Business Management

Managing the assets and liabilities of a business is a key management function. In order to be effective, financial controls must be understood throughout the business and identify increasing risk before it becomes business critical. Breaches of financial controls can be made in error or by deliberate act.

Typical Issues

• No documentation of commitment and authority levels resulting in poor visibility regarding who can take action and at what scale
• Excessive purchase of stock
• Proliferation of suppliers due to poor supplier authorization process
• Customer payment default due to poor collection cycle
• Inaccurate management information presenting wrong view of business performance
• Duplicate payments
• Unprocessed supplier invoices
• Failure to account for business transactions accurately
• Poor payroll controls – starters / leavers / overtime authorization

How We Can Help

We can review all business activity that impacts financial processes, or a more specific area of focus – for example working capital management. We will determine who believes they have authority to act, and agree a commitment and authority matrix that is appropriate for the business. Segregation of duties can be reviewed to ensure that end to end transactions are not controlled by too few individuals – for example one person sets up new suppliers, processes and pays invoices. We can review management information, to ensure that it is accurately presenting business performance and is properly reflective of source data.

Relevant Experience of the Team

Setting up finance shared service centre, ensuring clear identification of responsibilities and appropriate reporting to monitor individual performance.

Review of all financial transactions, and design of commitments and authorities matrix to suit.

Internal audit reviews of management information – reconciling financial ledgers to management information and reviewing accuracy of ledgers.

Review of supply chain processes to ensure ordering commitments soundly based in order to maintain balance between customer service levels and working capital.

Understanding business performance accurately and promptly is key to making sound decisions. All too often, businesses get caught between having information that is too highly summarized, or too detailed – both ways failing to focus on the key performance drivers.

Furthermore, management information is typically historically focused – informing on what has happened, rather than indicating what is likely to happen unless decisions are proactively made to change course.

Typical Issues

• Management accounts consist of profit and loss account, balance sheet and cashflow statement with no cashflow forecast
• Key performance indicators are backward looking – for example service level, but these do not identify the need to change course earlier
• No detailed functional reporting in relation to commercial or operations
• Slow speed of preparation – management accounts available 2 weeks after month end

How We Can Help

• Review the management accounts preparation and identify the bottlenecks in the process. Understand what really drives the business, and develop a balance scorecard of “lead” and “lag” indicators – for example movements in stock cover can provide early warning that there is a looming service level issue.
• Implement cashflow forecast model that is reported against weekly, and provides true forward visibility of potential pinch points.
• Build a business specific suite of reports that can be issued to relevant stakeholders, daily, weekly or monthly.

Relevant Experience of the Team

Redesign of management accounts packs to focus on the key drivers of business performance.

Development of business specific balance scorecards.

Development of cashflow forecasts looking 12 months ahead, including sensitizing in relation to a range of performance.

Restructuring management meetings to ensure that management information is driving action and not just providing a historic commentary.

Businesses with high colleague engagement are proven to be more successful. The foundation stone for colleague engagement is to have a clearly communicable business strategy. From the strategy, it is typical to develop a 3 to 5 year business plan, and the business plan is then broken down in to an annual budget with subsequent forecast updates.

Typical Issues

• Strategy out of date and does not reflect changes in the broader market
• Management team trying to do everything at once and achieving very little – need for prioritization and resource allocation
• Business projects not logically sequenced resulting in duplicated effort
• Budget preparation process not collaborative resulting in poor commitment
• Budget unachievable due to unforeseen event, but no reforecast process to reset expectations
• Budget and forecast processes cumbersome and become a paper exercise

How We Can Help

• We will facilitate the business reviewing the strategy to ensure that it is relevant in the current environment. We can ensure that the business strategy is easily communicable and is well communicated and understood throughout the business.
• We will help to develop a 3 to 5 year business plan that provides a structure to the delivery of the strategy – identifying the timelines that may be required in order to undertake new tasks – for example increasing capacity, in order to ensure that the business functions remain in balance.
• We can review budgeting and forecasting processes to ensure that they are streamlined and include input from the relevant stakeholders.

Relevant Experience of the Team

Resetting business strategy following acquisitions and disposals and ensuring that business resources are matched against requirements, with mismatches addressed well in advance – for example, capacity, financing.

Development of colleague engagement plan, ensuring that progress against the plan is regularly communicated and understood.

Development of budget and forecast processes including detailed reviews to validate inputs in the context of historic and current performance. Identifying budget risks and appropriate mitigation.

Professional relationships with banks, insurance brokers, lawyers and accountants typically endure for many years. However, these are all “people” businesses, and the great people who worked with you at the start may have moved on. Additionally, businesses change, and may be better served by a new partner.

Typical Issues

• Relationships allowed to roll on as management does not have the time required to conduct a review
• Complacency creeps in to the service provider – who starts to rely on the age of the relationship to secure additional work rather than a commercially “sharp pencil”
• Change of personnel in the service provider diminishes the quality of work
• Outgrowing a relationship

How We Can Help

Reviews of professional relationships are typically infrequent and therefore this is a specific project to be undertaken outside of normal day to day activity.

