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Many CFO’s ask me how to increase their job
longevity. There is only one answer to this question. Expand job responsibilities beyond assuring the financial
statements are presented on time. The senior financial executive has to be actively involved in the growth of his
or her company.
Through my CFO and Controller Roundtables and direct communication with many senior financial executives, I’ve
learned about ways financial executives are driving the growth of their companies. Examples that fuel the internal
corporate growth engine include:
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Utilizing a variety of financing vehicles
to obtain additional liquidity.
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Working with the executive team to develop
sales professional compensation, which rewards salesmen for focusing on sales with greater profitability.
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Working with sales reps in the field when
they encounter perceived internal corporate “red tape”. In many cases, there are opportunities to streamline
processes by easing overly restrictive controls or eliminating previously unidentified bureaucratic bottlenecks.
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Initiating meetings with industry specific
business strategists to provide guidance for growth.
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Evaluating and improving health and other
corporate insurance policies to attract and retain employees.
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Developing tax strategies, which produce
significant savings to free up cash for other productive uses.
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Finding value in liabilities by taking aggressive
stance on discounts by vendors, and getting rebates on credit cards, all of which provide cash for growth.
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Relocating plant controllers to the factory floor
vs. ‘ivory tower’ offices. This allows them to better see what is going on in real time. They are part of the floor team
and therefore are more accessible to concerns which otherwise would not be communicated to the proper parties for
action.
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Negotiating with banks to reduce account and
credit card fees.
Doing homework on competitive vendors and using information to achieve best pricing without necessity of changing
vendors.
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Securing State tax credits for software
installation (training credit) and Federal Income payroll tax credits for certain geographic areas.
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Developing strategies on timing of inventory
purchases to balance tax reduction, holding costs, and pricing trends.
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Working with the purchasing department to develop
policies and procedures for inventory, supplies, and even capital expenditures to eliminate waste and maximize rebates.
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Analyzing sales profitability by vendor, and
subsequent vendor selection.
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Analyzing sales profitability by customer, and
subsequent ‘firing’ of certain customers.
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Implementing travel and entertainment policy to
maximize cash flow and eliminate waste.
Several CFOs are taking an outward focus and
evaluating business opportunities that create competitive advantages. Examples include:
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Expanding current business territory to
increase profitability with limited investment.
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Creating a strategy and business plan to enter a
new business sector.
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Going on sales calls to better understand
challenges being faced by sales reps in the field. One such sales call resulted in development of a customer financing
plan with an independent financing company which allows the customer to make payments over time, and also mitigates
corporate A/R exposure, helps collect past due accounts and allows company to increase the size of customer orders. As a
result, finance is viewed as an asset to the sales team rather than an adversary.
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Investing strategically in IT (Information
Technology) to improve customer experience when interacting with the company website, providing easy product catalog
access, allowing customers to efficiently perform their own inquiries on product features, appearance, availability and
secure order status updates.
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Creating online E-Commerce solution allowing
customers to purchase directly online which provides for cost savings in customer service areas and improvement of
customer satisfaction at the same time.
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Selecting facility sites for maximum strategic
advantage.
By taking on responsibilities that improve
profitability and growth of the company, the senior financial executive should be able to better position his or herself
for a long term relationship with their current employer. Come to one of the roundtable meetings and learn about what
your peers are doing to drive growth in their companies.
Also, contact me with other questions or ideas at Michael.Levine@rhmr.com
or 404-261-3229.
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Should we outsource our human resource functions
partially, or totally? Should we retain these services in-house? As any consultant would answer, “It depends.”
First, what are we talking about? Using large companies as a gage, the list includes managing payroll, employee
health and disability insurances, worker’s compensation, pension and/or 401(k), governmental compliance and
reporting, safety and risk compliance, employee help desk services, human resource services, training and
development, recruiting, background checks, and testing of new hires.
Large companies often decide to outsource non-core areas such as payroll, employee benefits and administration,
recruiting, and new hire testing. Even though some functions are frequently outsourced, large companies rarely
outsource total functions.
