Title Details

DAVID PARMENTER is an international presenter who is known for his thought-provoking and lively sessions, which have led to substantial change in many organizations. He is a leading expert in the development of winning KPIs, replacing the annual planning process with quarterly rolling planning, management and leadership practices that will get you to the top, and corporate accounting best practice. David has delivered workshops to thousands of attendees in many cities around the world including Sydney, Melbourne, Kuala Lumpur, Singapore, Tehran, Johannesburg, Rome, Dublin, London, Manchester, Edinburgh, and Prague. David has worked for Ernst & Young, BP Oil Ltd, Arthur Andersen, and PricewaterhouseCoopers, and is a fellow of the Institute of Chartered Accountants in England and Wales. He is a regular writer for professional and business journals. He is also the author of Key Performance Indicators: Developing, Implementing, and Using Winning KPIs, Pareto's 80/20 Rule for Corporate Accountants, and The Leading-Edge Manager's Guide to Success: Strategies and Better Practices, all published by Wiley. David Parmenter can be contacted via [email protected] or +64 4 499 0007. His website www.davidparmenter.com contains many white papers, articles, and freeware that will be useful to the reader.

Acknowledgments xv

Introduction xvii

PART I AREAS TO FOCUS ON IN THE NEXT SIX MONTHS 1

CHAPTER 1 Accounts Payable in the 21st Century 3

Removal of Charles Dickens’s Processes 3

Move to a Paperless Accounts Payable Function 4

Invest in an Electronic Ordering System (Procurement System) 4

Introduce a Purchase Card 5

Cut Off Accounts Payable on the Last Working Day 6

Close Accruals a Day before the Accounts Payable Ledger 7

Limit the Accruals 7

Mount the Last Signed Check on the CEO’s Wall 8

Perform Frequent Direct Credit Payment Runs 8

Improve Budget Holders’ Cooperation 9

Speed Up Budget Holders’ Correction of Omissions 9

A Welcome Letter to All New Budget Holders 9

Introduce “Shame and Name” Lists 10

Reward Good Budget Holder Behavior 11

Have a Closer Relationship with Your Main Suppliers 11

Use Self-Generated Invoices (Buyer-Created Invoices) 12

Note 12

CHAPTER 2 Timely Month-End Reporting: By Working Day 3 or Less 13

Rating Scale for Month-End Reporting 14

Benefits of Quick Month-End Reporting 14

Impact of a Quick Month-End on the Finance Team Workload 15

Major Steps You Can Do Next 16

Major Steps You Can Do within the Next Six Months 23

History of Quick Month-End Reporting 26

Research on Quick Month-Ends 30

Implementing Quick Month-End Reporting 30

Some Tips on Running a Post-it Reengineering Session 35

Selling the Need for Quick Month-End Reporting 36

Key Month-End Activities on a Day 3 Month-End 37

Notes 38

CHAPTER 3 Make the Monthly Reports Worth Reading 39

Foundation Stones on Month-End Reporting 39

Reporting a Business Unit’s Performance 40

Reporting a Consolidated Profi t and Loss Account 42

The One-Page Summary to the CEO 43

Reporting the Balance Sheet 43

Reporting a Quarterly Rolling Accrual Forecast 45

Snapshot of All Projects Currently Started 47

Reporting Progress of the Top 10 Projects 49

Cash Flow Forecasting 50

CAPEX Reporting 54

The One-Page Investment Proposal 54

Reporting the Strategic Objectives/Risks/Cost Pressures 56

Designing Graphs and Dashboards 60

Notes 61

CHAPTER 4 Limit the Time Invested in Board Reporting 63

Selling Change to the Board 63

Costing the Preparation of Board Papers 64

Scoping of the Information Requests 64

Avoiding Rewrites of Board Reports 65

Tabling Board Papers Electronically 65

More Timely Board Meetings 66

Board Meeting Less Frequently than Once a Month 66

