PMCC Interactive

Tag: Effective Financial Management

  • This might be part of the [apparently] secret formula necessary to help you Improve the Business of your Business

    Active observation over the past several years suggest that curiosity seems to have dampened. Perhaps it is the fear of “doing deep dives” in situations that we fear might become uncomfortable. Perhaps it is remote working- or perhaps it is mentoring and leading that is not geared to the realities of our current workplaces.

    For whatever reason, we have to come to grips with this and really build this capacity in all sorts of organizations. Take a quick read of this, and spend more time assessing your own situation:

    https://www.fastcompany.com/90782370/why-we-should-embrace-radical-curiosity-and-learn-to-ask-better-questions?utm_source=newsletters&utm_medium=email&leadId=769432&mkt_tok=NjEwLUxFRS04NzIAAAGGl93cUD0tiBqiCILiqG9sDYBQJq_laztr0VQwMHYcfEw6nq0feW_S9-qdGDRIKqSuKeVVN69Yy-PqDFFQfqw8G8uY_YqoWhoPE6jcUA

  • The conversation about the role of the CFO- and where she adds the most value continues- but the bottom line is that Finance counts!

    Thirty some years ago, we began research on the role of the CFO and the impact of financial leadership on the performance of the enterprise.  After interviewing and reviewing more than 50 organizations and engaging thousands of CFO/Financial leaders in workshops around the world, we found that there were several determinants of success.

    Moreover, we found great frustration on the part of CFO’s wanting a seat at the “business management/Strategy table” and the rest of leadership questioning why they needed/should have that seat.  While that conversation continues, the accompanying link to the Visual Capitalist shows that significant progress has been made and that the conversation continues and that is a good thing.

    Enjoy the link:  https://www.visualcapitalist.com/future-of-the-cfo/

    Meanwhile, each day, we continue to prompt the conversation and help Clients create value by  improving the business of their business

  • Business challenges are not like wine and cheese….

    Over the past few months, I have had scores of discussions with people working in and providing services to Private Equity Firms.  The conversations have been interesting and focused on questioning and challenging the status quo.  I thought it would be fair and appropriate to summarize the themes of the conversations for your consideration.

    Business challenges are not like wine and cheese…. but more like bread and milk– they are common, but don’t get better with time…

    These are the most frequently discussed and vexing themes….

    1. The strike zone is expanding- Longer holds don’t generally seem to represent additional opportunity for incremental growth and development- but place extraordinary pressure for returns and maintaining expected IRR’s for investors… creating additional risk with little prospect for incremental reward
    2. Velocity on the sell side is emanating from A companies, while B’s sit and search for a way out…Plentiful debt and plentiful equity in search of the A companies, make this segment of the market hypercompetitive and Strategics, PE firms and lenders are in the quest to provide a value add- and make their green money even brighter and shinier
    3. Everyone has them, few like to acknowledge it. Every portfolio has a “bottom 50%”– those companies that are under achieving expectations, or underperforming on an absolute basis.  The surest way to make money is to not lose any.  But, the time energy and attention placed on the challenged companies, tends to be a trap that saps attention from the higher performing companies that likely have an opportunity to outperform
    4. Management teams have been built and curated to focus on growth and development and set up for the exit…. but most don’t have significant successful experience in dealing with types of challenges presented by the “bottom 50%”
    5. Quality information is elusive.  It is a challenge to sustain a focus on relevant, reliable and readily available information to effectively run the business.  This delays or impedes problem recognition and response- and in some cases does not promote confidence in the strategies and steps necessary to “get out from under”- at the very time confidence and resolve is critical to break the cycle and drive improvements

  • PMCC Services Overview

    Built on more than 30 years of experience, we tailor services to meet our client’s needs. For an overview of our capabilities and point of view, read: 20110425PMCCI Services v2

  • To be more effective, Financial Management has to become more offensive

    Despite being decades old, the debate about the role capability and performance of financial management  continues whenever financial leaders gather.  Our view is that no matter the side of the debate you take, your impressions of the barriers to effectiveness or your perception about your organization’s capabilities, most every organization needs more effective financial management capabilities to successfully compete in this hyper-competitive business and economic climate.

    Financial leaders need to set the tone and engage in the dialog that will produce positive and generative results for their business.

