives.
  28. 28. VIII TechnologyToday’s world is filled with gadgets and software. Therole of a Finance professional has changed largelyfrom a book keeper to a business manager on accountof the numerous integrated ERP software in the mar-ket which takes care of most entire business functions
  29. 29. VIII. Technology Controller’s Handbooklike Sales accounting, inventory, purchases, financialaccounting, production etc.The success of a Controller depends on how much techsavvy he or she is and how update is his knowledgeon business management related technology. Theuse of Microsoft products like Excel, Word and PowerPoint have become so important, it will be difficultto achieve efficiency without these products of tech-nology. The Controller need to develop skills to beable to use gadgets like computers, net works, videoconferencing gadgets, black berry, Iphones etc to max-imize performance in his role. These are only tools toachieve excellence in our work and cannot substituteour functional competence & skills.Automating processes help the controller in ensur-ing that internal controls are in place, transactionsare consistently & accurately recorded and above allgives the edge to analyse the data in a dynamic envi-ronment. Apart from the software that is being usedin the company, a good understanding of the producttechnology is very important for making an impressivepitch with the bankers who can relate the financial
  30. 30. VIII. Technology Controller’s Handbookinformation with input from your product knowledge.In countries like India where excise duties are de-pendent on the nature and category of the product,product knowledge is a must to make sure that wetake advantage of the concessions given by law forspecific products.
  31. 31. IX
  32. 32. IX. Tax & Cross-Border Controller’s Handbook Tax Laws and Cross-Border TransactionsAs a Controller one need to be fairly conversant withboth local and international tax laws particularlythose regarding related party transactions, transferpricing and maintaining arms length dealings. Thisarea is very vital as tax authorities in most countriesmeticulously look at related party transactions and PE(Permanent Establishment) issues. The Controller hasto be very cautious about PE issues as it would meana big blow to the company’s bottom line if the cross-border transactions are not properly documented andhandled in a professional way. It is best recommendedto consult experts in this field who will be able to usedata -base engines like PROWESS to compare therelated party compensation arrangements with thoseof similar transactions of unrelated parties.
  33. 33. IX. Tax & Cross-Border Controller’s HandbookIt is advisable to review all the transactions withrelated companies every quarter as to whether thetransactions are in line with the agreed terms as perprofessionally validated documents. The Controller isalso expected to keep himself updated with the locallaw changes by attending seminars and reading rel-evant journals periodically. Operations departmentneed to be informed to check with the Controller onthe implications of all changes to the way related partytransactions are handled. This will ensure that alltransfer pricing regulations are followed in spirit andthe impact of changes in product, business processare taken care of.
  34. 34. X Commercial Awareness and Business SenseControllers are expected to have a good knowledge ofcommercial law and be able to advise the company onthe obligations and rights on each business transac-
  35. 35. X. Business Sense Controller’s Handbooktion. It is important for long term arrangements to beproperly documented with a proper agreement detail-ing the scope, terms and conditions of the commercialtransaction. Purchase/service contracts, confidential-ity agreements, guarantees, rental agreements, non-compete agreements, sub-contract, capital purchaseand erection contracts, labour contracts etc are someof the key commercial agreements signed by manyorganizations.Though the controller may not be expected to draftthese agreements, he would be expected to review thesame before they are signed by the CEO/Unit Head.It is therefore important for the Controller to be com-pletely familiar with the underlying contract, reviewthe key clauses of scope, obligations and duties, makesure that the clauses are mutual and fair, providesexit and arbitration clauses and last but not the leasta validity clause if the contract is for a specific period.The controller may necessarily consult a specialistfor all major contracts and lead the meeting with thecontracting party to make amendments wherever nec-essary. Please note that contracts provided by thesuppliers or service providers would have been com-
  36. 36. X. Business Sense Controller’s Handbookpletely vetted by their legal support and so it is theresponsibility for the Controller to make sure that thecompany’s interests are protected.Please remember the standard phrases - “let the buyerbeware” and “ignorance of law is no excuse”. Whenin doubt consult the specialists. Similarly, every con-troller must have complete business sense essentialfor his success as a professional. The following abili-ties are necessary to be on top of your job with com-plete business sense: 1. Excellent knowledge of the product, market share, competition, technology, market expecta- tions for a new/modified product etc. 2. The potential business risks and identified risk mitigation strategies are in place 3. Are clear and firm in their decisions and com- pletely focused in their tasks 4. Will not hesitate to make suitable modifications along the way to their plans Thus, developing stronger business acumen meansa more thoughtful analysis, clearer logic underlying
  37. 37. X. Business Sense Controller’s Handbookbusiness decisions, closer attention to key dimen-sions of implementation and operation, and moredisciplined performance management.
