Finance Metric of the Month July 2009: Length of Time to Close the Gap to World-Class Performance in Finance

The journey to world-class performance can be a lengthy one. Just how long depends on the specific strategies and practices the finance organization develops and the effectiveness of its Service Delivery Strategy. The wide variation in the potential time to reach world-class underscores the need for a careful, methodical, sustained series of initiatives.

G&A Organizations Have Failed the Agility Test

Unprecedented declines in consumer demand, heightened business uncertainty and intense global competitive pressure are testing the agility of G&A organizations as never before.New Hackett research reveals that G&A organizations by and large have failed to demonstrate the appropriate agility to respond to the rapidly declining revenue trends and avoid being a drag on profits. Between Q1 2008 and Q1 2009, Global 1000 companies saw their revenues decline by 13.3%, while their SG&A costs declined by only 1.9%. Since one proven approach to increasing agility is optimization of their global G&A service delivery, executives should take action immediately to define and develop an appropriate Service Delivery Model for G&A.

Finance Metric of the Month April 2009: Percent of Entries in the National Tax Books that Require Correction

World-class companies - those also with a much lower percent of tax entries requiring correction - spend significantly more time analyzing tax data versus collecting it. This is due in no small part to the fact that the peer group has more than twice as many entries that require correction.

Finance Metric of the Month February 2009: Percent of Cash Transactions with Daily Cash Positioning and Funds Mobilization Automated

Treasury organizations must have real-time visibility into their global cash position to accurately forecast cash requirements, ensure liquidity and optimize the use of cash. Automated daily cash positioning improves efficiency by reducing the effort and the number of FTEs required to obtain this information; it also boosts treasury's effectiveness by improving its ability to manage liquidity and perform business analysis.

Leading CFOs Cite Agility as Important in Weathering Market Turbulence

CFOs are reporting a sharpened focus on improving their own agility in order to respond more swiftly to current market conditions, particularly by delivering superior analytics through FP&A, maintaining early warning systems, and optimizing the service delivery model. In addition to improving agility, finance organizations can use this disruptive time to bring home up to $138 million by closing the gap to world-class performance. Savings could be realized by beginning or accelerating transformation efforts while maintaining effectiveness levels and focusing on higher value-added activities.

Finance Metric of the Month FEB 2008 - Audit Fees per Billion Dollars of Revenue

Audit fees per billion dollars of revenue is a key component of overall compliance costs. While it is a simple metric to derive-total audit fees divided by revenue in billions of dollars-ts applicability is profound in highlighting the overall health of the finance organization...

Let's Not Say It Out Loud, But Are You Ready for the "R" Word?

Rather than view a possible recession in the US as something that you can only ride out, seize the moment and drive changes in your organization that will quickly reduce operating spend to appropriate levels and free up cash, which can then be invested in projects that will create competitive advantage. The following strategies are critical considerations. Their priority will be determined by individual circumstances, but ultimately, it is profit growth and the corresponding free cash flow that will drive shareholder returns. - Make sure your organization is operating at world-class levels - Remember that in times of uncertainty, cash is king - Make sure your enterprise performance management engine is properly tuned

Ongoing Fallout From Compliance Legislation Raises Cost Of Finance At Most Companies

Fallout from compliance-related activities continues to prevent most CFOs from resuming more than a decade of cost reduction efforts, according to new research from The Hackett Group. Hackett's Book of Numbers research for finance found that the average Global 1000 company is now spending 12% more than they did three years ago, in part due to increased focus and spending on compliance-related activities. World-class finance organizations, which have continued to reduce costs over Hackett's 15-year research history, are now spending less than half of what average companies do. At the average $22 billion Global 1000 company, this spending gap now amounts to savings of $138 million per year for world-class companies. In addition, world-class finance organizations operate with less than half the staff in virtually every key area of finance.

Gaming the Numbers: Who Really Wins When Companies Fudge Their Year-End Results?

Executives confronted with an intense pressure to meet quarterly and year-end performance scores often respond by playing games with the numbers. Organizations are locked into a vicious cycle; the longer they indulge in the practice, the harder it is to give it up. While we understand why companies game their numbers in the fourth quarter, we do not agree with it, or the need to do it. What is not obvious to those that do, is the down side. Although our analysis shows a $100 billion working capital improvement, nothing has really been gained thanks to a $122 billion deterioration in the very next quarter.

Transforming and Offshoring Finance Processes: Timing Is Everything

The concept of globalization is extremely compelling for companies striving to achieve world-class performance in finance. But globalization needs to be considered in a much broader context than just taking advantage of labor arbitrage; rather, it represents a chance to evaluate the overall performance of the organization. While globalization should not be a substitute for strategic transformation and continuous improvement, various options exist when it comes to execution, consisting of differences in the timing of the initiatives. However, no company should follow a strict "transform first" or "globalize first" path for all processes; in practice, optimization will take place through a series of "waves" that combine transformation and globalization initiatives. In this report, two different scenarios for a typical Global 1000 company are presented. Although the 10-year NPVs are not far apart in both scenarios, the benefits realization and risk profiles are very different.

Sarbanes-Oxley and Regulation FD Are Hindering Efforts to Shorten Closing Cycle Times

The closing cycle is a commonly watched performance metric by CFOs. It is considered a barometer of the ability to feed timely information to management and, increasingly, to external audiences. As such, one might expect a tight band of performance, as companies have widely been eager to work on reducing cycle time. Surprisingly, a significant gap still exists among companies examined by Hackett Business Advisors. During the month-end, the number of business days to close the books ranges from 2 to 11 days. This issue of Hackett Perspective includes data about the best practices that world-class companies deploy to minimize closing cycle time.

Improving Controls Can Also Help in Streamlining Payroll Processes

This issue of Hackett Perspective is designed to help payroll leaders increase their understanding of internal controls required for compliance with Sarbanes-Oxley, plus their impact on the payroll process. By incorporating the Hackett-Certified Practices described in this report, payroll leaders can assure that payroll disbursements are made only upon proper authorization to bona fide employees, that they are properly recorded and that companies are complying with related legal requirements (such as payroll tax deposits). Key steps for assuring compliance are enumerated, as well as a detailed list of payroll controls designed to mitigate the most common risks. The report also discusses responsibilities for controls when payroll is outsourced to a third party.

Sarbanes-Oxley Does Not Have to Spell the End to Transaction-Efficiency Goals

The Sarbanes-Oxley Act may well become a classic example of the law of unintended consequences. It was enacted in 2002 in part to improve the quality of information supplied to investors and other stakeholders. Yet mounting evidence, both empirical and anecdotal, leads us to conclude that it is causing firms to divulge less information, rather than more. Clearly, compliance with the Act has imposed significant financial and procedural burdens on firms. Furthermore, satisfying the letter of the law is, for many, serving as an impediment to improving the efficiency of business transactions. However, interestingly, given the right approach to risk control, it is possible to meet Sarbanes' legal mandates and at the same time create greater efficiencies in their transaction processes.

Best Practices in Management and General Administration

Management and General Administration

Treasury Today: Expertise in Search of a Mission

Increased scrutiny of company financials and cash flow; Pressure to reduce the cost of operations; Increased expectations about the strategic contribution of treasury to business success; How have treasury organizations responded to these and other contemporary business challenges? Exploring the impact of these business challenges was the purpose of a survey conducted in the spring of 2003 by The Hackett Group.

Audit's Evolving Role With Shared Services

Often equipped with skill sets that are highly valued in a shared services operation, the audit function in many companies is evolving from a necessary evil to business partner. Learn how some centres are taking advantage of this dramatic shift in the role of Audit.