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The
Evolving Role of Finance
Personal
profile
Key challenges
facing company
Comments on role of finance function
within the company.
Techniques.
Other issues
Business methods and techniques.
Observations on the evolving role of finance
Impact of the internet and the world wide web.
Skills required for accountants
Implications for the profession
Personal
profile
X has been
a accountant for seven years and qualified with CIMA within 18 months
after starting the examinations. Time in present role six months
although with the company for a total of four years. Previously
his experience was in the retail and service sectors..
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Company
profile
Turnover over
£100 million, employees approx. 4,000. Payroll costs account for
the 35 per cent of total and expenditure. The industry is best described
as leisure/service sector.
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Key
challenges facing company
YY Ltd offer
leisure breaks and now operate in a crowded marketplace where many
competitors are offering short break bookings at short lead times
anywhere in Europe. This is an impulse market and booking lead at
times are shortening. The consequence of the short booking time
scales is the comparative lack of monetary interest earned on booking
fees and advance payments. The challenge is to cater for a rapidly
changing consumer tastes. This involves continual re-branding. The
objective is to reduce the boredom of holidaymakers! Payback time
scales are diminishing, 4-5 years is now the maximum life cycle
for a restaurant concept. Greater emphasis is being placed upon
the product life cycle. The company is increasing promotional spend
but remains determined not to discount the basic price of a holiday.
Previous experience of discounting has lead to a belief that discounting
feeds consumer expectations for the future.
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Comments
on role of finance function within the company.
X feels that
significance of finance is a now much stronger within the company.
Managers are expected to be financially literate. To support them
the company runs courses for unit managers. Originally these were
concerned with how to actually do a budget, mainly the mechanics
of the process. They are now concentrating on explaining how managers
can influence the financial position of their individual business
unit. The course is very successful and scores highly against the
expectations of business managers.
YYadopts a
system of bottom up budgeting but this system is not apparent in
the European part of the group which is still based on the top-down
system. The impact of legislation is not significant; apart from
a health and safety aspects and planning permission difficulties
Challenges facing the finance/accounting function.
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Techniques.
The company
tends not to adopt innovative accounting techniques. However, they
did experiment with activity based costing but did not proceed on
the basis that a large proportion of their costs are uncontrollable
and thus irrelevant at a departmental profit and loss level. There
is a feeling that the impact of variations in variable costs (which
the company is primarily trying to control) tend to lose their significance
when set within the context of overall departmental expenditure.
This tends to reduce a manger's focus on their controllable horizon.
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Other
issues
Finance is
a driven by information technology but not, an end user perspective
as yet. In terms of information technology and its application in
business, X cites his experience with reward cards in the retail
industry as informing his present position. The reward card system
generated vast amounts of information but it became apparent that
it was difficult for this information to be used due to the sheer
volume. He feels that the real value of information is what it tells
you. He feels that Information Management is moving away from the
production of periodic reports and more towards what he calls the
traffic light system (similar to be controlled charts that have
traditionally been used to in variance analysis). The three colours
of the traffic lights indicate three states;
1. OK
2. needs to
be monitored and finally,
3. take action.
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Business
methods and techniques.
YY are not
strong adopters of the latest fashionable management initiatives.
Corporate culture No particular comments. There is not a strong
set of overt corporate values and this is not seen as an issue for
the company and its operation. People identify with their immediate
team of co-workers and operating site.
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Observations
on the evolving role of finance
X sees big
divergence developing between straight financial roles based upon
'number crunching and what he calls business analysis. He commented
that there are certain roles developing in terms of tax specialisms
and IT but otherwise the role of the management accountant is becoming
more general. He commented that accounting/reporting timescales
are subject to decreasing time frames. Traditionally the monthly
accounts were prepared within three weeks; this has now reduced
to one week after the end of each month. X defines the outlook of
the finance department as 'have done it' rather than 'can do it!
At YY each
site has a financial controller that must take over as the real
duty manager on a rota basis of one weekend in eight weeks. He sees
the financial accounting as being 'self-facing', whereas the position
of a business analyst is front-facing. He sees a greater trend towards
a self-auditing of finance and operational processes throughout
the business.
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Impact
of the internet and the world wide web.
Previously
customers have only been allowed to seek information; now they can
place bookings on-line. This is a small percentage at present but
X feels that this will increase dramatically within the next year.
Care is taken to keep technology to low profile within the public
side of the leisure sites so as to preserve the country to retreat
image. However, they have the aim of developing their own a business
bureau service into a small part of the site for the convenience
of customers who need to access electronic communication.
YY are trying
to encourage home working as a philosophy but have problems with
full functionality of the accounts system on a remote basis at present.
X felt that procurement would be the major application of the www
within the business, (unit managers would select a range of goods
and services from a predetermined electronic catalogue defined by
central management. E-mail was used extensively but there had been
a point at which 'overcommunication' had enforced a rationalisation
of its use.
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Skills
required for accountants
X feels that
accountants need to develop stronger personal skills and need to
build on the people side of the business. X feels that the examination
regime needs to assess a candidates log book or record of practical
experience before he can is allowed to sit to the final examinations.
He feels that practical experience alongside examinations is vital
to accountants. He says that accountants should ask themselves what
they can add to the business rather than what they want to get out
of it. He noted that the competency route adopted by the Association
of Accounting Technicians had clear benefits on the basis of experience
within the YY company. If he felt that accounting is moving from
an historical basis towards real-time. He felt that accountants
must now be more focused on the investigation of operational performance.
A key feature of this is the viability of business units and the
inclusion of post-investment appraisal in accounting. X identified
the key accounting skills as; analysing, interpreting and communicating.
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Implications
for the profession
X feels that
the number of professional accountants employed within finance departments
will reduce but the number of accountants operating within the business
units will increase. X feels that the accounting profession also
needs to be at the front-facing and must operate alongside, or within,
business operations.
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