Finance teams contribute to company’s performance and overall results in 2 major ways;
1) act as a business partner to other teams and provide valuable insights in company’s revenue, cost, and efficiency drivers
2) organize finance agenda by contribution merit:
Accounts payable
Key activities:
Processing incoming invoices from vendors. Preparing outgoing payments.
Opportunities:
Negotiate better price and payments terms with vendors. Save payroll cost by automation.
North star metric:
capital cost of outsanding payables
Other metrics:
average days payable, % oustanding payables of total expenses
Accounts receivable
Key activities:
Issue invoices and collect outstanding amounts
Opportunities:
Price in better credit terms. Incentivise prepayments and early payments. Manage credit risk.
North star metric:
capital cost of outstanding receivables
Other metrics:
Days sales outstanding. Bad debt as % of revenue.
FP&A
Key activities:
Analyze and identify trends, cost & revenue drivers. Prepare forecasts and financial scenarios.
Opportunities:
Improve forecasting accuracy. Identify bottlenecks in company’s performance.
North star metric:
Forecast variance
Other metrics:
Actual / Budget variance
Tax
Key activities:
Tax compliance, planning, tax burden reduction.
Opportunities:
Find and execute tax optimisation strategies
North star metric:
Effective tax rate
Treasury
Key actitivies:
Secure cash flow by liquidity planning and pooling. Manage cost of capital. Secure necessary currency volumes and manage FX risk.
Opportunities:
Improve capital utilization by cash pooling automation and accurate forecasting of cash requirements.
North star metric:
Profit trom treasury activities