“Do not book unrealised gains but provide for all potential losses” – this is the most commonly taught ‘convention of conservatism’ to all of us who studied CA. We follow it so much throughout our work life, that unintentionally we tend to concentrate on losses (the negative aspects) of everything and forget thinking about the direct/indirect or lateral profits (or the positive aspects).
Through this article, I wish to share my experience with young CAs to break this traditional approach.
I will start with a recent gig at CFOs-
CFO asks CEO – What happens if we invest in developing our people and then they leave us?
CEO says – What happens if we don’t and they stay?
Smart response by the CEO!! Unfortunately, there are many CFOs who ask such questions without thinking from a long term investment perspective.
I have met so many finance, accounting and tax professionals who often become a road block in business dealings for procedural points on Service Tax, TDS, Security Deposits etc. At times it is so shocking to see that they just don’t bother about the long term/indirect benefit their company will get if they just think once like a businessman.
Now days, CAs with business acumen is such a rare and lethal combination, for which any company’s management will pay handsomely to get that talent in their organisation.
Every department in a company loves a finance guy who can -
a. Think of benefit to overall business, while understanding the requirement of the department seeking his financial help/approval
b. Will leverage his experience / background to prevent other departments from making financial mistakes.
c. Will have sound knowledge of where when and how to put entries in the books of accounts as well as proactively assess the taxation impact to avoid any surprises later.
d. Will not unnecessarily delay business decisions on the basis of trivial issues.
These are things every successful businessman has to do and they would love if someone can do it for them. I will share a few thumb rules for you to become a Business Enabler, rest you will learn through your own experience–
Make a rule for yourself – You will never let any accounting rules come in the way of business growth. Any business deal, if profitable for the company has to move ahead without any road blocks or delays on part of the Finance department. You should infact provide ways and means to enable your company to fully profit from business opportunities.
Be good at business calculations/projections/investment for future: Know your business calculations well and if you are not good at it in the beginning, there is no harm in taking help from the right sources. For example-
1. Marketing expense – Understand the ROI on marketing investments from Marketing leaders to appreciate the objective and tracking/review mechanisms. You will be surprised to see how ROI is used by every intelligent department head. For example, a small press conference or PR event in a 5 star hotel, costing Rs.10 lacs (which might look like a waste), can get you publicity worth a crore if done in the right manner and published in high profile newspapers for free.
2. HR Expense – If HR has to recruit 50 people at an average month salary of Rs 1 lac, be quick to ask them to show calculations on which option will be cheaper and faster – 1) giving 10% (of annual salary) commission to an outsourced recruitment agent (50X100,000*12*10%=60 lacs) OR 2) hiring 2 good recruiters in your HR team and subscribing to a good candidate database like Naukri.com (Rs 8 lacs salary per annum*2+ Rs 2 lacs for database= Rs 18 Lacs). The first option should only be taken if hiring can be much faster and the company can earn much more than the cost differential if the hiring is done faster.
HR angle – Never think too much if something is being spent on employees of the company. Always know that a better employee benefit, insurance policy, food or snacks, training etc. will prove to be a long term investment in the Company on which some of the employees will give higher returns for sure. Also, if you can drive those positive announcements/approvals then finance team will be loved and respected by everyone in the Company.
Materiality – Based on your level in the organisation, always keep a monetary limit in your mind below which you will seldom spend time on thinking or reviewing. Let’s say, a finance manager will trust the admin manager for all expenses upto 10K or a CFO will give a free hand to CEO to decide spends upto 5 lacs without thinking about the financial approvals. Start with trusting them and in my opinion, the maximum you will go wrong will be in 0.5% of the cases. The value you create in the free time you got by not bothering about those would always be much more.
Just start with these things and see how you will become a Business Enabler in your company and cross many levels of career and financial growth, just by being that. :-)