New Advisory service helps Decision Making
Date: 20-09-2007
Source: South China Morning Post
Mainland companies are turning to advisers for assistance with "financial management transformation", according to Deloitte's Daurant Chan. Ms Chan, a Hong Kong-based consulting principal for Deloitte, said the trend towards engaging the advisory services provided by consultants such as Deloitte was due to significant new pressure from investment banks and/or shareholders to improve shareholder value.
"The concepts are not new. But mainland companies must now find ways to enhance revenue, optimise cost structures, and/or improve asset turnover or utilisation so that they can report good results during roadshows and [provide] good ongoing earnings pictures to shareholders," she said.
Packaged and presented to clients under the label of "Financial Management Transformation", the service offering from Deloitte aims at walking CFOs and financial managers through a process that begins with identifying the optimal financial strategy, works through the design and implementation of budgeting and cost management systems, and delivers management information in reports tailored to support strategic decision making.
"For example, we were engaged by a listing candidate to advise them in a pre-IPO capacity on cost management, a signal to potential investors that they were committed to improving value. We are still working with them, generating multidimensional profitability and cost reports so they know which products are profit making and which are not performing well, and therefore [providing them] with the information they need to decide whether they should streamline some processes or make changes in product development."
Part of the work also involves generating information on customer segments, she added, which enabled the company to identify how much it cost to serve each segment and what returns could be obtained to make sure that resource allocation was optimal.
"With the balanced scorecard system we put in place we help our clients develop strategic goals-linked performance indicators, tracking results and progress, improving efficiency and facilitating business decisions," she said. "The services offered under Finance Strategy and Process aimed at helping clients streamline their financial and accounting related processes, to ensure more efficient and effective finance and accounting functions.
"The business process re-engineering would include automating and streamlining processes for better efficiency, re-evaluating controls and checking against risks being mitigated; increasing the authority of key staff, and spotting and removing areas of overlap in functions or unclear responsibilities."
Clients who were exploring potential cost reduction and shared services as well as outsourcing opportunities would benefit from the service, Ms Chan said. Deloitte calls upon the expertise it has across all industry sectors to deliver the service, she said. "We are familiar with the wider industry issues and competitive issues and basically know the difficulties and challenges our customers face.
"We then talk to different people in the organisation to understand their requirements and then communicate feedback in workshops designed to come up with a financial management transformation planning roadmap that can be implemented and is practical to operate."
One of the initiatives in the roadmap, added Ms Chan, could be assisting customers to migrate from Excel-based planning and budgeting tools that are inadequate to support complex organisational structures and multidimensional requirements, to more sophisticated planning and budgeting packages.
Important for mainland companies with an eye on US listings, is the assistance offered by Deloitte in designing and developing business and technical solutions on Sarbanes-Oxley compliant financial consolidation, she added. "Recently we have had a lot of requests from companies already doing quite well with respect to financial management, but that have some gaps when compared with leading world-class companies. We then provide them with a roadmap to make recommendations on initiatives that they need to take in order to close those gaps," she said.
.jpg)