Continually Purging the Board Papers 66

Timeliness of Board Meetings 67

Reporting Key Result Indicators in a Dashboard to the Board 67

Examples of Key Result Indicators for a Board Dashboard 70

Notes 73

CHAPTER 5 Timely Annual Planning Process: Ten Working Days or Less! 75

Sell the Change through Emotional Drivers 75

Foundation Stones of an Annual Planning Process 76

Efficient Annual Planning Processes 80

Note 90

CHAPTER 6 Managing the Accounting Team 91

Hold an Off-Site Meeting for the Accounting Team at Least Twice a Year 91

Set Up Monthly One-on-One Progress Meetings with Your Direct Reports 93

Become Known for Giving Recognition Freely 93

Attract the Best Staff to the Team 94

Adopt Better Recruitment Practices 95

Recognize Staff Performance 96

Team Balanced Scorecards 96

Better Practice Training 96

Outdoor Pursuit Adventure 98

Team-Building Lessons from a World-Class Coach 98

CFOs and All Direct Reports Must Find a Mentor Immediately 98

Become a Serving Leader 99

Five Foundation Stones of a Serving-Leader 100

Areas of Focus for a Serving-Leader 104

A Viking with a Mother’s Heart 111

Three-Month Planner 115

Notes 115

CHAPTER 7 Quick Annual Reporting: Within 15 Working Days Post Year-End 117

Costs of a Slow Year-End 117

Cost the Annual Accounts Process 118

A Quick Year-End Is a Good Year-End 118

Help Get the Auditors Organized 120

Appoint an Audit Coordinator 120

Complete the Drafting of the Annual Report before Year-End 121

Limit when Changes Can Be Made 121

Negotiate and Plan for a Sign-off by the Auditors within 15 Working Days 121

Have a Month 10 or 11 Hard Close 122

Effective Stock Takes 123

Estimating Added Value in Work in Progress and Finished Goods 123

Effective Fixed Asset Verification 123

Importance of the Internal Auditors 124

Extract More Value from the Management Letter 124

Derive More Value from the Interim Audit 125

Run a Workshop to Post-it Reengineer Year-End Reporting 125

Restrict Access to Confidential Information to the Audit Partner 128

Speeding Up the Reporting Supply Chain 128

Moving Forward 129

Some Case Studies 130

Notes 131

CHAPTER 8 Managing Your Accounts Receivable 133

Operational Improvements to Accounts Receivable 133

Reporting on Your Accounts Receivable 134

Avoiding Accounts Receivable Month-End Processing Bottlenecks 134

Increasing the Use of Direct Debiting of Customers’ Accounts 135

Debtors’ Collection before Year-End 136

CHAPTER 9 Marketing the Accounting Team 137

Fitting into the Wider Team 138

CHAPTER 10 Client Management: Improving Relationships with Budget Holders 141

Perform an In-House Customer Satisfaction Survey 141

CHAPTER 11 More Emphasis on Daily and Weekly Reporting 145

Yesterday’s Sales Report 146

Weekly Key Customers’ Sales 146

Weekly Reporting on Late Projects and Late Reports 148

CHAPTER 12 Working Smarter, Not Harder 151

Staff Debriefi ng at the End of the Day 151

Banning Morning Meetings for the Finance Team 152

Implementing “Action Meetings” Methods 153

Golden Rules with Emails 154

Continuous Innovation in the Finance Team 157

Getting the Induction Process Right 157

Creating a Service Culture in the Finance Team 158

Having Fun in the Workplace 158

CHAPTER 13 Limit the P&L to 50 Account Codes 161

Project Accounting 162

Subsidiary Chart of Accounts 162

Note 162

PART II AREAS TO FOCUS ON ONCE CORE GAINS HAVE BEEN ACHIEVED 163

CHAPTER 14 Throw Out Annual Planning and the Associated Monthly Budget Cycle 165

Reporting without a Budget 167

Note 168

CHAPTER 15 Quarterly Rolling Planning: An Evolvement from Quarterly Rolling Forecasting 169

Quarterly Rolling Forecasting Is the Most Important Management Tool of This Decade 169

