Jeremy Fletcher, interim finance director and change-management consultant, currently at Global Shared Services, gives his views on the year ahead
What have been the biggest challenges for your business over the past year, and what role did finance play in addressing them?
One of the benefits of being a finance consultant is the visibility it gives into a wide range of companies, sectors and organisational structures in a short space of time. Although every sector and business has a list of different issues that it faces, three challenges have been consistent amongst all: efficiency of cost, efficiency of process and efficiency of cash.
In days gone by, a slash and burn methodology was the go-to management style for cutting excess spend quickly. Over recent years, this has been replaced by a more considered and tactical approach. Internal teams are opting to improve the efficiency of each business function so that they can do more with the resources they have, rather than focus on trimming the fat.
The finance function across many businesses is playing the lead role in creating the sharpest possible organisation, with improving profitability and cash performance almost as bi-products of a more streamlined and effective organisation.
What are the key political and economic risks/opportunities you face in the year ahead?
2016 has been a year of unexpected change: Brexit, Trump, Putin, EU, Syria … the list of impenetrable issues is lengthening. But the problem is the direction of change is in many cases a complete unknown which causes only one thing for businesses: uncertainty.
In times of uncertainty, companies tend to become risk adverse and restrained in their operations. Particularly across Europe, with a spate of national elections looming, we will have to consider the outlook for international revenues with even more care than usual.
Although caution is wise during these times, business must be prepared to face these changes head on as those that are fleet of foot will be able to pick up on moments of opportunity. The year ahead will be a test for management teams as they’ll be required to steer a company and its employees through a tough economic cloud – with many employees covering ground that they haven’t been expected to do so before. Companies that remain nimble, self-aware and resourceful will ultimately be the ones that will clinch the bursts of light as they break through over the next year.
Which capex projects will you be focusing on in 2017, and how will these be financed?
Similarly to the past few years, technology will again be key. Ultimate efficiency can only be achieved through ultimate technology. Every organisation will be looking for payback against their capital investment within 18 months. With the cost of money remaining low, cash conservation will remain key, and technology funding will continue along the path of utility services – monthly payments for a whole suite of services.
How do you expect the balance of your role to change in the coming year; between compliance and forward-looking/strategic? And why?
During these times of economic uncertainty, it’s likely that strategic decision making will move towards conservation and away from expansion. Strategic thinking will be aimed towards improving profitability in established markets and balanced against cautious investment in new opportunities. Merger and acquisition activity will tend towards organisational efficiency gains through acquisition of target companies that offer low risk returns.
Advice for other FDs for the coming year?
Exercise caution, but look for those opportunities that give quick and safe return. A series of small successes may prove far more valuable than looking for that one big hit. Efficiency is the key to long term success; find it in your organisation.