We can review existing services and prepare a tender document for prospective service providers to complete. We will agree a list of service providers to approach, and the timeline for the review process to follow. Submissions will be evaluated and presented. Typically the business management team will be involved in a “short list” of presentations leading to final selection.

Note – change is not an essential outcome, but this process seeks to ensure that the business is making a positive decision to maintain a relationship.

Relevant Experience of the Team

The team has undertaken professional relationship reviews across businesses in respect of banking, insurance, legal and accounting services. This has resulted in changing incumbent service providers and remaining with incumbents.

Even in remaining with incumbents, the review processes have enabled pricing to be benchmarked and ensure that the business is commercially up to date with the market.

All businesses run with processes. New business requirements and changes in technology may result in processes becoming inefficient and failing in a number of ways. These failures can include processes being more costly than necessary, taking too long to achieve the desired output or delivering a suboptimal output.

Typical Issues

• Implementation of new technology leads to multiple “workarounds” in order to maintain the existing process, rather than being prepared to change the way something is done
• A business critical process becomes established on a platform that is subsequently outgrown and is no longer fit for purpose
• New technology is selected that does not have functionality to accommodate a business critical process – and this “must have” was not identified as essential for the selection process
• Business processes expand over time, and simply do not achieve what was originally required
• The output of a business process is no longer used, but the process is still performed.

How We Can Help

We can document business processes in order to: understand what the process is intended to achieve; establish that the process is still relevant; review who has input to the process; review what is done with the process output; determine if there is a more efficient way in which the output can be achieved.

Supporting the implementation of new processes is essential in order to ensure that they are embedded into the business. Clear communication of the need for change and effective training of the new process are key to a successful outcome.

Relevant Experience of the Team

The team has worked on a number of systems implementations including full ERP, sales forecasting, production planning and scheduling, warehouse management and transport scheduling. This has included documenting business requirements and processes in order to support system selection.

Additionally the team has reviewed processes to ensure ongoing effectiveness – ensuring process objectives are achieved with the right combination of cost and timeliness.

Customer relationship management refers to all interactions with customers – both potential and existing customers. The relationship touches all areas of the business – starting with how the potential customer is identified, the moment the contact is first established, an order is taken, delivery made and payment collected. Every function of the business is involved.

Typical Issues

• Need to identify new customers and new markets
• Management of customers issues
• Service level challenges
• Tender submissions
• Retendering of contracts
• Payment delays and disputes
• Management of complaints

How We Can Help

Identification of new markets that offer potential for growth can be extremely time consuming. The business needs to understand where demand for its products exists, what could differentiate the business from the existing suppliers to the market, and what local legislation needs to be navigated in order to achieve a smooth supply chain. The team can provide this understanding and support establishing an effective supply chain.

The team has extensive experience of managing customer issues, including supply chain disruption, defending claims from customers and addressing disputes that result in payment delays.

The team has successfully navigated significant contract retenders, ensuring that customers understand the value of the existing relationship and that clear plans are in place to deliver against proposals that are integral to the tender submission.

Relevant Experience of the Team

The team has led on establishing new routes to market in order to facilitate substantial business growth. Managing customer expectations during periods of disruption beyond the control of the business requires establishment of ongoing discussion with both suppliers and customers, in order that clear and consistent messages are communicated.

Handling of disputes with customers requires collation of documentation to challenge and change customer perspectives – presenting information clearly to aid understanding.

Cost control in every business is essential. Without effective control of expenditure, it is impossible to forecast the usage and availability of cash – cash being the absolute lifeblood of a business.  Every colleague authorized to incur expenditure on behalf of the business should behave as if they are spending their own money – is the expenditure absolutely necessary, and is the business getting the best value for the money that is spent? These principles should be applied regardless of the amount being spent.

Typical Issues

• Lack of clear policies regarding what can be spent or committed to, and who by
• No expenses policy
• No approved supplier list
• No capital expenditure evaluation process – both before and after expenditure
• Lack of effective tendering process
• Contracts and suppliers continuing to used by default
• Regular expenditures – for example being paid by standing order / direct debit not being reviewed for ongoing need
• Replenishment of stocks before they are required

How We Can Help

We can undertake a detailed review of all expenditure being incurred by the business, ensuring that the business understands what is being purchased, and how it is creating value for the business. Moreover, we can validate how the expenditure is accounted for – ensuring the asset or cost line is reported in an appropriate manner.

In relation to capital expenditure, we can objectively review the outcome of the spend, and ensure it is delivering in line with the justification used to obtain approval for the investment. Projects can include identifying opportunities for additional returns which may then exceed the original plan.

Relevant Experience of the Team

The team has undertaken projects that start with bank statements and traces transactions back through the business, to ensure that payments are only made in respect of items that have been properly approved at the point of commitment, and not at the point payment is required.

We are experienced in drawing up commitment and authority schedules, and helping to define who the budget holders are. Development of timely reporting is essential to providing transparency around expenditure.

The team can also audit past expenditure and ensure that it has been properly approved, and also review the business case on which spend has been incurred.

Support has previously been provided to both build business cases necessary for capital expenditure approval, and to also review project implementation – spend in line with authorization and benefits at least in line with the proposed business case.

