QMI – Quick Market Intelligent.

Allot of us need to provide a weekly status update to our leaders. There is allot of name for this report like, weekly status report, IOI, QMI and ext. I personally like the QMI because it integrates the market with company metrics.

My advice – QMI should not be a reporting tool, it should be performance checklist to your goals and accomplishment.

Year-end Closing

Preparing for year-end closing is one of most important task for finance organization. Here are few tips how to have a good closing:-
1) Engage in operation and understand the output – because this translates to sales.
2) Review expenses before system cut off and book accruals into sub-system.
3) Plan for all system cut off and manual journal entry.
4) Finally review trial balance and understand the change in YTD.But most importantly make sure all the staff is healthy and the timeline is meet.

Negotiating with Vendor

Negotiation with vendor is key for long term contract. We need to start early and make sure all areas are taken into consideration. Also the bidding process will take some time and choosing the right vendor can be very tricky if it is first time purchase. But at the end of the day closing the bid and finalizing the price is most important.

My advice:- Make sure you have a face to face negotiation with the right key person. If there person you are negotiating does not have the authority on pricing then it is a waste of time.

Dealing with Dificult Customer

We spend allot of time working with customer to listen to their problem, but it difficult to meet all their demand. Also some times customer can really drive you against the wall with tough request. From my experience working with internal customers is more difficult then external customer, I belief this is because internal customer understand your cost structure better and demand more from your margin.

My advice:- Have a single contract and price list for both internal and external and offer discount base on volume, payment and ext. By this you will also avoid transfer price issue.

Revenue Recognition

Revenue Recognition is becoming more important then anything else. In current environment when a customer demands for free transportation and insurance services, it seems impossibly for vendor to offer. This is because all risk should be transfer before revenue is recognized.

My advice: - Focus on contract negotiation and offer cash discount if your customer request for transportation or insurance.

Invoicing

An account receivables process starts during invoicing activity, communication with operation or alert from shipping system in important for billing department to start an invoice process. With the current environment on revenue reconciliation this process is the most important in controllership.

My advice: Never delay an invoice process because your customer payment term will only start when you issue an invoice.

BOD Meeting

Preparation for BOD meeting critical. The BOD meeting gets complicated if the legal entity is JV or has minority partner. Since the minority partner is not involved in daily operation the BOD meeting give the opportunity to address any issue and concern.

My advice: The standard agenda should be operation overview, financial overview and any important issue or concern to address to board.

Deflation Saving

There is two type of saving, one is hard saving and another is soft saving. Hard saving is deflation in price with the same quality of product and service. Soft saving is when you compare the wining quotation with losing quotation; this is for first time purchase product or service.

My advice: Give your sourcing department an deflation saving target at the beginning of the year and make sure they report all the deflation saving project to finance manager. We as finance manager need to make sure this saving match with productivity saving we report out.

Closing

If the accounting system and business process can work in accordance with reporting standard, statutory rules and tax guideline then we in finance department does not need to work during weekend for closing. But closing the books monthly is very important because it is early indication of the company financial performance before the quarter ends. The timeline of closing is also important, for manufacturing and service company it very important for you to understand when the production cut off.

My advice: If you already identify a journal entry before system cut off then please pass this entry early. This will save you time during the actual closing process.

balance sheet

most of company only hire employee to analyzed profit and loss. But I think it is more important to analyzed balance sheet. Few of they key important asset that finance leader should continue to monitor is cash, sundry receiveables, inventory, account receiveables.

My advice: review your balance sheet quaterly with variance prior quarter.

Working on Holiday

Allot of people think nobody should work on holiday because the argument of work life balance. But in the current market environment we all need to be more flexible. This is important because with globalization and change in market lead us to make quick decision which require us to work on weekend and holiday.

My advice - It is always important for finance manager to meet timeline if you need to work on weekend and holiday please do so because your manager or shareholders expect you to accomplish your deliverables.

Plant and Equipment Investment

With current market condition in financial crisis and recession it very important for company to manage their cash position and maintain a strong balance sheet. Investor looking for less borrowing, with less borrowing company has less cash for investment, meaning Plant and Equipment budget will need to be reduce.

My advice - Cash is King, look at your balance sheet and reduce asset that does not generate revenue or productivity.

Commodity Price

When commodity price is high we are in inflation environment but when commodity price is down it not necessary we are in deflation environment. This is because when commodity price is down the end user product does not necessary be down this is because there are other factors contributed to produce a product. We see this impact now when price of metal is down but machinery and tools price is not coming down.

My advice - plan your investment ahead of prior year and place purchase orders in prior year this is important because you get more time working with your supplier for better price and quality.

Working with Direct reports

Today i got upset because something that my direct report misses out the payment. As a penalty my company need to pay extra payment. There will be a few problems working with your direct reports: -
1) Very common problem is communication - sometimes they don't understand the requirement it important for us as leaders to make it clear to them in writing and verbal.
2) They don't understand the important of the subject matter - most of the time we leaders are to busy handling allot of task and assign some role to our direct reports but it important for us to explain the important of the matter in detail and follow up with them.

Inventory

Inventory is good because it help to reduce the production cycle. But it is one of the most dificult asset to manage because:-
- very fast it become obsolete
- cash tie to inventory
- require storage
- worse case if you manufacture then it part of your wip and consolidation p&l need to eliminate the Inter-Company Profit.

My advice - Continue to look at turn and prepare aging by part number.

FX Impact

Just completed a conf call with my boss on FX. I attended a conference about FX and one strong participant refuse to accept any hedging strategy, because he fell any hedge is a speculation. But then another participant stood up and said hedging is like insurance, it is cover to mitigate risk.

My advice – You can blame the market on FX but realize loss is direct loss to your organization. Please understand your organization exposure and find the right strategy.

Non Profit Organization

Religion organization is one of the biggest non-profit organizations. In US Methodist church and Baptism church runners this non-profit organization like a company. In Malaysia churches, Buddhist and Hindu temples currently growing their organization. But they do not consolidate into single profit and loss statement of temples.

My advice – Temples and churches need to start consolidation and implement internal control

Document Management

Current environment is changing to have document in soft copy with increased storage space. But we are in finance need to make sure we have the right balance between soft copy and hard copy. The most important is our customers need to adapt to soft copy if we are changing.

My advice: Government agency still has limited capability of soft copy document, but we should find right company and outsource the document retention.

Communication is Key

Today was not a good day. I had a miss communication with my boss and we reported a different figure. Globalization is making communication more difficult. We in finance organization were asked to communicate more effectively by phone and conference call.

My advice: Use simple file to communicate and confirm back your understand before you end the call.

Meet your estimate

Company pay finance manager to make sure you meet your estimate. Your leadership will be in question if you don't meet your estimate. As finance manager we need to spend allot of time going through the numbers and make sure it is right. Closing numbers can change daily and the best way to estimate is through communication.
My advice: Pick up the phone or schedule couple of meetings with your boss and explain closing number. Not just the number, if you are missing your estimate what opportunity you have to make it up.

Tranfer Price

Just came back from meeting with auditors. Tax is one area there is no right and wrong. The best way to fix a problem is to discuss all the matter but still you as finance manager need to decide want you want to do. My advice is to document all your discussion and findings.