News items:
On this page updates are given about StratyFin Consultancy B.V. such as projects and commitments at hand. But also related matters of interest noted in social media and during reading as well as matters encountered during self/permanent education.
News on StratyFin Consulting BV
18/10/2018
Ready for new opportunity after successful time at Helloprint
A period of three months supporting Helloprint ended. ended second half September 2018. Helloprint is one of the fastest growing e-commerce platforms in Europe. Helloprint is the umbrella-name of Drukzo.nl and a number of own and white shops labels which through internet platforms offer articles which can be printed according desires of the customer. Helloprint acts as a broker and buys all print work on order. High level of automation because of high volumes. The group has the ambition to grow 40% at least per annum and is succeeding with that currently. 2017 was the first year of which the consolidated annual report had to have an auditors' report. Sales are made in eight European countries through websites where procurement is made in various European countries. VAT-regulations are one of the complexities besides managing the fast growth.
During the three months coached the young and ambitious Finance team in managing their projects and alignment thereof in the organization, held weekly team meetings and bi-weekly bila's, proposed the Finance department's strategy for the third quarter OKR's, started/completed various national and international compliance reports including work instructions for repeat reports, validated Cash Flow projection model, supported the business/ICT development with input on VAT and structuring processes to identify possible efficiency improvements. Supported CFO with several tasks and suggesting procedural or system improvements where deemed appropriate.
After a nice holiday break now ready for the next opportunity. In the mean time, updating on reading and other technical matters.
11/06/2018
Engaged for new interim assignment.
After a series of interviews I am excited to have been contracted for a new interim assignment for an initial period of three months. More news follows after closing all formalities and start up.
31/05/2018
Interim assignment at Compass Group International B.V. ended.
After five months, having started with an initial three months period, the interim assignment at the Dutch section of the International Head Office of Compass Group International B.V. has ended.
Compass Group International (B.V.) is an intermediate international holding and financing company, with a publically issued Bond loan of EUR 750m, quoted on the London Stock Exchange, part of Compass Group Plc, a globally leading catering and facilities (management) services' Group.
Assisted/replaced controller who was involved in a time consuming internal reporting project. International holding and financing activities spread over about twenty local entities, various legal types. Financial Year-end is 30 September. Upon entry on Day 1, performed larger part of month-end reporting followed by four subsequent month-end reporting cycles, including Half-Year reporting, as well as several periodic compliance activities. Dutch Central Bank reporting.
Main accomplishments: smooth period-end reporting enhancing closing control sheet; Drafting working instructions for all steps during closing process, improved control over accounting of interest accruals enhancing consistent execution; Drafting accounting memo's to ensure correct and consistent reporting by multiple international entities in various countries. Contributed to quality of operation enabling back up possibilities to sustain continuity of reporting and support to Group Holding in UK. Where possible proposed restructuring of financing activities between the Dutch entities and Group Holding in UK. Contributed to setup of more efficient external audit preparation. Worked with SAP and uploading the data for reporting in HFM.
12/10/2017
FM Day 2017
On Wednesday 11 October 2017 attended the
FM Day 2017 organized by Alex van Groningen. This year`s FM day had as motto Founder`s Mentality (for CFO`s and other Finance professionals).
The opening session took nearly two hours in which chairman of the day Rens de Jong (nice hair cut) discussed with two CFO`s (one of a family company and one of a listed company) several interesting presentations from people in or having gone through change.
Subsequently, there were breakout sessions and master classes. I attended: `Doing is the best way of thinking!` (by Vrije Denkers facilitated by TriFinance); `Going for it! is confusingly simple` (by Jan van Setten facilitated by Finance Factor); `I made a capital mistake! And now?` (by Gerard Kemkers facilitated by FinTree) and `Stop repeating the past, start rehearsing the future` (by George Parker facilitated by Improven). The closing of the day ended with handing out the award `CFO family business` and an emotional presentation of Marc Herremans, who suffered a major setback in his life and how he coped with this inevitable change.
