I knew from the start there would be absolutely tons of things to do in my new role and it’s become very clear I’m in what you might call a target-rich environment.
As I mentioned in my first entry, the company I’ve joined is in a state of flux and growth. Everything is new and I’m dealing with infrastructure: people, processes and systems. This facilitates some of the fantastic things a finance department can then do – collect cash from customers, pay our vendors, create statutory accounts, calculate and submit tax returns, create management accounts, and provide insights and challenge across the business to ensure every decision is smart and financially beneficial.
All those areas are being addressed and there’s a lot of energy being put into it. We’re wrestling with multiple ERP systems at the moment and are about to implement one common ERP system across the business.
When it comes to things like financial reporting, management reporting, compliance and tax returns; none of them will work unless you’ve got the right infrastructure in place. I can tell you now that I spotted something significant on my first morning in the job but I waited until the end of the first week to say something…
I saw a way of improving the company’s EBITDA by 14 per cent a year.
The area in question was early settlement discounts. These are a legacy from the days of high interest rates when, if people settled their accounts early, you gave them a sweetener – especially if a company is struggling with cash flow.
Here we are in an era of low interest rates, yet I worked out the company was giving away millions of pounds a year in discounts to customers who paid up within 75 days (which, you may say, doesn’t even sound that early!).
I’d restricted the procedure at previous companies and it was clear it would make a big saving here as well. The slight issue was that there may have been pushback from the sales team, who are keen to protect their good relationship with customers so, I had to approach it delicately.