Optimising the output from available capacity is essential in order to operate efficiently. The cost of increasing capacity is often very high, and can result in significant overhead increases that are not readily absorbed by the incremental production requirement. In many instances, business have “hidden” capacity as a result of ingrained inefficiency, that if addressed can meet the needs of the business. Managing capacity for future growth is essential to strike the balance between the ability to generate incremental profit and maintain a correctly sized cost base.

Typical Issues

• Inefficiency in operations is restricting capacity
• Seasonal peaks in demand exceed capacity
• Poor training and supervision
• No short interval controls providing visibility of performance throughout a shift
• Production scheduling resulting in excessive down time
• Poor product changeover protocols resulting in excessive down time
• Failure to understand bottlenecks in production
• Poor factory layout

How We Can Help

• Mapping factory floor activity can quickly identify inefficiencies and bottlenecks in processes that reduce availably capacity.
• Understanding critical skills throughout the processes can help to direct training to ensure that absence does not impact capacity.
• Identifying critical activities and bottlenecks helps to direct supervision as it is suboptimal execution of these activities that will have the largest negative effect on overall performance.
• Reviewing scheduling, stock holding and production frequency will reduce the number of product changeovers required; reviewing changeover protocols will identify opportunities to move faster.
• Reviewing factory layout will speed up activity through the factory.
• Where activities rely on multiple processes, ensuring the timing of process execution is matched will reduce inefficiency.
• Developing a longer term vision for capacity will ensure that investments made today will not need to be unpicked further down the line.

Relevant Experience of the Team

The team has experience of identifying under utilized capacity. This can include start up readiness, effective shift pattern management, reducing changeover times, improved production scheduling.

We have experience in identifying bottlenecks and delivering targeted capital investment - thereby reducing the level of spend thought to be required to increase capacity.

Design of training to improve skill levels has also been proven to make available capacity more robust, and reduce the need for temporary labour.

Defining standard manning levels according to different activities throughout an operation has ensure efficiency levels are consistently maintained.

Business turnaround is typically required when there has been a sustained period of underperformance / loss making, and the long term viability of the business is in doubt. If the current trajectory of the business is projected forwards, it is not sustainable.

Typical Issues

• Loss of customer/s has resulted in a capacity / demand mismatch with consequent too high cost base
• Change in market dynamics resulting in declining demand
• Failure to offset or recover rising costs
• Insufficient funds to support execution of turnaround plans
• Lack of focus / inability to prioritise recovery opportunities
• Low colleague moral
• Declining productivity
• Loss of key colleagues

How We Can Help

A typical business turnaround requires a number of workstreams to be executed in the right sequence. We can support the business in identifying what needs to be done in order to improve performance, and work with the business to execute the different activities in a timely manner. A key part of the process is to ensure that the recovery plan is communicated, and that colleagues understand what is being done and why.

We can engage with customers, suppliers and external agencies to ensure that there is support for the plan, and that most importantly the business is afforded the time to complete the recovery. Unwillingness to communicate the plan leaves stakeholders in the unknown, and may cause them to take actions that further undermine the business – for example seeking county court judgements for recovery of debts. Too often, business resources are focused on fire fighting the symptoms, with insufficient resources available to address the root cause of the issues.

Relevant Experience of the Team

The team has undertaken workforce reviews and made changes to shift patterns to deliver significant savings and achieve productivity improvements.

Negotiation with customers has delivered necessary price increases to recover cost price inflation.

Consolidation of factories has been undertaken where it has been determined the long term demand does not require the infrastructure currently in place.

Supply chain reviews have addressed service level issues – improving the customer experience and resulting in sustainable growth.

Communications plans have been developed and delivered to colleagues to ensure that the situation of the business is understood, the plan for recovery, and the role that all colleagues have to play in delivering the recovery.

Robust business continuity plans demonstrate that a business knows precisely what to do in the event of significant disruption. Risk registers should be an integral part of business continuity plans, as they should not only capture what the key risks to the business are, but also what mitigation is appropriate to reduce the likelihood of a risk becoming a reality.

Typical Issues

• Sole dependence on single suppliers of key products and services with no alternative identified
• Critical suppliers not documented
• No crisis manual in place
• No disaster recovery plan in place with key suppliers
• Key data not backed up and stored off site
• Reliance on obsolete equipment
• No business recovery plan in place to address a catastrophic loss of infrastructure
• Inadequate insurance to fund a recovery

How We Can Help

We can work with the business to construct a risk register and define plans to mitigate issues. We can help to identify alternative suppliers for all critical products and services used by the business, and define how these alternative suppliers are tested.

We can support the writing and testing of a business recovery plan, ensuring that in the event of a catastrophic loss of infrastucture, the business knows precisely what to do to recover from day one.

Relevant Experience of the Team

The team has worked with insurers and brokers to put in place business continuity plans and risk registers, demonstrating that there are clear plans to address issues should they arise. This has delivered cost savings to insurance premiums.

Within a business, securing engagement to define a risk register and consider mitigation and response requires clear communication as this work is often seen as outside of the “day to day”. The team has established risk register reviews as an ongoing business process.