| The Overall Process
For most organizations, there is a need to move from basic accounting to "real" financial management. Traditional approaches to managing finance (rooted in accounting) are subjective and unreliable. For example, the primary accounting metric is earnings. Earnings can be a very creative type metric, here today, gone tomorrow.
We need to impose discipline upon the organization that is rooted in value. Unlike accounting which fails to measure and report value, finance has its roots in value. In its simplest form, value is created by generating free cash flows, not Net Income! Unfortunately, many organizations are under the impression that as long as Net Income is going up, we are creating more value for the owners of the organization. This is a false assumption that you need to break.
Right now you are probably making most of your financial decisions based on a set of financial statements. Financial Statements are very limited in their application for decision making since they do not measure and report on those things that create value. Therefore, you need to focus more attention on how value is really created. This requires placing more emphasis on those management activities that are focused on value:
- Performance evaluations that go beyond traditional ratio analysis such as non-financial metrics (Balanced Scorecards)
- Continuous processing of competitive intelligence so that your organization looks at the outside world and thinks strategically
- Creating a process whereby you monitor and measure the value of your business with an understanding of what levers to pull on to improve value.
- Mapping and measuring the drivers behind value which are usually non-financial in nature.
- Benchmarking your value performance against your industry peers using battle-tested techniques such as Economic Value Added.
|What's in it for me? You will be doing real finance and not just bookkeeping. Your business is way too important to settle for anything less for such an important function.
Seven Distinct Service Offerings
A broad range of services is available to improve the value of your organization:
- Basic Finance -
For any company that wants to move beyond traditional accounting and have some level of analytical support that is currently not present within the company. This helps transform your current financial support services so it becomes more value added as opposed to just processing transactions over and over again every month with no real insights into what's going on.
- Value Analysis -
For any company that wants a strategy and program for monitoring and managing the value of the business going forward. This may include value mapping and the use of the Financial Radar Screen which serves as the engine for value metrics such as Economic Value Added. This makes the “management of value” a reality for any private company.
- Performance Measurement -
Developing and implementing a set of non-financial measurements to compliment the value metrics, helping to ensure the business owner has all the critical bases covered in running the business. As a minimum you should have 5 to 7 vital few metrics.
- Competitive Intelligence -
Avoiding the common trap of being too inward in how you think about business. Using competitive intelligence to fully understanding the external landscape – critical to strategic thinking and the management of risk!
- Training -
A simple but highly effective way for anyone to gain the knowledge of doing it yourself. Training services include workshops and e-learning (launched in year 2011). Also check out the free short courses at: www.exinfm.com/training. Training is available for every service offering.
- Non Profit Financial Management -
Assisting non-profit organizations and non-governmental organizations with financial management practices. This may include the use of logic models for accountability and economic analysis of social value to justify a funded program.
- Small Business Services -
A range of specialized services such as estate planning, tax planning and wealth maximization for small business owners. Two professional networks are used to deliver these services: Mid Market Place and Midas Nation. These services are targeted at private companies with between $ 5 million to $ 150 million in sales revenues per year within the United States