A macroeconomic factor is a significant fiscal, natural, or geopolitical event that has a significant impact on the economy of a region or a country. In other words, instead of affecting only a small number of people, macroeconomic forces typically have a large-scale influence on whole communities.

For example, macroeconomic factors such as inflation, war, energy & supply chain crisis are hitting all of us.

Therefore, in order to best preserve and improve your finances, it normally pays off to stay on top of things and be informed of what’s happening. Most importantly, this is because the economy still experiences boom and bust cycles.

What Can You Do as A Person to Secure Your Future?

First, double down on investing in yourself. In addition, I strongly believe this is the best way to protect yourself from a critical economic situation.

Therefore, what can you do?

• Set yourself a goal to be 1% better every day
• Learn a new tool
• Improve your soft skills

How Can you apply it if you are a Finance Professional?

1. How can you get 1% better every day?

• Simplify your reporting
• Automate your tasks (even one small improvement every day compounds to great effects)
• Read more about the business
• Take a walk in the operational department to get a better understanding of the products and what are the current pain points

2. Learn a new tool
If you don’t know which one, start with this list:

• PowerQuery
• PowerBI
• QuickBook
• SAP
• Oracle
• Any new Excel or PowerPoint functions

3. Improve your soft skills
Here are the skills you should focus on:

• Storytelling
• Lateral management
• Influence decisions
• Demand management

Conclusion – Protect Yourself Efficiently from Macroeconomic Forces

Macroeconomic factors have a significant influence on industries and the health of our own finances, making them difficult to ignore. Therefore as I explained, you need to:

• Set yourself a goal to be 1% better every day
• Learn a new tool
• Improve your soft skills

Moreover, what are you doing to get 1% every day?

Finally, if you want to learn other valuable things to protect your finances from the macroeconomic effect, you can take my course today.

Our capacity to adapt and pick up new finance skills is crucial for career development and enhancing corporate outcomes, as the pandemic has taught us. For you and your team to succeed in the shifting market dynamics, it is essential to update and develop skills. How can you improve your career as a Finance professional?

Here are the skills you need to develop to accelerate your career in Finance.

Analytical Finance Skills

Learn how to use the right analysis methods, such as:

• Price Volume Mix
• Sensitivity analysis
• Variance analysis
• Horizontal analysis
• Vertical analysis

Almost every day, finance professionals must deal with difficult business scenarios. In other words, from obtaining resources for financial research to keeping an eye on finances, finance managers and executives need to be able to understand and evaluate a situation. In short, they should be able to think critically and make decisions under pressure using the methods.

Basic Accounting Skills

First, to understand the impact of business events on financials, you need a basic understanding of accounting and learn how the three statements (P&L, Balance Sheet and Cash Flow) work together. Second, you need it because employers search for people who have a fundamental knowledge of accounting, including how to create and manage cash flow statements, prepare balance sheets, and do other accounting-related tasks. Therefore, in order to have a competitive advantage over rivals, you should be well-versed in core accounting concepts, procedures, and tools.

Soft Skills

Develop the following soft skills to deliver value to your organization:

• Communication (written and verbal)
• Interpersonal
• Influencing
• Put yourself in other people’s shoes

Explaining complicated financial ideas in simple terms orally and in writing becomes crucial since the finance team now must work collaboratively with several other teams. Additionally, you should be able to converse with industry experts and answer inquiries from a wide range of people regarding the performance and objectives of the organization.

The Bottom Line – Importance of Finance Skills

The skills you posses in finance will play huge role in shaping your career. Therefore, if you are willing to develop your analysis skills, I am here to help you.

Finally, I have a program to help finance professionals upskill themselves and accelerate their career. To get access to that program you can take my course.

A financial KPI (Key Performance Indicator) measures a company’s performance in terms of producing revenue and profits. KPI tracking reveals if a company is succeeding in attaining its long-term objectives. Therefore, here are the top six KPIs for Headcount Analysis.

#1: Headcount Analysis Evolution and Variance

Salary and Full-time Equivalent (FTE) reports, which are categorized as employee or HR reports and are frequently utilized by HR and other managers to acquire a thorough picture of headcount and compensation status in comparison to plan. As a result, this sort of report’s primary features includes displaying actual and budgeted FTE numbers by division and department for every month of the year.

#2: Full-Time Equivalent

Evolution and variance Full-Time Equivalent is based on the contractual hours of an employee. Therefore, Full-Time Equivalent (FTE) is calculated by dividing the employee’s planned hours by the company’s hours for a full-time workweek. Workers who are scheduled to work a 40-hour workweek are considered 1.0 FTEs by the company. A 0.5 FTE employee is one who is scheduled to work 20 hours per week.