The general dilemma remains how to keep financial and risk control as agile as possible within a growing organization. The larger it becomes, the more rules it needs to comply with. And how can the CFO be a facilitator of (controlled taking of) risk. From the presentations, the usual startup perspectives came forward: focus on the goal and finance is often busy facilitating and building the business. As organizations are still small, there is no real need for a large control set up as the basic controls are missing (anyway) and there is a lot of direct control and direct involvement (= supervision) by the entrepreneur.
My general take is that as CFO, you need to go beyond your comfort zone and facilitate the business with a mix of trust and rules adapting with size and nature of the business. Keep an open mind, think out of the box: apply lean thinking to new initiatives (didn`t we learn in the past to set a real creative team aside from the normal operation because of different competencies and behavior? Furthermore, no matter how much of a top sporter/athlete (focus on your individualistic performance) you are, you cannot excel without a team to achieve your goals and deal with change and possible set back`s!
`Coincidentally`, MCA Magazine (Management Control & Accounting) of October 2017 an article is featured describing the balancing act between Trust & Control of CFO`s based on 20 interviews.
07/10/2017
Interim assignment at Olympia Nederland ended
After 20 months, due to several extensions, the assignment at Olympia Uitzendbureau came to an end per 15 September 2017.
It turned out to be a demanding time. The company was acquired by private equity having its impact on both the people and the organizational structure. The accounting of revised consolidation of the acquisition and the reporting thereof was implemented. Ended up completing two annual reporting cycles of which the more recent one was more complicated due to the change in ownership which happened during the year. Supported and coordinated compliance audits which were structured and upon leaving embedded in the organization. Besides the interaction for reporting purposes, was also involved in the development of sectorial salary processing of the temporary workers.
Enjoyed the interaction with the entrepreneurial staff.
A kind recommendation was written by Mr. Chris van Galen, please refer to the page Testimonials.
After a few weeks of holidays, I am available for a new assignment, effective immediately
18/01/2016
Started interim assignment at Olympia Nederland
Started as Financial Controller ad interim documenting working procedures and preparing and co-ordinating year-end audit for both investor reporting (IFRS) and annual reports (Dutch GAAP) and co-drafting the annual reports for senior management. Expected to run several month-end reporting cycles. Expecting to add further value in envisaged improvements to the financial reporting process and controlling function.
30/11/2015
Strategic review assignment completed
During November an assignment was completed by isuing a report advising on strategic options for a service line for use in discussion with the Supervisory Board. This included summarizing consequences and the financial impact on the projected Income statement for the next four years. It also involved building a revenue projection model based on production data.
08/10/2015 Attended Day of the Financial
The Day of the Financial was organized by the NBA and VRC and this year's theme was Inexhaustible earth/value ('Onuitputtelijke (w)aarde'), subtitled Business models in the circular economy.
Companies planning to recycle their consumed products or arranging that the consuming of their product or service is harming the environment as minimally as possible. Which means that companies are already thinking about how to easily recover materials when recycling their products. But also how to ensure to get the products (materials) back after usage? This will bring the recycling to a higher level of re-use instead of for example only recover warmth by burning the residuals. I envisage it a bit as recycling 2.0.
But what drives this trend. Business is driven by economic laws, further steered by taxes or regulations imposed by governments. The larger group of consumers are hard to mobilize to have such an impact on producers that they will so significantly change their processes to be (more) environmentally friendly. The opinion of the general public is gaining voice, just remember Starbucks and Amazon who have realigned their tax planning structures, which were complying with laws as they were, under such pressure.