Managing human capital is considered a critical key to company success. However, many outsourcing decisions are
made by functional experts who lack the strengths in financial, business, or sourcing skills which are essential
for outsourcing success.
Medium size companies tend to be hybrids in outsourcing. Most prefer in-house management, but some mirror larger
companies in outsourcing some of their human resource requirements, such as governmental compliance, safety and
risk compliance, employee help desk services, basic human resource services, training and development, recruiting,
and new hire testing. Payroll companies have extended their offerings to cover many of these areas and call them
an Administrative Services Only solution, or “ASO.”
A number of medium sized companies prefer to outsource everything, including transferring their employees to
become legal employees of the payroll company, which, in turn will provide employee benefits. Again, payroll
companies offer this co-employment option and call the service a Professional Employer Organization, or “PEO”.
Selection of In-House, ASO, or PEO alternatives in a medium sized company tends to depend on risk factors, company
culture, but mostly economics. We observe that most medium size companies prefer In-House management.
Smaller companies, particularly high growth companies, often lean toward the ASO or PEO models. Frequently they
begin with the PEO model and gradually pull in-house functions that can be handled better or more economically
in-house. Here the primary decision factors are time, internal resources, risk, and economics.
In making most of these decisions, companies often don’t have the time, resources, experience, or knowledge of
what to do, whom to select, or how much should be paid. To make matters worse, companies often ask for advice from
their PEO/ASO vendors and go with the best sales story or sales personality!
Whether a large, medium, or small company, we recommend you hire an independent trusted advisor to help determine what is right for you, which provider offers the lowest total cost, and who will optimize your needs
both now and in the future. Your selections should depend on your strategic needs, optimized cost, and company
culture.
Jim Villwock
IEM Group, Inc.
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THE TOP TEN LEASE NEGOTIATION AND
SITE SELECTION MISTAKES
The following list of common mistakes is the result of a survey taken. Participants drew
from an average of well over 15 years of Tenant Representation experience, representing and advising national and
local commercial tenants with hundreds of leases totaling millions of square feet. Most major U.S. markets were
included.
The main risks to consider when commencing the Facilities Acquisition Process (Lease or Purchase) can be broken
down to the following three categories:
MONEY – Were the best possible rate and terms achieved?
Today with record high vacancies and low interest rates we have been able to achieve incredible savings for our
clients both economically and in other areas of the lease itself.
RISK – This includes the risk of making a bad location or operational decision, and whether you have the
right lease clauses, which prepare for future, unknowable requirements such as business expansion, contraction or
relocation needs.
TIME – How much time is going to be spent on the Facilities Search and Acquisition process, and what will
it cost the company in terms of lost productivity?
The process of determining ones needs and the site selection and lease or purchase process can take up much of
your valuable time if you don’t have the right team in place!
Most Common Mistakes
#1 Most Common Mistake
NOT ALLOWING ENOUGH TIME
Facility research, property inspections and comparison analysis can usually be completed in a week or so by
motivated companies already familiar with the local market. However, those tasks are only the tip of the “time
drain” iceberg, and several commonly overlooked complications needing to be factored into the relocation
timeline:*
- Negotiations with the Landlord and preparation of the lease can take weeks, (even months).
- Once the Lease is signed the interior usually needs to be finished or renovated, which can
take one to three months depending on size.
- Before renovations can begin, building permits need to be obtained which can take one to two
months, and
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Before permits can be obtained, architectural plans
must be completed, and may take one to two months.
If existing facilities cannot be found which are acceptable, new construction can easily take 9 to 12 months or
longer.
Bottom line: 6 - 12 months is a good time frame to use when looking for new facilities, even longer if experienced
professionals are not used to guide the process. Today we have renewed tenants up to two years early with the high
vacancies in the market so it’s never too early to start your strategic plan.
* This assumes the space is not going to be taken as-is, which is possible, but unlikely.
For complete article, please visit: Top 10 Mistakes
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