  38. 38. XI Crisis Prevention and ManagementAvoiding a crisis is of course the best way in everyfunction. However, the Controller must be fully com-petent to manage a crisis after it has landed. While a
  39. 39. XI. Crisis Prevention Controller’s Handbookcrisis can happen in any area, the best way to avoidit is by regular & systematic review of business oper-ations, risks and proper financial planning. Preparea checklist of important key areas that need to beunder control at all times and fix a schedule for re-viewing them with the concerned person in your team.Wherever senior management is involved, fix up ascheduled meeting, send agenda points and share thefinancial information and actions required to achievethe budgeted numbers. Develop a culture to have aNO SURPRISE culture within the organization. Thismeans that you need to share with your team andthe management of any important findings that theyneed to know. Blowing the whistle unnecessarily willonly cause panic and also lead to people not believingyour words. However, when you are in doubt, pleaseshare the topic with the concerned and state that theoutcome is not conclusive. Please remember to keepthem posted of the final outcome. This will ensurethat the concerned colleague is aware of what is hap-pening around in their areas. Management may beparticularly informed of financial implications of anycrisis & a Controller is expected to play a positive rolein solving problems and totally avoid being part of
  40. 40. XI. Crisis Prevention Controller’s Handbookthe problem. Maintain your calm and ensure proper& complete analysis of the issue on hand. Once thecrisis is handled to the complete satisfaction of theconcerned, take necessary steps across the companyto ensure that the risk factors are well monitored foreffective control.
  41. 41. XII Supporting Other FunctionsThe role of a Controller does not stop with Financefunction alone in the current days of competition. Itis therefore important for the Controller to interact
  42. 42. XII. Support Controller’s Handbookwith the heads of other functions like production,purchase, marketing, maintenance etc to know theirviews relating to costs, efficiency and sensitivities ofbusiness. The Finance Controller must necessarilyvisit the shop floor regularly to know about the prod-ucts that are being manufactured, production process,productivity, material accounting, and efficiencies ofbusiness. This will help in first getting a proper un-derstanding of the company’s business nuances andalso help in identifying areas of cost reduction. TheController may give a helping hand to other functionsand interact in such a way to offer help and solicitthe support of the other functions in cost reduction,waste elimination and improving other operationaleffectiveness.The Controller has to be able to understand and evalu-ate the functions from an internal control angle whileat the same time be an enabler to smoothen the busi-ness process. Efficiency cannot remove controls butat the same time controls shall not be an impedimentto the business process. There needs to be a goodbalance between the two and the Controller has toplay a vital role in this review process.
  43. 43. XII. Support Controller’s HandbookThe more the controller spends time with people fromother functions like marketing, Supply chain, pro-duction etc, to have an in-depth understanding oftheir processes. This will help for internal controlreviews, process improvements, and compliance mat-ters. Colleagues from these functions will be happyto cooperate with you as you have a complete under-standing of their difficulties to solve inter-functionalissues.