#3: Percentage of Direct Vs. Total Employees

Direct or indirect work is the two types of labor that employees can provide. A direct employee works directly on a project or production order, whereas an indirect employee has more of a supervisory or support function role.

#4: Flexibility

A number of temporary workers, number of hours in time account. In other words, this will help you know how much you can reduce or increase your activity to adapt to the business demand.

#5: Actual Capacity in Hours Vs. Budget

Compare the gross capacity (hours before holidays, sickness, leaves) as well as the net capacity. Also, identify the root cause of differences in your capacity. Furthermore, it can help you explain why fewer or more hours are worked.

#6: Turnover rate in Headcount Analysis

The number of employees leaving the company compared to the total number of employees. You can see if there is some anomaly in some departments or some regions. The dynamics of individuals leaving or remaining in an organization are evaluated using turnover analysis to:

• How many workers leave
• The causes of why people exit or stay
• The expense of turnover caused by a loss in company continuity
• How to reduce the danger of present employees leaving the company through turnover

The Bottom Line – KPIs for Headcount Analysis

Beyond the common financial metrics and KPIs listed above, businesses can track specialized KPIs that focus on their inner workings or functions, such as those related to analyzing inventory, sales, receivables, payables, and human resources.

Do you perform other analyses, and which one has the most value?

To learn more financial metrics and gain more knowledge in Finance, you can take my course.

To begin with, to increase the financial success of your small or medium business, utilizing the best tools for SMEs’ finance teams is crucial.

In addition, owning a small or medium business can be challenging, but applying the finest financial management techniques can enhance your company’s financial future.

Moreover, I have made a mini guide of the most common tools used by SMEs. Therefore, here are the best tools for SMEs Finance teams.

#1 Accounting Tips for Tools for SMEs Finance Teams

SMEs are mostly using QuickBooks (60% market share).
Advantages:

• Easy to find accountants worldwide who can use it
• API gives many possibilities to interface with other solutions

#2: Payables

Many SMEs use Bill.com to streamline and automate the accounts payable process. In other words, it helps you eliminate manual tasks from managing funds, including controlling employee costs, collecting payments, and paying bills.

#3: Business Intelligence

PowerBI is taking over the business intelligence front end. Both in SMEs and in multinationals, the BI tool from Microsoft is gaining traction. The tool is easy to use thanks to its “Office feel” interface.

#4: Operations

ClickUp is used by many fractional CFOs companies. Additionally, using this tool can help you adapt to the demands of your team; you can plan, monitor, and oversee any kind of task. Here is what you get:

• For project management
• SOPs
• Workflows
• Tasks
• Documentation

#5: Invoicing

Chargebee is one of the solutions covering SaaS businesses wanting to automate their subscription invoicing. In other words, it manages subscriptions, billing, and revenue recognition.

The Bottom Line – Tools for SMEs Finance Teams Can Give You Advantage

The SaaS described above are the best tools for SMEs finance teams, from finance and administration to internal and external communications. Additionally, spend an hour right away looking into each option, as you can wind up saving yourself days, weeks, or even months later on.

However, if you are a finance professional in a SMEs, what is the number one tool which brought you the most value?

If you want to receive more finance tips like this, feel free to sign up for my newsletter. If you subscribe, every two weeks, you will receive an email from where I share best practices, career advice, templates, and insights for Finance Professionals.

Huge quantities of organized and unstructured data are gathered, processed, and analyzed by business intelligence tools in finance from internal and external systems.

There are many different types of data sources, such as raw files, ERP databases, emails, CRM data, archives, online data, and much more. Business Intelligence (BI) tools employ query to retrieve this data.

Then, they may be shown as reports, dashboards, charts, and graphs for ease of use. How can you make the best out of business intelligence tools when you work in finance?

10 Tips for Using Business Intelligence Tools in Finance

Here are my ten tips for you.

#1: What to Do When You Start?

Understand where you can get the tutorials and learning materials in your company and on the internet.

#2: Get An Understanding of The Data and Reports Available

Ask to see the library of data mapped, standard reports, and customized reports to have a quick feel of the possibilities.

#3: Learn from Others

Document the list of reports your colleagues are using, and for each of them, make sure you also note which parameters to use cubes, date, and filter.

#4: Identify the Key Users

Get to know the key users within your department but also from the other teams. Furthermore, this is a great way to learn from others and get some help if you are stuck with one report.

#5: Influence the key stakeholders

Influence the IT team and key users from your company to move some of your priorities to the top of the agenda. Therefore, the best way is to participate in key meetings. But also to do one-to-one meetings as well as draft proposals.

#6: Use Every Request as A Way to Leverage The Business Intelligence Tools

Each time people ask you for information, show existing reports they have at their disposal. As a result, create for them ad hoc reports they can receive per email and/or consult when they need it.

