Transforming XYZ Company’ Finance Function

to a World Class Finance Function

(“The Intelligent Finance Function”)

Finance Agenda
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Prepared by Olalekan, 08054806223 .ng

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 Executive Summary
 This document, Finance Agenda or Finance Transformation Journey, outlines our strategy to transforming XYZ Company finance function
to an intelligence finance function. It provided high level information on our approach which include how we should be organized, goal
alignment with corporate strategy, talent management, challenges, targets, etc.

 The ultimate objective of this finance transformation journey is to become best in class in terms of operational efficiency, business
support effectiveness and ability to add real value to our stakeholders.

 While we deal with legacy issues, we would try to benchmark most of our operations with best practices, identify areas we can quickly
improve.

 Investments and commitments would have to be made in further improving the efficiency and effectiveness of our finance operations
and broader finance transformation.

 We would take advantage of quick wins as we identify them and look at a mid term period – 18 to 36 months to complete our
transformation; hence after our transformation, we would have successfully shifted our focus away from transaction processing and
financial reporting and control activities towards more strategic and forward looking business performance, decision support and risk
management activities.

 This Finance Agenda would be amended to reflect changes in our business environment and corporate strategy.

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 Finance Agenda
1. The Building Blocks of a finance function

2. Characteristics of a World Class Finance Function

3. Finance Function Structure

4. Finance Function Role

5. The Most difficult finance function process to improve

6. Finance Target Operating Model

7. How do we get there?

8. Goals

9. Summary – Transformative Initiative

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 The Building Blocks of a finance function

Financial Business
performance performance
Business
and risk
analyses at
Decision management
strategic level
CFO support

Financial
reporting and Financial Financial
Financial Financial statement and planning,
control
reporting planning management reporting and
and analysis and control information control cycle
Past Future
Controllers

Financial Transactional
operations processing
Standardized Transactional Master data The ‘basics’ and book
(ERP) system Services and policy (foundation) keeping
Book (shared) management
keepers
Source: KPMG International

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 Characteristics of a World Class Finance Function

Culture People

 Highly communicative  Highly communicative In my opinion, the most

 Fact based management/data driven decisions  Fact based management/data driven decisions important factor is PEOPLE.
 Promotion of insight/team participation  Promotion of insight/team participation
 Blameless environment  Blameless environment
 Consistently evolving/transforming  Consistently evolving/transforming Hence, we would pay keen
attention to the finance team
Business Partnering
Processes/Systems members and ensure that they
 Global finance function have the motivation, training,
 Recognized as bringing value to the organization  Clear roles, responsibilities and accountabilities opportunity to add value to the
 Fact based assessments  Transparency and objectivity
 Balanced approach to corporate governance  Global object settings business of XYZ Company.
 Involvement in non-finance activities  Global training and mobility
 Global governance framework
Finance staff are very
Cost Efficient Organization important to our journey to an
Reporting
 Understand cost of the organization
“intelligent finance function”.
 Assess/challenge costs, seeking on-going cost reductions  Simple and Concise
 Benefits derived from personnel and system costs  Timely
 Engaged approach to outside service providers  2-3 day close
 Benchmark against similar organizations  Bridges with minor “other”
 Consistency with operational management

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 Characteristics of a World Class Finance Function
Technology People
 Single consolidated/GL  Global finance team The team have to be organize in a way
 Common reports, data models and reference data  Global finance team competencies
 Single ERP  Commercial challenge
that finance function lead can operate at
 Global systems governance framework  Highly motivated and enthusiastic staff a strategic level, only being puled into the
 Single outsourcing strategy  Global talent management
 Scalable and flexible  Global succession plan detail when necessary.
Process
Organization
 Standardized policies , procedures and controls
 Global finance function
 Integrated processes and common data models and
 Clear roles, responsibilities and accountabilities
reference data
 Transparency and objectivity The Icebergs
 Standardized and automated processes  Culture
 Global object settings
 Integrated performance management
 Global training and mobility - This is how we do business here”
 Complex scenarios
 Global governance framework
 Scalable and flexible - Indiscipline
- Tone at the Top
Services
Location  Succession planning/career opportunities
 Sourcing aligned globally  Single finance vision and strategy aligned to business  Compensation
 Processes in optimum locations  Finance as a business partner  Legacy Systems/Issues
 Global sourcing governance framework  Focus on value drivers
 Single version of the truth  Company Performance
 Processes/controls enable sourcing
 People skills enables sourcing  Strategic and operational decision support
 System(s) enable sourcing  Leads communication of performance to stakeholders

Source: KPMG International

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 Finance Function Structure

FC

There is need to
Tax, Regulatory work as “ONE
Treasury Financial Management
Reporting Accounting
Compliance and TEAM” and have a
Risk concise vision that
the whole team
 Revenue Assurance  Transaction Processing  Budgeting and forecasting  Personal (including Payroll)
 Bank Transactions  Reconciliations  Management Report  Company believes and
 Banking Relationship  Account preparation  Board Matters  Regulatory Compliance connects with.
 Cash flow management  Payables, Prepayments and  Cost Control
 Petty Cash Accrual Management
 Fixed Assets

