Embedding financial discipline

My role as Finance and Strategy Director at MA Group neatly brought together financial strategy with organisational purpose. I was far more than the numbers person; I was part of the strategic growth story – which is exactly how it should be.

The finance team are a key part of the strategy – they are an important source of information and strategic thinking:

• Finance needs to be aligned to the strategic goals, understanding where investment is needed and measuring the results of that investment.

• Cash flow forecasting and dynamic scenario testing ensures that the board have a clear view of the demands on cash, the range of likely outcomes and the contingency plans. The quality of data and the use of predictive analytics ensure data-driven decisions to support investment in the right resources that deliver positive returns.

• Good forecasting and financial planning also ensure that requirements for external financing are predicted in advance and at the right time, creating enough time and space for the business to go through the funding process, which can be time consuming and complicated.

• Strong working capital management, or “self-financing” as I have previously called it, is essential. New business creates working capital challenges as customer credit terms, WIP and stock tie up cash at the same time as supplier and overheads increase.

  
  

Strategic growth is expensive, and many founders and entrepreneurs don’t appreciate how much cash they need to grow their business and, more importantly, how important financial discipline and support is. Over the years I have come across many companies who have got into trouble when trying to grow too quickly with insufficient resources and financial knowledge.