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How Finance Can Support Strategic Business Innovation

By Andy Burrows

Two innovation problems for Finance

When we think about the attitude of Finance towards innovation, there are two key questions:

  1. What should our attitude be towards business innovation? And,
  2. What should our attitude be towards internal innovation within Finance?

I’ll deal with the second question in another article.

But, before I kick off let me be honest about my thinking about innovation and Finance.

I approach innovation, whether in business or Finance, with a mixture of scepticism and mind-boggled wonder.

I am still staggered when I think of the rate of change over my working life. The internet, mobile communication, digital music and photography, to name but a few. Life has been transformed in less than 30 years.

And in order to achieve that, brave entrepreneurs – the likes of Bill Gates, Steve Jobs, Mark Zuckerberg – had to take risks with their new inventions. They reaped the rewards, and continue to do so.

And there have been hard lessons...

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7 Things Finance Can Do to Make Business Projects Successful

business change projects Mar 28, 2019

By Andy Burrows

I’ve worked in many businesses, and only two of them had what I would have judged to be a proper grip on change projects. In the other ones, senior Finance people would sometimes talk disparagingly about certain projects, and almost ‘tut’ with disapproval in seeing projects underdelivering and overrunning on time and costs.

I never had much time for that kind of ‘standing-on-the-side-lines’ mentality. It’s always struck me that there’s so much we can do in Finance to help projects succeed, rather than standing watching them crash and burn, wringing our hands, as if it’s some sort of spectator-sport.

So, here are seven observations – things that I think Finance can easily improve that will give change projects in our businesses more of a fighting chance.

1.    Appreciate the Importance of Projects

First of all, I don’t always get the impression that Finance business partners really appreciate...

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All forecasts are wrong - so what?

forecasting fp&a Mar 21, 2019

By Andy Burrows

 “Does anyone in FP&A ever review the accuracy of their predictive financial models from time to time?” That’s the question I posed on LinkedIn a while back, and it generated a good discussion. And it turns out that FP&A professionals generally care quite a lot about the accuracy of their forecasts.

One of the businesses I worked in was strongly linked to the travel industry. So, our business tended to fluctuate seasonally. But we never seemed to be able to get our P&L and volume forecasts right. It was low margin, high volume business. So, volumes made a big difference. It was so frustrating trying to predict things like the effect of Easter being early or late, public holidays, school holidays, and other factors like the economy, the weather, and exchange rates.

When we did variance analysis, the Managing Director would get frustrated with us, because sometimes the explanation for a variance would be that we’d neglected to...

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How to tell if your Finance function is any good

By Andy Burrows

There are many different ways of looking at the performance of a Finance function.

But in this article, I want to start from first principles and definitions.

As with any question of performance, before you can tell how well you’re doing, you have to know “what good looks like”.

How can we tell if we’re doing a good job if we don’t know what the definition of “good” is?

But don’t, at this point, go straight into thinking about how you’d define a good job in Finance! If you do, you’re jumping the gun!

We need one more definition... the general definition of “doing a good job”.

The general definition of “doing a good job” is that you are meeting your objectives, which in turn is defined as making your anticipated progress towards your ultimate goals.

So, you have to know at the outset what your goals and objectives are.

Most people think that these are so obvious that they skip the...

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The one risk you should always take as a Finance professional

By Andy Burrows

Do we want risk takers in Finance? Does that conjure up positive or negative images in your mind?

I once asked my Supercharged Finance newsletter subscribers to tell me about problems and issues they had in Finance (by the way, if you want to be on that mailing list, please go to www.superchargedfinance.com and click the button that says "join our mailing list"). One FP&A Director wrote back to me saying that one of his frustrations was that his team was reticent to take risks and get out of their comfort zone.

From a business point of view, I guess we need Finance people who have a balanced view of risk. But in a very big sense, I believe we do need people in Finance who are willing to actually take risks personally.

But what risks do we want our Finance teams to take? And what are the benefits of developing risk takers in Finance? And how do you develop that culture?