Having heard the developments during the presentations, I actually conclude that it are again economic laws steering behavior. Not that I protest against the trend: the video shown at the start of the congress was very powerful. Think along the lines of documentaries of Andre Kuipers showing the earth from ISS which should make you think about Earth and its use. But the driver behind these processes are actually natural resources and raw materials getting exhausted!! A shocking wake-up call was a graph shown indicating that several raw materials are no longer available in a period of 10-20 years and taking another 10 years extra, this becomes even more severe. So actually, the corporates are doing their job in planning ahead to secure the resources needed for their products and hence securing their existence. And, what we do not often realize is that time goes faster than we think. Recently, I saw a table which indicated some major occurrences during the flight of the New Horizons probe to Pluto (flyby last July). As one example, there was no i-phone when the probe was launched. Another factor driving the trend is again an economical one, being the envisaged levy on carbon output. So regulatory measures which need planning to remain cost efficient.
Business models are changing because of this trend, but actually still slowly. Some examples are Philips who is now selling 'light' as a service to Schiphol, nearly fully re-usable carpet tiles and the office area (being) developed in Hoofddorp, also known as Park2020 maximizing the cradle to cradle concept for offices also applying the new business models (like renting of light) in these offices. This, indirectly, shows another economic 'benefit', as supplier you do not have an end game scenario deal, but you actually will have a longer business (partner) relationship. This will benefit learning about your product and most probably could dramatically increase the Customer Lifetime Value...
Another related development is considering and measuring the impact on society and environment resulting from decision making by organizations. Such process can be developed in more dimensional P&L's not only showing financial data but also on these other subjects.
Besides the economic considerations, regulations and taxes are the other driving factor to steer to 'desired behavior'. The Ex'tax project as thinktank has already considered that levying the usage of scarce resources will be able to change business models or economic thinking. This would mean that raw materials would get more expensive and labour cheaper, considering that (the) government(s) still need their income to fulfil their public tasks. The thought is interesting: where labour would become cheaper would this cause more employment? Also, the impact is different from industry to industry. Overall it could be at par, but petrochemical industry for example will have much higher input costs (besides labour). Will it be possible to have the sales price fully absorb the effect without outpricing the product? With cheaper labour, more possibilities for more services could arise… but is such expectation slashed by the economical thinking of those companies? This thinking has definitely not ended and if and when feasible, will need implementation on a larger geographical or political area scale, such as EU or WTO-wide. What a challenge.
But it was the Day of the Financial: how does this impact the Financial? Is the Financial saving the world? As I have commented before, the above 'developments' needs a team effort. The tone at the top needs to drive this and walk the talk to embed this thinking throughout the organization. The Financial is equipped with enough expertise on reporting, compliance, concepts of value and a realistic opinion on measurement and progress. The Financial could be fostering the process as advocate: like looking at your organization to (become or) remain lean(er) and therefore not running your usual budget process by improving on earlier goals, but taking the opportunity to evaluate and brainstorm on the Business Model Canvas for your organization, the Financial could also insert thinking about resources' streams and how are these materials being re-used. Combining the two could lead to new concepts servicing both profitability and contributing to the circular use of resources.
Changing business models will change various aspects of controlling and reporting the previous business model by the Financial. For example, remaining owner of the lamps causes that you have more assets on the balance sheet resulting in valuation and depreciation considerations. And assets need to be financed. And, indeed your cash-flow pattern is changing completely from a one-time lump sum income to lower periodical instalments. Also, the 'new' assets owned need servicing, so that needs to be organized. The performance needs measurement (enabled by the development of Internet of Things). Cost price calculations becoming more complex. But the Financial does not like risk... and all the above is new: will the assumptions on economic and technical lifetime become true, will the recovery of the raw materials work out and be cheaper than expected market price at recycling: because one could just envisage this set up as a kind of complicated hedge for future raw and scarce materials prices.
As mentioned above, such developments will have a significant impact on the overall financing of the business. Banks will have to let go of their traditional perception of business models and accept more risk... if and when they will be financing. I think that the banks in general will be too slow and that loan crowdfunding can actually have an important contribution when elements of the new model are put out for project funding. A reasonable return backed by actual assets.