  44. 44. XIII ControlIt is a known fact that the Controller is the consciencekeeper of the stake holders and is expected to monitorthe business processes from a Corporate Governanceangle. The expectations of the public, stake holdersand the owners from a Controller is that he or she
  45. 45. XIII. Control Controller’s Handbookneeds to have immaculate credibility and track record.Hence a Controller can at no point of his career affordto be lax in his conscience keeper role. Apart fromthe expectations, laws have been enacted to punishand even imprison the defaulting Controllers whosedereliction of job causes the owners, stake holdersand the Govt to lose money.In order to have better control, the Controller needsto have a thorough knowledge of business, businessprocesses and have a good foresight into the future ofthe company. His eyes, ears and antenna need to bealways receptive to important information and effortsshall be taken immediately to fix control weaknesses.The Controller need to regularly review internal con-trols either on his own or with the help of internalauditors for taking prompt & necessary action. WithinFinance function, regular review of the reports is amust along with review meeting with the individualswithin the organization.
  46. 46. XIII. Control Controller’s Handbook Wherever, the Controller suspects something illog-ical, he must probe into the subject deeply to convincethat things are in order.
  47. 47. XIV Do’s & Dont’sA Finance Controller has to maintain a clean trackrecord and maintain high integrity. No employer willbe keen to have a tainted person particularly as the Fi-nance Manager/Controller. As we are the consciencekeepers of organizations, our activities will be under
  48. 48. XIV. Do’s & Dont’s Controller’s Handbookconstant scrutiny and we have to live up to what wesay. The Controller will be expected to be impartialand objective both within and outside of the depart-ment. Please follow the principle to criticize ideas andnot the persons. Always provide your feedback in apositive manner and build your revised suggestionaround the original. Please remember to give creditto the originator to make sure that your points arewell taken in an objective manner. Be friends with thefunctional heads and reach out to them when theyneed help in resolving issues.As you will have all the confidential info about thecompany, maintain high level of secrecy and be dis-creet with your sharing of key information. Maintaingood relations with bankers, auditors and consultantson a professional count and maintain a distance. Befree with your team members but always rememberthat will look at you as their role model in the com-pany and so be cautious about what you say & do.As you will be handling lots of confidential and busi-ness critical documents, please keep your desk andcomputer organized to ensure safety of the documents.
  49. 49. XIV. Do’s & Dont’s Controller’s HandbookWith each email communication you can build or spoilyour image. Hence be very objective in your writingand DO NOT write emails when you are in an aggres-sive mood and upset with some of the happeningsin the company. Even if you have to communicate,please keep the HOT MAIL in the draft box and reviewafter an hour or two before you press the send button.Write emails in simple language and make sure thatthe person receiving the mail sees the “subject” andnot pushed to be defensive.
  50. 50. XV Financial ProjectionsAs the Finance Manager/Finance Controller you willbe involved in preparing some financial projections forthe bankers and on a monthly basis the Latest Viewof the current financial year to the management. Inboth the scenarios, you need to maintain the financial
  51. 51. XV. Financial Projections Controller’s Handbookinformation is shareable (as generally approved bythe management) and also please make sure that youdiscuss with your functional head first before yousend to the Unit Head or the Business Group Head.Always follow a NO SURPRISE culture and share theinfo in advance with your functional head so that hecan take appropriate action and also share with theunit head as may be necessary.The financial projections shall reflect the current busi-ness trend and the strategic business plans of theorganization. While making the projections, pleasewrite down all the assumptions, validate them with theconcerned functional heads and get their concurrenceon the numbers & underlying facts. A well docu-mented financial plan, particularly the annual budgetwill help in proper analysis of the actual business per-formance vs the budget at all controllable areas andprovide risk mitigation strategies for non-controllableareas. Notes on fixed cost assumptions will makethe relevant functional heads to manage costs betterwithin budget and assumptions on sales by regionwill help manage the market risks. Always spendtime to review your numbers from the view point of
  52. 52. XV. Financial Projections Controller’s Handbookthe recipient and discuss with your functional headbefore sending it to others in a presentable format.