Being outside our comfort zone is often not a risk at all

What we’re really thinking...

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What I learnt from nearly going bust

By Andy Burrows

The cold, hard fact

The basic - some would say the obvious – fundamental requirement in keeping a business alive is cash. Not customers, and not profit – you can have both of those things and still have a business failure. Cash is like the lifeblood of a business. That’s why the maxim, “Cash in King” is so true.

Anyone in business should have heard this. But it may still seem confusing to you how you can be profitable and run out of cash and fail. If that’s the case, then you can think more clearly about this by remembering one word...

... timing.

Take a very simple example – I buy a car for £5,000 and sell it for £10,000. There is no question that I have a good customer and I have made a profit. But if I have to pay for the car tomorrow, and I am not going to get money from the customer until next week, then my business will fail if I don’t have £5,000 cash to pay for the car tomorrow.

The brutal fact...

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How to work with the business as a Finance Business Partner

By Andy Burrows

The Marketing Director of a business I worked for a long time ago said in leading a seminar, words to the effect that, “functions like Finance, HR and IT are just overhead costs. They don’t add value. They don’t bring in new business or sell anything, and they don’t produce anything.”

I didn’t respond at the time, but I remember being quite offended. I felt put down, saying that I was no value to the business.

I was, at the time, I have to say, fairly naïve – this was not long after I’d started my first job outside of public practice.

What follows here are some of my reflections on the relationships between the Finance function and the other parts of a business, from working in more than thirteen different companies over more than twenty years since then.

“Business Partner” – a misleading phrase?

One thing that has vexed my pedantic brain occasionally over the years is the use of the term...

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Six things every business must never forget

By Andy Burrows

Business Fundamentals

I’ve been thinking recently about the fact that it’s difficult to say useful things that are relevant to businesses of all sizes.

In reality the difference between small and large businesses, and the way they’re managed, are huge.

And we tend to talk about ‘small business’ as if it were one category, with solopreneur micro-businesses like mine lumped in with the £100m international group.

And ‘big business’ is a massively diverse category too.

And whilst it is difficult to give financial management advice that will suit a wide-ranging audience, every so often I think that, whether you’re in a big business or a small one, going back to the fundamental principles of business can be really helpful.

So, what are those fundamental principles of business? Well here are six things that I think ought to be drummed into every senior manager or business owner.

1 - Profit is Prime

First, your...

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Don’t make this one mistake in your Finance Transformation

By Andy Burrows

Finance Transformation programmes will often include something like the following line in their business case: “Capacity created by automation and process efficiency will be reinvested in value-adding activity.”

Sounds great, doesn’t it? What could possibly be wrong with that?

Well, as an aspiration, it’s got a lot going for it. The trouble is, no one really believes it and it hardly ever happens. In fact, the opposite often happens. The capacity created is turned into cost savings, which leave even less time for “value-adding” activity than before.

So, if you really want a value-adding Finance function, don’t let your Finance Transformation programme become all about cost savings. And be clearer on how Finance adds value.

Automation is a good thing

First, lest you misunderstand me, let me say that automation and process efficiency are good things.

When I look back on the revolution caused by computerisation 20-30 years ago,...

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What’s driving the trajectory of the CFO role?

ai cfo epm finance rpa technology Jan 31, 2019

By Andy Burrows

Let’s talk about how and why the role of the CFO has changed over the last 30 years, and why that puts Finance in a critical position within the business.

You know, ever since I qualified as an accountant in 1995, I’ve noticed magazine articles, courses, seminars, books, all talking about the changing role of the CFO (or Finance Director as we used to call it).

And I’ve always been a bit cynical. I didn’t really know what it was all about until I sat and thought about it recently.

You see, I think there’s a misunderstanding in the media, even in the financial press, about what is driving any changes in role, if there are any.

The media portrays the CFO’s role changing because of Finance technology. In the past it was all about EPM (Enterprise Performance Management), BI (Business Insight) and ERP. Nowadays it’s all about RPA (Robotic Process Automation), AI (Artificial Intelligence) and Blockchain, apparently – you...

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