So all in all an interesting day with enough food for thought for business strategy and modelling and the role of the Financial in the whole process.
06/10/2015 Dutch Testing Day
Visited the Dutch Testing Day at the High Tech campus in Eindhoven. Supported the other ambassadors and CEO of Bstriker International BV in making and nurturing network contacts. Enjoyed some presentations and a last key note speech by Dr. Jan van Moll who in a very humoristic way showed the dangers of faulty and sloppy software testing. But finishing with giving recommended techniques to do a proper and thorough Root Cause Analysis of problems encountered with software (already operational). Best is of course to find faulty software before being taken into use. Would Bstriker be able to take this challenge?
19/07/2015
Launch of own developed website.
Structure for free: see footer for reference.
9/07/2015
Establishment of Company.
Interests from Reading and Permanent Education
10/10/2017
Mismanagement Dutch outsourcing center Hanjin Group?
An article Het Financieele Dagblad of Tuesday 10-10-2017 it is reported that the Dutch liquidator of the bankrupt Korean container transport company is going to Court charging the management of the Group holding of mismanagement of the Dutch branch office (of a German GmbH Hanjin group company).
Hanjin went bankrupt in August 2016 after it did not manage to reach a new arrangement with its banks. As a consequence, the Hanjin group companies also landed in financial difficulties resulting in bankruptcy.
The Dutch branch office was a small operation with 60 people. They serviced only Hanjin companies and had no other (third) party customers. It was operated as an internal outsourcing entity working effectively on a `cost plus`-basis. This was supposedly just enough to cover expenses (on a going-concern basis). In doing business with this entity suppliers considered to work with a multinational, but this turned out to be a hollow shell.
The case of the Dutch liquidator is that group management has not allowed the branch office to build sufficient reserves to satisfy all obligations of the entity (now leaving nearly EUR 9m unpaid claims of Dutch suppliers).
The question will be whether due to the complications of international law, the liquidator will quickly settle his case. However, the verdict of the Court will be interesting for multinationals who have centralized certain support activities exclusively in a Dutch hub. If the verdict is in favour of the Dutch liquidator, in comparable situations local management will need to consider whether they have sufficient reserves (or guarantees) to pay up for all third party obligations when they are suddenly forced to end the operation in order to prevent from being charged with mismanagement (and as director becoming personally liable). The legal format of the entity and how the management function will be filled might need reconsideration.
20/02/2016
Start-ups should not have too much support
This weekend on the site Startupsinsights.org and published in the Dutch Financial Newspaper Het Financieele Dagblad an interesting short article of Chris Eveleens was published: Below the English language translation:
In The Netherlands hundreds of people work to stimulate and support entrepreneurship: incubators, accelerators, governmental bodies, development companies and economic boards. Purposeful, as although start-ups have economic importance, they are quite vulnerable. About a third does not survive the first year, and more than half has disappeared after five years. This presents a nice task for all stimulators and supporters to improve these statistics.
As supporting start-ups is difficult, the approach was up to now demand focused: leaving it up to the start-up entrepreneurs themselves to indicate the bottlenecks and then take those out. But when you ask start-up entrepreneurs what the problem is, they often state that it is lack of money. Hence, policy is now mostly focused on making the life of the start-up easier: with cheap company space, attractive financing and tax advantages.
From management literature however we know that non-unique resources, such as money, are never the key to long-term success. Research of incubators even shows that offering trivial resources can have a negative impact. One needs the unique resources which are hard to copy, such as technology, image, knowledge or collaborative relationships.
Why are start-ups stalling then? CBInsight, a company that gathers and sells start-up data, keeps track of why start-ups fail (see separate table). According to the entrepreneurs and investors that is often not due to money. Lack of money is ranking second, but it is here merely a symptom The real reason is the lack of a market or a good team.
