Finance and portfolio management

I’m working on a set of accounts and solutions for my company, handling a portfolio at country level.

My team is composed by account managers where that handle the day to day relationship with customers, write offers, deliver services with the support of service managers, handle projects directly or with a PM…They do a lot of things, and they understand the importance of the customer touch, and all they need to do to sell.

If you have a team, you will have high potential people and average people. So you can expect that the knowledge differs in general depending of the person behind.

My point today is that I found the knowledge all these guys have about finance is so poor in general. Things like the P&L rules of the company, how the indirect costs are allocated, how are the revenue recognition rules are, how to make accruals… is basic knowledge they need to be able to understand what is happening in their accounts.

The person handling the portfolio before me did a good job organizing finances, having clear figures of pipeline, gap plans, forecast… but s/he never teach or coach the team about all the basic rules that are impacting the account managers.

This lack of understanding has derived into a lack of interest on the results or on understanding why so many of them are delivering poor operating income figures. The second derivative of the impact is the fact that they had not under control the impacts of bad delivery. They know they have problems on the contracts, but they are not able to tell me how much in dollars is the quantity of the impact.

My first step on the portfolio has been to review all the finances with them:

  • Account by account,
  • review the gap of the contracts with respect the expected gross margin, direct cost margin.
  • Understand what are the reasons of our poor operating income (this is outside of the accounts).
  • Explain what are the basic rules of the P&L, and how some behaviors affect more than others.
  • Enable actions at account level and at country level, reviewing periodically all these actions.

The results are being interesting, once this first whole review of accounts conclude, I will be able to focus on growth and sales.