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Industry view Business Reporter · June 2011


7 Time to get your hands dirty


From cash flow to outsourcing to managing the accountants, our experts look at the challenges facing today’s finance director


Sid Vasili John Booth Chandra Patni


What major sourcing contributions were you involved in that have had a significant impact on the business community?


In 2008 I founded Invapay, because I realised there was a need to help vendors get their invoices paid faster than within 30, 60 or 90 days. We created a platform where buyers and sellers interact. The buyer receives the goods, and then the vendor receives payment in five days. Everybody wins. Imagine that. The problem with the current business dynamic is that corpo-


rate buyers tend to want to preserve cash flow, so vendors find themselves waiting weeks and sometimes months to get paid. This disrupts vendor cash flow and means that businesses can’t afford to expand. I don’t know if corporations want to change. Why would they?


But improved vendor cash flow would improve the overall efficiency for everyone because there would be more capital in the system.


What key change do you predict will occur in the next 12 months?


I believe banks and corporations will have to change their be- haviours. We need to drive liquidity back into the economy. When businesses hold back you see a decrease in a country’s core assets, its people and innovation. That’s the problem we’ve had with offshore outsourcing; it’s a short-term solution. If you look at Germany, for instance, they are doing really well because they protected their core assets and didn’t outsource their services to low wage-paying countries.


I’ve been doing business for 40 years and I actually think outsourcing is an excuse for not dealing with problems


What is the most debated question in the industry?


Whether offshore outsourcing is beneficial. I’ve been doing busi- ness for 40 years and I actually think it’s an excuse for not dealing with problems. What tends to happen is that corporations shift their messes to countries with low-cost employees. It pleases shareholders but it has a negative effect on local operations. We have to find a way to sustain jobs because that has long-term implications.


Sid Vasili is the CEO and founder of Invapay www.invapay.com


Why should owner-managers get more hands-on with their business? Their business is their investment so they will want to be close to it. Traditional exit strategies – selling the business, passing it to the next generation or simply taking a back seat – have become more difficult in the current economic climate and we’re seeing many owner-managers getting back into the saddle.


It’s important that your accountants understand your vision for the business


How can they do this?


By taking advantage of all they’ve learned over the years. They should have a better idea now of what’s critical to the business, where it is currently heading and where it needs to be heading. This can be encapsulated in a handful of key performance indi- cators (KPIs): specific measurables like staff utilisation levels, turnaround times or debtor and creditor days. These let you check the pulse of the business regularly: focus on getting them right and you should see performance improve.


How can KPIs improve business performance?


Because what gets measured gets done! It’s too easy to define a strategy but do nothing about it. KPIs are the key milestones that drive you forward and measure your progress. Share them with all your staff to help them understand your strategy and change their behaviour accordingly. You can also change the rewards system to encourage this further.


What other changes will business owners have to make?


Many diversified during the boom years, often into areas where they lacked expertise. Now they must measure performance and divest of areas that are less profitable or are a drain on cash. Now times are tougher many staff will need training and hands-on supervision to improve their performance and bring it in line with your own vision.


Where can businesses get help?


Their in-house finance function should be utilised, if they have one. For KPIs to be effective you need detailed, current information and so it’s also becoming common for the external accountants to become more involved on a regular basis and to be more proactive rather than just being called upon at the year end. It’s important that your accountants understand your vision for the business: they can then help you build on your strengths and identify op- portunities to help you realise your vision.


John Booth is a partner at accountants and financial advisers Armstrong Watson www.armstrongwatson.co.uk


What is an electronic wallet?


It’s a piece of software that contains details of all your credit cards, debit cards and store cards, plus loyalty cards, gift tokens, money-off coupons and so on. It doesn’t hold cash because you can use your credit or debit card. They’re already becoming popular on the web and are now starting to be used for mobile payments.


Why would I want one on my mobile phone?


Firstly, convenience. Instead of carrying a wallet stuffed with plastic cards and scraps of paper, you just walk up to the till, select a payment method and tap in your security code. The phone either displays a barcode for scanning, or communicates via 3G or a short-range wireless link. The wallet can store electronic receipts (even if you pay with


a physical card) and keep a running total of what you’ve spent. You can’t lose paper vouchers or leave them at home. And you can get location-related information and offers: coupons for the shop you’re in or discounted tickets for the cinema round the corner.


What about security?


The wallet is protected by security codes. And because your card numbers are stored on a central server, not on the phone, it’s more secure than a physical wallet – if you lose your phone, you don’t lose your life! It also means shop assistants never see your name and card number, and cards can’t be “skimmed” to steal their data.


Electronic wallets are quick and easy to use on the web and retailers like them because they don’t have to store customers’ card details


Will it link up with what I do online?


Yes. Electronic wallets are quick and easy to use on the web, and retailers like them because they don’t have to store or process customers’ card details. Soon you’ll be able to go virtual shopping with your friends on Facebook and, over time, mobile wallets will become more and more the consumer’s persona.


How soon can I get one?


Several companies already offer mobile wallets, including YESpay, Barclaycard and Orange. They’re free to the consumer, and within a year I think they’ll be widely accepted by retailers and leisure outlets.


Chandra Patni is CEO and CTO of YESpay International, the secure multi-channel payment service provider www.yes-pay.com


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