Luckily incubators and accelerators are realizing this and are focusing on composing the start-up-teams and validating the idea. Still every now and then the call sounds to pamper start-ups. But to fulfil their wishing lists without thought is not really useful.
What is going wrong
Top 10 causes of start-ups' failures, based on an analysis of 101 start-up deaths (in %, more causes were possible)
1. No market demand 42
2. Lack of money 29
3. Not the right team 23
4. Pushed out by competition 19
5. Price or Cost problems 18
6. Mediocre product 17
7. Lacking earnings model 17
8. Average marketing 14
9. Neglecting customers 14
10. Product badly timed 13
Source: CBInsight.com
04/09/2015 Day of the Financial (8 October 2015)
In about a month's time, Day of the Financial will be held. This congress is the continuation of the annual congress of the NBA and VRC, respectively the organization for certified (public) auditors and for registered controllers. This year's theme is the inexhaustible value (earth) - business models in a circular economy.
The circular economy is defined by Wikipedia as: 'The circular economy is a generic term for an industrial economy that is, by design or intention, restorative and in which material flows are of two types, biological nutrients, designed to reenter the biosphere safely, and technical nutrients, which are designed to circulate at high quality without entering the biosphere.' Quite technical, but in brief a circular economy should seek to prevent hazardous output back into the environment and the re-use any output or used output, of course when of a tangible nature. As such this is in my opinion a continuation of the concepts of recycling, durability and sustainability. In the past many initiatives have been developed to make products 'green' and to recycle. To be sustainable. Cradle to cradle-principle. So is it really new? And why is Finance seemingly so involved?
I consider the focus on this subject as a next step in building awareness for a sustainable society. Because, we are now shown how to read business cases to support the concept. How to contribute to the strategy of our enterprises. A circular mindset will need a real change of general perception and a more outside view at and appreciation of the world. Because, let's be honest, all these initiatives are always driven by return on investment. And when it had been cheaper or more profitable to recycle old products, this would have already been happening. Possibly, under the pressure of Today's danger of disruption, boards' strategy considerations become leaner and might be more willing to leave the beaten tracks.
But I expect that turning into a circular enterprise will not be so smooth: it will require a mind shift. Like while companies often state to be a good corporate citizen and hence follow tax rules... but under pressure from society needs to adjust their legal tax planning. The same parallel with the energy certificate on houses. Only because of law this has a very slow off take.
Finance alone will not make this happen. Finance with creativity might present a proper or different business case. But benchmarks will need to be wider than only financial criteria. The finance function through business control can prepare additional reporting to sustain focus on this topic. This will create awareness. However, I feel that it will not that easy and that pressure from shareholders (with a changed state of mind) will be required to really change an enterprise to become circular. Again it is about return... about measuring... but against what?
17/08/2015 CFO should think more innovatively
Het Financieele Dagblad of Monday 17 August 2015 contains an article in which CFOs are considered to play a more important but different role in the innovative power of a company. The CFO is often the person to evaluate the expected costs, revenues and risks of projects. A traditional method such as the Discounted Cash Flow is not the tool to assess more radical innovative projects. Mr. Jan van den Ende, professor Innovation management at Rotterdam School of Management recommends the 'real options'-approach. This approach surpasses the apparent current consideration that a project is 'carved in stone' once approved and the go-ahead is given. The real-options approach breaks the project down in scenarios with percentage estimations of the possible outcomes and related cash flows for various phases. The project is evaluated at the end of each defined phase. Development and expected future success (factors) are assessed whether still moving towards the most beneficial outcome. If not, pull the plug, if yes, then approval for the next phase is given. Not really different from good project management.
This manner of development is more similar to startups which first develop a Minimal Viable Product, test this in the market and develop it from there based on feedback and experience. A step by step approach or lean innovation. This should enable the larger companies to become more innovative and to not only focus on improving its running products pushing out radical and disruptive innovation from the overall evaluation.