Optimization of working capital Focus on value adding initiatives

needs and identify &quantify Production of error-free with leading indicators that
Ensure compliance, reduce risk
potential cash flow financial statements routinely provide]de early insight into
and increase efficiency.
improvements ad forecast cash without unusual heroics areas of challenge or
flow evolution. opportunity

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 Finance Function Role
Business skills
Non-financial KPIs for Finance
Function/Perception Assessment
Commentator Business Partner
1 Expert

people driving the business strategy.

 Focus on explaining

business and have empathy with the

 Focus is value creation
numbers  Acts as business advisor and

We should be in tune with the

 Tell the business story in
numbers
integrator 2 Commercially aware
 Provides insight and robust
 Variance analysis challenges to support
 Management reports decision-making 3 Indispensable
Reactive

Proactive
4 Innovative
Scorekeeper Custodian
 Focus on booking  Focus on governance
5 Strategic Business Partner
 Process transactions  Work with the business to
 Reconcile balances ensure compliance and 6 Adding Value
 Produce trial balance effective controls
 Custodian of assets and
value protection
7 Helpful
 Conscience of business
8 Approachable/ Solution Based
Accounting skills
9 Efficient

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 The Most difficult finance function process to improve
Which finance function process, if any, is the most difficult to improve?

The Process for

attracting talent
and maintaining
technical
knowledge is the
area where most
CFOs has
difficulties

Source: KPMG International CFO survey 2013

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 Goals
Short Term – 1 to 6 months Mid Term – 7 to 18 months Long Term – 19 to 36 months
 Understand the finance function  Finance Function perception  Have an Intelligent Finance
and its needs. Management Function.
 Understand XYZ Company  Benchmark finance function with  Improving efficiency.
business model, value chain and best practices.  The business can depend on
value drivers.  Process improvement. finance function intelligence.
 Getting the basics right – ability  Review the existing standardized  Improve governance.
to run an efficient department. Policies and Procedures.  Roll out BI/analytics tools.
 Build a commitment to change  Succession Planning.  Acquire standardized, simplified
within the finance function  Add Value to the business. and robust technology.
through motivation.  Talent management, including
 Streamline Preparation of training.
Financial Statements  Capital raising exercise, including
M&A
 Contract review.
 Improving reporting and decision
support.
 Utilize Process Metrics

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 Finance Target Operating Model
Entirely Multiple Finance vision Finance is a business
Focus on value Key influencer of Value driver
agendas, cost agreed and aligned partner of
Services internally management management and stakeholders
focused centre mentality with the business
This is a plot the board

of where we Autonomous BU finance reporting Strong alignment

Finance finance functions, directly into local Central guidance for Integrated
with central finance
are Organization function in e.g.. objective mgmt./dotted line (hard dotted line) BU implementation
Integrated finance finance
silos community function
(probably) setting at BU level to center
today and Business acumen
Diligent Reactive Insightful analysis Constructive Business
where we People Scorekeeper and financial challenge
caretaking adhoc analysis and comment partner
want to be knowledge

in our Disaggregated Low degree of Recommendation for Standardized Standardized

transformati Business unit processes and standardization and common methods, processes for low processes for Standardized
Process responsibilities, automation
(BU) specific processes and value, high volume financial and optimize
on journey multiple G/Ls (divisions/geographies) reference data transactions management
in two to Multiple data Standard systems, Standardized data
Incompatible Central data
three years. Technology systems and
models, Standard interface layer and models, Standardized tools
consolidation layer recommended tools/applications, on and applications model/systems
tools/applications
data models and G/Ls data multiple occurrences

Sourcing (central or Majority of finance All financial

All processes are Some centralization
Decentralized external) of finance processing are processes in Strategic
Location internal and for low value, high sourced (central or optimum locations
processing support tasks (i.e. sourcing
decentralized volume transactions
finance systems) external)

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 How do we get there?
Adoption of Continuous Improvement Approach
This shall be either:
Incremental improvement over time;
or Breakthrough improvement all at
once.

Incremental improvement shall be

used by benchmarking our processes
with best practices and designing fit for
purpose solutions.

Breakthrough shall be used for quick

win opportunities and areas where we
are currently performing below par.

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 Summary – Transformative Initiative
 Restructure Department for Efficiency

 Reengineer finance processes

 Managing talents
1 People
 Develop Succession Plan

 Improve finance’s performance management capability

 Implement appropriate technology and tools 2 Process

 Assess how finance can support XYZ Company to achieve its

goal

 Continuously seek opportunities to create value

3 Technology
 Alignment of finance, tax compliance and risk management

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