IMPROVING FINANCIAL PERFORMANCE - WINNING MARGIN -

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1 IMPROVING FINANCIAL PERFORMANCE - WINNING MARGIN - A board based business simulation for improving financial management SST 9/11 Princess Street Knutsford Cheshire WA16 6BY Tel: Fax: info@slatter.co.uk SSt Copyright 2006

2 BACKGROUND Financial management and cash management, in particular, is a key priority and skill for operational managers in an ever more competitive market. It can no longer be left solely to the finance function to take responsibility for the constant appraisal and improvement of cash and profit margins. Therefore operational managers need to become more proactive and solutions oriented to managing finance. WHAT IS WINNING MARGIN? Winning Margin is a practical and proven approach using a board-based business simulation to: demonstrate that Cash is King address the business and financial issues concerning working capital management profit and cost management The lessons learnt and issues raised by the simulation are used as a catalyst to discuss, define and understand the financial needs and priorities within the participants own companies and spheres of influence. From these discussions participants have a better understanding of their own business and cash cycle from how the money is spent to how it is controlled and managed. The key output from the event is that participant s produce their own action plans to address the local improvement opportunities they have identified. OUR APPROACH Our preference is to start with a short development phase to: understand the client s current approach to financial management, the procedures, reports and KPIs discuss and debate the client s future business and financial issues, priorities and needs. identify and understand any priority areas for discussion and debate for inclusion in the workshop or in particular case studies. obtain the buy-in of the key directors / managers that will be managing the follow through of the action plans. The last point can be achieved by either individual meetings or by running a Special Event for the key directors/manager. Step 1, The training workshop is a two day event, tailored to the client s own financial issues and challenges, and uses their own financial management accounts and reports. Attachment A shows the structure of the 2 days for one of our clients. SSt Copyright

3 Step 2, Back at their company/site delegates individually or collectively prioritise, quantify, set targets and allocate responsibility for improvement opportunities identified in Step 1 and in the action plans arising. Step 3, Follow-up Workshop. A half or one day workshop to review Steps 1 and 2, and to develop more focused and effective action plans. Step 4, On Site. Back at their company / site delegates complete the full implementation of action plans and review achievements as a standard management agenda item. TUTORS SST have a number of highly experienced tutors who can undertake this work, but are always under the direction of either Stuart Slatter or Chris Perry. SSt Copyright

4 Day 1 Managing Working Capital Two Day Programme Appendix A Purpose and objectives of the workshop Company Senior Operations Manager / Director Introduction What is Working Capital and why is it a priority? Relationship with the company s own debt position Evolution of the company over last 5 years Its impact on funding The cost of finance in the Company The Business Cycle Introduction to the business cycle and how the Company s own balance sheet reports it Profit v cash management: current reporting methods and interpretation Introduction to the business simulation: Examination of the opening balance sheet and the Working Capital position Run Trial Year Recognise new Working Capital position and impact on business performance Role briefings: Commercial manager Purchasing + Manufacturing manager Finance manager + Treasurer Initial team strategy formulation Year 1 orders placed Teams run Year 1 PM Review year 1 performance and impact on: Inventory Receivables Overall business performance measures Options to Improve Working Capital Management in the Company: Stage 1: Inventory Practical issues: Potential Impact on the company s business performance Current developments and constraints Examples of live problems and successes across the company Further opportunities? Review strategy and evaluate options for change Stores inventory Work in progress Finished goods Year 2 orders placed Teams run Year 2 Review Year 2 performance Examine impact of teams' decisions on Working Capital and effect on overall business performance SSt Copyright

5 Day Recap on Day 1 Examine cash position at end of Year 2 and its relationship with profit Reconcile profit to cash with particular reference to working capital movements Revisit the company s reporting of Profit vs Cash Rethink decisions and forecast position for Year 3 Year 3 orders placed and teams run Year 3 Review Year 3 performance Summarise learning points Options to Improve Working Capital Management in company: Stage 2: Credit Receivables and Payables Practical issues - receivables: Are receivables just a credit control issue for company s finance? Other factors affecting the company s receivables o International relationships and business cultures o Own performance examples of good and poor practice Further opportunities with the company s customers? Practical issues - payables: Impact of intervention by the company s finance Examples of the company s problems and solutions Current company Procurement initiatives o cost reduction o quality and performance o honesty in relationships Further opportunities with the company s suppliers and sub-contractors? Plan Year 4 including preparation of budget, incorporating the opportunity for supplier credit SSt Copyright