As Mr. Van den Ende states, it is not only the CFO who is accountable for solid innovation strategy. But using the real options valuation is not the only change. The CFO will need to align with the internal innovation stakeholders what part of the (R&D) budget or revenue will be reserved and spend (just assume as incurred expenses) during a year and over multiple years. Because, although the real options valuation will allow to calculate the outcome differently (a more favorable outcome compared to projects using the more traditional calculation) and allow go or no-go decisions to mitigate too much resources lost, when making budgets and forecast over multiple years, every year the same decision is on the table to which projects to allocate the scarce resources to. The innovation strategy should clearly reserve a paragraph for 'radical or disruptive' innovation and how to deal with such a process besides the incremental innovation. Because for multiple years planning, the real options valuation technique will not give a solution as one will not know the outcome of such special projects. And let's be honest, when a project is really promising, it will not be so difficult to obtain sufficient funding to see such project through. It shows that an innovation strategy should also have categories based on feasibility and have its own targets to measure success.
But is an established company able to initiate radical innovation? Being scared of cannibalizing own well running products? It will come down to periodically critically assess its business model canvas to assess the current status and expected (technological) development of its business, industry and environment in the next few years to see opportunities. And that is a group effort.
07/08/2015 Ethereum popping up
This week on LinkedIn, a post was made highlighting Ethereum, a blockchain-based virtual machine featuring stateful user-created digital contracts and a Turing-complete contract programming language (note: bitcoin is built on blockchain technology). Ethereum uses its underlying network unit, Ether, as payment to incentivize a network of peers to provide computational services defined by the smart contracts deployed on the blockchain. In this respect, Ethereum is different from a cryptocurrency, as it is not solely providing a service for transacting monetary value, rather, it is a censorship proof network which can provide user-defined services. Smart contracts can be used to securely execute a wide variety of services including: voting systems, domain name registries, financial exchanges, crowdfunding platforms, company governance, self-enforcing contracts and agreements, intellectual property, smart property, and distributed autonomous organizations. The platform was initially described by (Vatalik Buterin) in late 2013, formally described by Gavin Wood in early 2014 in the so-called Yellow Paper and launched 30 July 2015. It is among a group of "next generation" (or "Bitcoin 2.0") platforms. Source: (Wikipedia). This is going to bring change to how compliance is handled and controlled in society and business. Not tomorrow, but in the foreseeable future.
06/08/2015 Dutch startups survive above average
Of Dutch startup companies 53% see their fifth anniversary, while according to the survey of OESO the average survival rate over five years in the 25 researched companies is 44%. Sweden (65%), Belgium (60%) and Austria (60%) do even better than the Dutch startups. Worst is Letland (20%).
Startups are an important driver for employment. In 2012 an average Dutch startup employed three to four people, slightly above international average. Startups in the USA are at the top employing on average over seven people. Another review by Compass showed that more often people from abroad are hired. In the 20 most popular startup regions in the world, on average 29% of the employees came from another country then the startup country.
Source: Het Financieele Dagblad of August 6, 2015
28/07/2015 IASB voted for one year delay IFRS 15 implementation
The International Accounting Standards Board (IASB) has on 22-07-2015 voted to delay the implementation of IFRS 15 Revenue from contracts with customers by one year. The standard now needs to be implemented by
1 January 2018. Delay will give all parties more time to study the comments and comprehend the effects (on the business). This standard will impact revenue recognition for companies selling more then a single product and use contracts to define and close the sale. It might impact the way Sales behaves It might also impacting a lot of business controllers and their systems measuring performance (will source data remain the same?).
A consultation paper containing proposed clarifications will be issued for comment later this month. Early adoption still permitted. It also keeps the effective date aligned for IFRS and US GAAP.
Source http://economia.icaew.com/news/july-2015
22/07/2015
Downloaded white papers on various topics on Agile software development and Lean Startup, and How to develop a succesful SaaS product?