Earlier this week, Greece received its first tranche of EU bail-out money. Stock markets rallied. The Euro made gains, but fell back in later trading. According to the BBC, there were still concerns among investors that the package does nothing to address the fundamental problems of high debt levels in many European countries.

What’s top of mind for the CFO during this period of uncertainty?

#1 Access to cash

How to access data up and down the financial information chain that could impact cash. Without it, they can’t keep the doors open let alone grow the business.

#2 Accuracy of financial reports and forecasts

Get it wrong and investor confidence falls and with it access to their #1 concern - cash.

#3 Understanding what drives profit

The focus here is on effective and efficient processes designed with profit (not revenue) in mind. The sad reality is that many organizations destroy up to 400% of profit without realizing. And it’s typically because they are so focused on revenue – not the drivers of profit.

Personally, I think CFOs should concentrate on #3. Once you have an accurate understanding of which customers and offers bleed cash … and why, you are in a far better position to protect cash, grow the business and improve your forecasts.

Antwerp Port Authority have started down that journey. Their first step was to understand what drove costs and profit at a departmental level. They can now model the redesign of a business process and calculate the impact on the overall cost structure with confidence. The same system helps them analyze Economic Value Added (EVA®) to ensure that any change generates a return that exceeds the cost of capital.

Standard Life performs product profitability analysis in its three lines of businesses. A typical product has in excess of 100 activities that could influence its final cost, with activities defined as anything from direct costs, such as the labor involved in a contribution to a group pension plan from a participant, to indirect costs such as the executive team. Standard Life use the data to quantify which products they should focus on and how they can improve a products efficiency over time.

When you get to analyzing both products and clients, data preparation is typically the greatest burden. Visa previously used Excel to model customers. The process took a week and a half to update and a lot of time was spent validating information was correct. Using SAS, they now update and perform over 20 million allocations in less than hour, with the ability to drill back and group data in many ways. Visa can now provide detailed analyses of all of the products, revenues and investments that relate to each client. With that kind of information, they are able to see more profitable opportunities – music to a CFOs ears.

What are your top 3 issues during this period of economic uncertainty?