The Inferno of the Finance Director


Sometimes, I harbor a suspicion that Dante became a Financial Director. His well-known work, “The Inferno”, is such a correct description of the activity that it can not be in any other case. He is fervently hated by using the people. He is thoroughly despised with the aid of the alternative managers (“imply bastard” is his not unusual nickname among them, frequently for scrutinizing their cost money owed). He is dreaded by means of the proprietors of the company due to the fact the powers that he has frequently outweigh theirs. Shareholders preserve him accountable in annual conferences. When the monetary effects are excellent – they’re attributed to the talented General Manager. When they are horrific – the Financial Director receives blamed for no longer implementing budgetary subject. It is a no-win, thankless activity. Very few make it to the pinnacle and the relaxation retire, eroded and embittered.

In Macedonia this will be taken into consideration treason – but, inside the West each characteristic holder within the enterprise can – and regularly is – summoned via the (active) Board. A grilling session then ensues: debriefing the officer and looking to spot contradictions between his testimony and others. The structure of enterprise corporations within the USA reflects the political shape. The Board of Directors resembles Congress, the Management is the Executive Arm (President and Administration), the shareholders are the humans. The traditional checks and balances are carried out: the government are supposedly separated and the Board criticizes the Management.

The same tactics are carried out: the Board can summon a worker to testify – the identical way that the Senate holds hearings and go-questions employees in the management. Lately, but, the delineation have become fuzzier with managers serving on the Board or, worse, colluding with it. Ironically, Europe, where such incestuous practices were common hitherto – is reforming itself with zeal (see Britain and Germany).

Macedonia remains after the snug, very vintage European version: Boards of Directors are rubber stamps, without any will to exercise their powers. They are staffed with cronies and friends and circle of relatives contributors of the senior control and that they do and determine what the General Managers tell them to do and to decide. General Managers – unchecked and unbalanced – get themselves concerned in big mistakes (not to say worse things). The concept of company governance is alien to most Macedonian companies and the corporations are appeared via most fashionable managers as milking cows – fast paths to personal enrichment.

(1) To alter, supervise and put into effect a well-timed, full and accurate set of accounting books of the firm reflecting all its activities in a way commensurate with the relevant rules and law within the territories of operations of the firm and with internal pointers set once in a while through the Board of Directors of the firm.

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This is somewhat tough in Macedonia. The books do not replicate reality because they’re “tax-driven” (i.E., supposed to cheat the tax authorities out of tax revenues). Two units of books are maintained: the actual ones which incorporate all of the profits – and some other one which is supplied to the tax authorities. This gives the CFO an inordinate energy. First, he is in a position to blackmail the management and the shareholders of the firm. Secondly, he becomes the statistics junction of the firm, the most effective person who has the whole photograph. If he’s cheating, he can easily enhance himself. But he cannot be sincere: he has to continuously lie and he does in order an existence long habit. He (or she) develop a cognitive dissonance: I am honest with my superiors – I only misinform the State.

(2) To put into effect non-stop monetary audit and control structures to screen the overall performance of the firm, its float of a price range, the adherence to the finances, the prices, the profits, the cost of income and different budgetary objects.

In Macedonia, that is often careworn with valuable making plans. Financial control does now not suggest the waste of precious management resources on verifying petty prices. Nor does it suggest a price range which is going to such details as what number of tea luggage could be ate up by whom and in which. Managers in Macedonia are still beneath the sensation that they’re supervised and followed, that they have got quotas to complete, that they’ve to behave as even though they are operating (although they may be, in fact, maximum of the time, idle). So, they have interaction inside the antique time critical making plans and they do it through the finances. This is wrong.

A budget in a firm is not any different than the finances of the State. It has precisely the identical features. It is a statement of policy, a beacon displaying the manner to a higher (=greater worthwhile destiny). It set the strategic (and not the tactical) goals of the company: new products to broaden, new markets to penetrate, new management techniques to implement, feasible collaborations, identity of the competition, of the relative competitive benefits. Above all, a finances have to allocate the scarce resources of the company so that you can gain a maximum impact (=correctly). All this, alas, is lacking from budgets of firms in Macedonia (that I have seen).

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But the budget is simplest an amalgamation of the intentions. No much less crucial are the control and audit mechanisms which go together with it. An audit can be external however should be complemented through internal processes. It is the process of the CFO to provide the control with an actual time tool which will inform them what is happening inside the company and in which are the complicated, potential inflammatory regions of interest and performance.