  53. 53. XVI Management ExpectationsManagement everywhere is always looking for 100% in-tegrity and commitment from the Finance Controller,especially owing to the role, as it involves cash &
  54. 54. XVI. Management Expectations Controller’s Handbooksensitive aspects of the business. The managementwill expect the Finance Manager/Controller to be com-pletely hands-on, and in full command of the financialnumbers. As the management always will first reflecttheir business plans with the Finance Controller toknow the financial impact, it is naturally expectedof the Controller to be completely proactive in histhought process.Keep yourself abreast of all the compliance require-ments for the business and always be upfront if youare not sure but quickly revert to the managementupon getting the right inputs. The management wouldalso like to have a sensitivity analysis both financialand otherwise of the different options. Good knowl-edge of MS Excel and Power point presentation willbe required to summarize the discussion so that awell considered management decision can be taken.Finance function is the hub of all activities in thecompany and therefore the Controller need to havegood knowledge of the Finance related areas includingcommercial laws, knowledge of our product, knowl-edge of the business plans & proposals, good IT skillsand communication capabilities.
  55. 55. XVI. Management Expectations Controller’s HandbookYou are what you project yourself as. People rec-ognize brilliance and brilliance will be rewarded. Bepatient and you will get the management attention.
  56. 56. XVII Time ManagementAs you might have observed from the above para-graphs, a Finance Manager/Controller is expected tobe handling plenty of areas across the business func-tions both knowledge wise and be able to do thingshands-on where required. Hence Time Management
  57. 57. XVII. Time Management Controller’s Handbookskill is very important to juggle with all these expecta-tions and within the given time. Prioritizing work is ofutmost importance within Time Management.Delegation of work is also very important to get thingsdone as planned and need to be timely apart frombeing accurate. It is highly recommended that youspare some time to save time by attending a trainingprogram on time management. It is a well known factthat Finance department staff in each company burnmidnight oil each year for annual accounts closingand even for month end reporting. I feel this can bevery well avoided provided we manage time duringthe day, week, month and year. First is to plan andset a target of what we want to do. List down theactivities, whether it is for month end reporting orannual closing work. Prepare a time table workingbackwards from the target date. Then you will knowwhen to start each activity so that we achieve ourtarget date even if some unplanned activity comes up.Identify critical activities and gear up your team towork in their respective areas to do things daily likefor example – update customer collections daily inthe ERP system, file papers then and there, update
  58. 58. XVII. Time Management Controller’s Handbookvendor invoices daily as and when received, reviewwork constantly with a view to clear bottlenecks andimprove smoother flow of work. As the head of financedepartment help your team members to achieve theirtime plan by talking to purchase, marketing, produc-tion and other functions from whom the papers andinformation flow into finance.Similarly talk to banks to get info on transactions ona daily basis so that you can manage your collections,payments and cash much better. Have frequent meet-ings with your team to discuss issues and help clearthem asap. Have daily, weekly, monthly and quarterlyinfo updated in your data bank or MIS reports. WorkSMART than working HARD. Most important, havethe habit of getting back home like your colleaguesin Marketing, Production, Purchase and HR. A goodwork-life balance is important for being effective andefficient.
  59. 59. XVIII Relationship ManagementWe all have seen that every organization has grownbecause of nurturing “Relationship “ with investors,bankers, customers, vendors, employees and all the
  60. 60. XVIII. Relationship Management Controller’s Handbookgeneral public. As a Finance Controller, we also needto learn the art of developing and growing the Rela-tionship. Many Controllers spend lots of time in theircabin churning reports, crunching numbers and writ-ing emails to all others. Though this may be part oftheir job, they have to understand that others inside& outside the organization are also human beings.Please walk up to the various departments (includingyour own Finance department) to spend time withthem to understand their pains, issues & view point.Most of the organizational issues can be solved bytaking those few steps out of our cabin to meet peo-ple, going for lunch with other department heads orcolleagues, keep smiling, and most important listento what others say. If we have the habit of going tothe other departments only to argue or fight out anissue, then people will avoid talking to you. So pleasedo not do that. Go and meet people when there areno issues and help resolve their issues if you can.Promise something which you can handle and deliveron time.Great CFOs are made by small gestures in their career
  61. 61. XVIII. Relationship Management Controller’s Handbookpath to a majority of their colleagues. Kindly remem-ber that as the Controller you may be having lots ofconfidential information and so be very discrete whiletalking about those sensitive topics. Employees andcolleagues go that extra mile for anyone who strikes achord with them and so focus on Relationship Man-agement. My request to you is please do not start withthe result in mind while building relationship. Trust isa very key factor in Relationship and if that is brokenthen it takes long time to rebuild it. A Controller main-taining good Relationship with bankers is very key tothe company as apart from the strong financials of thecompany it is many a times the Controller who hasearned the trust of the bankers over a period of timeis able to get the bankers’ nod in time for funding andat the most cost effective terms. Similar is the need toearn that trust & respect from regulatory authoritiesby maintaining good compliance track record.