    Read more….20110425 EFM Offensive Financial Management

  • Further Thoughts on Effective Financial Management

    The topic and concern for enhancing the effectiveness of financial management has been around for decades.  Despite the length of time this matter has been on the stage, many leaders still are concerned and frustrated with assessing and enhancing their organization’s Financial Management Effectiveness.  PMCC Ventures has been dealing with this issue for 30+ years and offers some insights on why the issue is still front and center- and what practical things a business can do to enhance its financial management capabilities.

    To us, the fact that the issue is still front and center is a good thing.  We believe that the role of finance and hence its actual effectiveness will always be in a state of change.  The challenge for many companies is that in this constant state of flux and change- they are seeking insights for solutions in many of the wrong places.  Insights for meaningful change don’t likely exist within the organization- they are sourced by changes the business undertakes, changes in competitive situations, government or regulatory changes and the economic climate and its impacts.

    In many companies, the finance organization is buffered from dealing with shifts in strategy, changes in market conditions, and emerging issues.  This is particularly true where the traditional role of finance has primarily been to efficiently process transactions and accurately prepare compliant financial reports.  Plenty of new survey material suggests that the role of finance is changing and expanding, and the most recent economic situation has caused the overall organization to be more dependent on the effectiveness of finance- throughout the company- not just in the “finance department”.

    In today’s environment the source of enhanced effectiveness will likely be developing new capabilities- or dramatically enhancing existing capabilities- not just doing the same things incrementally better.

    To gain more insight on the subject, review PMMC Ventures’ brief presentation on Enhancing Financial Management Effectiveness- Seeing what is missing.

     

  • Effective Financial Management

    The subject of Effective Financial Management (EFM) seems to be a perennial favorite.  Welcome to our inaugural blog on the subject.

    EFM has been a favored research topic for educators and consultants alike.  The subject while likely around since shortly after the creation of double entry bookkeeping which seems to be around 1211 in Florence Italy, really came into focus in the mid 1980’s as companies were stretching their resources (and those of many of the manager-owners) to accomplish leveraged buy-out transactions.  Up until then, keeping score was the role of a few people in the organization whose offices did not have great views.  However, once people started putting their own money into the game, the desire to know where you stand began to build.  Further, the basic need for “safety” helped to move the concept of internal control out of the “nuisance column” and into the – “this is a good idea- even if it creates a bit more work column”…. ERP advances and the desire to cut cost lead to EFM’s focus initially being placed on transactional efficiency.  Shared services, and outsourcing created the opportunity to create both economy of scale- and economy of intellect (just how lucky were you to have the best accounts payable supervisor in each of your 29 locations that paid bills….?) by co-locating people doing the same tasks.

    The ENRON era related failures created additional control requirements mostly on the reporting side of the business with the apparent goal of creating an environment that financial leaders would be much better prepared to describe exactly how the horse left the barn when it was decided to keep the barn doors open to avoid the costs of running the fans….

    Yet these might not have been all that potent since we are still at a loss in coming to grips with just exactly happened on Wall Street in our latest series of financial challenges- and why “whatever it was” wasn’t reported sooner and more clearly.  Most of us are waiting with baited breath to understand the full scope of new government regulation that will help with these challenges in the future.

    And the debate rages, blame is laid and elixirs abound.  Yet, there are still many different definitions- and degrees of rigor applied to the answer of the question of: ”just what is Effective Financial Management”.  The debate is still a bit uncomfortable because some of the outcomes might not be “doable” for many organizations because many are still debating just “what is the role of finance” and if you can’t get your status in the organization settled- it might be tough to acquire or develop the resources to create EFM.

    Having been on the EFM quest for 30+ years, we know there are a lot of good people with good ideas- some basic- and others game changing about how to create a business environment that enables more Effective Financial Management.  With that as background, we launch this Effective Financial Management Discussion Forum.

    We want to run this as a true discussion forum with rich and thought provoking conversation emerging.  Since we are all at the same time, operators and investors, it is in our best interest for companies to improve the effectiveness of their financial management.

    To put the ball in play- we ask a few simple questions: To create a more Effective Financial Management environment or capability for your organization what would you have to:

    • Start doing
    • Stop doing
    • Continue doing with more intensity?

    What has been in your way of accomplishing this?