Ten Foundation Stones of a Rolling Forecasting Process 171

Better Practices in a QRF 184

Implementing a Quarterly Rolling Forecasting and Planning Process 186

Note 192

CHAPTER 16 Cost Apportionment: Do Not Do It Monthly! 193

CHAPTER 17 Ban Excel from Core Monthly Routines 195

Note 196

CHAPTER 18 Identifying the Organization’s Critical Success Factors 197

Benefits of Understanding Your Organization’s Critical Success Factors 198

An Airline CSF 199

Relationship among CSFs, Strategy, and KPIs 199

Finding Your Organization’s CSFs 201

Notes 202

CHAPTER 19 Reporting Your Winning Key Performance Indicators 203

The 10/80/10 Rule 204

Key Result Indicators 204

Performance and Result Indicators 205

Key Performance Indicators 205

Characteristics of a KPI 207

Importance of Daily CEO Follow-up 209

Selling KPIs through the Emotional Drivers 209

Reporting KPIs 24/7 or Daily to Management 210

Reporting Weekly KPIs and PIs to Management 210

Reporting Monthly PIs and RIs to Management 210

Reporting the Key Result Indicators in a Dashboard to the Board 213

Reporting to Staff: The Team’s Progress 213

Reporting to Staff: The Organization’s Progress 213

12-Step Model for Implementing Performance Measures 213

How KPIs and Financial Reporting Fit Together 219

Notes 222

CHAPTER 20 Where to Invest in Your Accounting Systems for Maximum Benefit 223

Avoiding the Hard Sell 223

Better Systems to Invest in 224

Note 227

CHAPTER 21 Implementing a New Accounting System 229

CHAPTER 22 Better Use of the Intranet 233

Your Intranet Should Be a Spider’s Web 233

The Intranet as a Business Tool 234

What the Finance Team Can Do 235

PART III AREAS WHERE COSTLY MISTAKES CAN BE MADE 237

CHAPTER 23 Designing Performance Bonus Schemes 239

Foundation Stones 239

Avoid Having Deferral Provisions 245

Note 250

CHAPTER 24 Avoiding a Rotten Takeover or Merger 251

How Takeover or Merger Goes Wrong 251

Takeover or Merger Scorecard 255

Alternatives to a TOM 255

Note 259

CHAPTER 25 Hidden Costs of Downsizing 261

CHAPTER 26 A Reorganization Too Many 265

Ramifications and Associated Costs 265

An Addiction to Reorganizations 266

Typical Reasons for a Reorganization 266

There Are Alternatives to a Major Reorganization 268

Before You Look at a Reorganization 271

Note 272

CHAPTER 27 Listing on the Stock Exchange 273

Gather Useful Experiences 273

Selecting the Advisors 274

Have a Well-Oiled Public Relations Machine 274

The Prospectus 275

Due Diligence Coordinator 275

Preparing the Forecast 276

Getting the Timing Right 276

Sources of Useful Information 277

Notes 277

CHAPTER 28 Managing the Treasury 279

An Open and Honest Relationship with Your Banks Will Pay Off 279

Do Not Get into Deals You Do Not Understand 280

You Can Never Guess the Future, So Be Half Right and Half Wrong 280

Foreign Exchange Trading Can Be a Zero-Sum Game 281

Obtaining Credit Lines When You Do Not Need Them 281

Staggering the Maturity of Loans 281

Sources of Useful Information 283

Appendix A

Checklist of Areas to Focus on in the Next Six Months 285

Appendix B

Month-End Reporting Checklist 293

Appendix C

Month-End Bottlenecks and Techniques to Get around Them 297

Appendix D

Speeding Up the Annual Audit Process Checklist 301

Appendix E

Checklist of Strategic Focus Areas 307

Appendix F

How a Quarterly Rolling Forecast Can Be Laid Out in a Planning Tool 311

Appendix G

Implementing a Quarterly Rolling Forecast Checklist 315

Appendix H

Performing a Quarterly Rolling Forecast Checklist 321

Appendix I

Streamlining an Annual Planning Process Checklist 325

Appendix J

Useful Letters and Memos 329

Appendix K

A Satisfaction Survey for an Accounting Function 339

Index 347