  62. 62. XIX Career PlanningEach one of us is interested to grow and expect thecompany to recognize our performance & contribu-tion. During the early years in a company at all levelswe have to take initiative to not only manage our re-spective functional roles but also be helpful to other
  63. 63. XIX. Career Planning Controller’s Handbookfunctions to play a key role in the growth of the orga-nization. We have to do our career planning to worktowards a goal to grow into the next position in thecompany.In large organizations there can be lots of peers atthe same level competing for a position that may fallvacant. As only one person can be chosen for that po-sition, the person with good knowledge demonstratedthrough his work, and also is very pleasant to workwith will get his chance against others who may alsobe equally deserving. Please do not take it to yourheart and suffer within yourself. You have to openlydiscuss with your superior to find out how you couldhave qualified for that position and take the feed backin your stride. It is very easy to say this but as anambitious person, very difficult to accept. We havetwo choices here, one is to stay back without grudgingand the second is to move on gracefully to anotherorganization.I am not suggesting that you become complacentand stay put accepting things as it is, but would liketo say that you chalk out what you want to do. Do
  64. 64. XIX. Career Planning Controller’s Handbooksome introspection (a SWOT) and plan your careermoves by yourself. Ask the question, what I want todo three to five years down the line. Write down whatyou need to do to achieve that and make it happen.As the saying goes, ‘Plan your work” and “Work yourplan”. People who spend long years in one companytend to have a comfort zone and are reluctant to takenew challenges outside of the organization. New orga-nizations will help you learn different work cultures,approaches to business and your ability to adapt tonew environment. You can meet new colleagues, expe-rience challenging tasks and more importantly couldlearn to look at things from a different perspective.
  65. 65. XX Fitness & Stress ManagementOur role in an organization is that of a support func-tion and it is purely a desk job. With long hoursin front of the computer, we tend to develop health
  66. 66. XX. Stress Controller’s Handbookissues – obesity, back aches, eye related problems,headaches and many more. As a Controller, there is alikelihood of excessive stress, and this just builds up,leaving people with ill health at the age of 35 thesedays. Hence physical fitness plays a very vital role inour life.Break the monotony by exercising in the morning,play an active sport like soccer or table tennis andyou will be surprised to find it helps manage bothphysical fitness and stress. Make physical activitiesa routine and you will look forward to weekends andwill be seen smiling your way to work each day. Ourfamilies reflect will also reflect this mood.Any person under excessive stress and with poorphysical activity tends to be negative, less optimisticand generally not preferred as company by colleagues.A healthy body has a healthy mind and a healthymind brews positive thoughts which can spread andbenefit others around you. Stay fit and add value toothers.
  67. 67. XXI ConclusionThe views expressed in this document are based onmy personal experience and I hope you’ve benefitedfrom it. Kindly adapt the points mentioned here tosuit your needs. I wish you the best in becoming agreat Controller and more importantly a successful
  68. 68. Controller’s Handbookcorporate executive. Success is defined differentlyby each of us; in my opinion, you are successful ifyou have been able to add value to the organisationyou work for and your colleagues by sharing yourknowledge. Monetary gains and designation are usedas measures of success by some, but these are con-stantly in flux and do not reflect your true value. Iwould appreciate your constructive feedback on thishandbook. I also invite you to visit our company’swebsite regularly for such documents. I am sure manyof you have similar ideas and the ability to spreadyour knowledge. Please do pen your thoughts downand share it with the world.Best regards.Krish

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