Ep. 29: Laura Landmark - Business Performance Management

Nov 25, 2019

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FULL EPISODE TRANSCRIPT

Adam: (00:05)

Hey everyone. Welcome back to Count Me In. IMA's podcast about all things affecting the accounting and finance world. I'm your host, Adam Larson. And today we're going to hear episode 29 of our series. Our featured expert guests for today is Laura Landmark, who spoke to Mitch from Norway about business performance management for a concept that everyone may not be too familiar with. Laura does a great job making important connections for accountants. So let's go ahead and listen to what she has to say.

Mitch: (00:37)

What is business performance management? Why is it important and why is it so hard?

Laura: (00:44)

That's a great question. Business performance management is actually a set of processes really that enables the, you know, the managers to to keep track on whether they're actually heading towards achieving their goals or not. I think that many people these days call it financial planning and analytics and you know, so there are, there are different words for it, but the reason why it's important is that without keeping focused on how the company's performing, there's a very good chance that you're not going to end up where you want to be. And especially with these days, things moving at the rate of knots, you know, moving so quickly, it's important to be fully on the ball and keep a track month by month, week by week, day by day, whichever is the relevant time-span on, on how you're performing against the goals and the targets for the company. And the reason why this is so hard is basically because there are so many moving parts, so it's not easy to, you know, to basically capture the actuals that are in the economy system and match them up potentially with the time registration that's going on in the time system. And then the project transactions that are in the project system and the whole ecosystem of, of different applications that exist in an organization make it very difficult to actually do unless you've got good systems in place of course.

Mitch: (02:15)

Now our main audience is the management accountants and you referenced financial planning and analysis. So from FP&A or business performance management, what is your view on the budgeting and the forecast that accountants are typically responsible for?

Laura: (02:32)

Yeah, that's, well that's another good question. I can resonate with your audience cause I'm also a chartered management accountant. So I took my exams in London, well many years ago, I think about 20 years ago now. And I have spent an entire career trying to look at the future of companies, the different companies that I worked with or worked for because that's what we're trying to do. You know, as management accountants, we're to take data and to utilize it for reporting, forecasting and prediction. Budgeting and forecasting are extremely important. I would say forecasting more so than budgeting because it says it's live information. Really, when I talk about forecasting, I'm talking about rolling forecasts. So every month that goes by is another month of history and an extended month on the end of the forecast, whether it be a 12 month rolling forecast or an 18 month rolling forecast. You know, in reality, we've used these for all of our customers for quite some years now that we've been working in this way. And I've had many stories of customers that have been able to use the rolling forecast for effectively managing their businesses and also avoiding potential fools and, and threats. So one particular customer that I worked with, she was very proactive. This was a few years ago now, and she wanted to build a very detailed cashflow forecast because I think she could detect that they were potentially troubles ahead. So I worked with her for a while and actually understanding her business, I'm putting together a driver base full cost for her, which would roll forwards and it rolled forwards for 18 months. So every month that went by, she could look forwards and see 18 months into the future. And what she could see that in month 16, there was this big cashflow Dip and for a number of different reasons, it meant that she needed to go and renegotiate some, covenants with the bank. Now, what we found and what I found is that if you can go to the bank with a full cost and with a set of financial statements that show, you know, your, profit and loss, your balance sheet, your cashflow forecast in, you know, a period of say 12 to 18 months, they love it. And it's so much easier to go to the bank and renegotiate terms when you actually don't need the money. You know, when you get to the stage where, you know, in crisis and you need the money now, then it's very, very difficult to actually work, you know, with the banks. Naturally they see the risk of lending the money or extending the times. So I would say, although full costs, you know, they, they can't tell you the future, nobody can tell you the future. And the goal of forecasting is not actually to predict the future, to tell you what might happen and to allow you to do that scenario planning. So what if this, what if that, and as I say every month that goes by as new information allows you to, to adjust the forecast, it allows you to play with the figures and to create a future before the future happens.

Mitch: (05:46)

So many of our previous conversations have been around data analytics and how there is technology available to really enhance this efficiency that you were talking about, you know, enable our management accountants to offer more foresight as opposed to insight into what's currently going on. So I'm curious what kind of technology you know, you are accustomed to or you know, is available to accountants to really improve in this planning and overall business performance,

Laura: (06:15)

Right? Yes. Well we primarily use three tools for this. And when we started all business, we went actually all over Europe looking at different types of tools, different types of software to actually create the kind of environment for our customers that we wanted to be able to create. And what we found is, you know, a range of different great software, you know, so there's a lot of software out there, but for us it was important that it was SQL based because that's what our skillsets are. So what we found a is actually a Scandinavian product, which has recently been bought up by I think an American company actually, but it's called Bizview365. And what happens? Well what happened when we found this product was that it wasn't particularly set up for accountants. Now accountants, you know, we work a lot with accountants and they typically have a portfolio of let's say 300 or 3000 clients. You know, they're often working with many, many, many companies. And this particular product that we found ...