#7: Accept The Imperfection of A Solution

Accept the imperfection of the BI solution and embrace the time and value you get (single source of truth, consolidation, versioning, collaboration).

#8: Increase Awareness

Explain to others what the tool can and not do: increase awareness and decreases frustration.

#9: Don’t Use The Business Intelligence Tools as An Excuse to Hide Other Problems

Often critics of a tool are the tip of the iceberg showing communication problems and issues in the processes. Therefore, solve them before trying to change the tool.

#10: Learn The Best Practices from Other Organizations

Participate in webinars and conferences, connect with BI specialists on LinkedIn, and learn what the best practices are.

Conclusion – The Importance of Using Business Intelligence Tools

Ultimately, the secret to boosting profitability and securing overall business success will depend on the proper data gathering and analysis.

The best approach to obtaining data from many sources and extrapolating relevant, business-enhancing information is to use business intelligence tools. But it’s crucial that you pick and use the appropriate BI tool for your company.

If you want to receive more finance tips like this, feel free to sign up for my newsletter. If you subscribe, every two weeks, you will receive an email from where I share best practices, career advice, templates, and insights for finance professionals.

Firstly, if you work in Finance, you must know how to use Price Volume Mix analysis. As a result, I created this free guide for you.

However, it’s ideal if you have an FP&A role and are working with management and other departments. Also, this guide can also help accountants who want to move to FP&A. Moreover, once you have identified variances in your PVM analysis, it explains what to do.

What Is Price Volume Mix Analysis?

PVM analysis enables you to break down changes in revenue or margins into their constituent elements. Furthermore, the created report displays the discrepancies between expected and actual sales along with the three key elements that may be causing them. Therefore the three elements are price effect, volume effect, and mix effect.

In short, here are the definitions of the three elements.

• Price effect: Effect price-keeping quantity constants
• Volume effect: Selling more products, even at the same mix and price, will increase sales
• Mix effect: Even keeping total quantities and prices the same, sales can increase if we sell a higher proportion of expensive products

Examples of Situations in PVM and What to Do?

For example, here are some situations that can occur and what should be your move.

You Detect An Increase in Volume with a Negative Mix Effect

What to do? Check if the changes in volume are really aligned with the product portfolio strategy. Then, detect why you decide to sell more of the cheaper products.

You detect an unusual business event
What to do? Investigate business events and take corrective measures.

You identify product cannibalism
What to do? Review product portfolio strategy and prioritize.

You have variances coming from new and discontinued products
What to do? Revalidate business case assumptions.

You see variances coming from price changes
What to do? First, validate prices. Then, perform elasticity & sensitivity analysis to choose the best price and supply chain combination.

Variances come from discount effects
What to do? Verify impact on profit and revise your discount strategy if the use and results are not aligned with goals of the organization.

You have exchange rate impact
What to do? Check for hedging strategies if the effect is significant.

You see a correlation between Volume and Mix
What to do? Check if the changes in volume and the impact on the mix are aligned with the sales strategy.

Conclusion

To sum up, business executives must use a robust PVM analysis to effectively assess their sales model and make changes where necessary. Moreover, to improve decision-making and drive revenue growth, analytics are necessary to have an impact on overall profitability.

Also, here is a quick recap of the material

In addition, this is how I see the value of Finance:

1. You have results from your analysis.
2. You identify what the causes are.
3. You communicate with your business partners and identify the next course of action.

Finally, if you like this article, you will love my course. The PVM analysis is one of the methods I am teaching in my course. Join the 200 other students who decided to use my 14 years of experience to accelerate their careers!

The finance industry is constantly evolving, which offers a dynamic and challenging work environment. Therefore, finance professionals need to be able to adapt to change and always learn new things.

Working in finance can be a very rewarding career. It can be exciting and challenging, with the potential for high earning potential. However, it can also be stressful and demanding.

How Has The Finance Sector Developed?

The finance sector has been expanding for many years. In addition, a large portion of this expansion may be attributed to the trend toward globalization of markets, which has given investors in almost every nation access to more financial resources and investment opportunities than ever before.

However, the crisis that began in 2008 temporarily slowed the expansion of the finance sector, but when the economic downturn bottoms out and starts to rise up again, demand for financial experts will increase.

Advantages and Disadvantages of Working in Finance

Here are some pros and cons of working in finance:

Pros

• You are involved in many strategic and operational discussions as often financials play a significant role in the decisions.
• You have access to both the past (financial statements) and future (budgeting) of your organization.
• Topics, industries, and seniority allow you to choose between many different career paths within the finance function.

Cons

• Sometimes the focus can be on figures and less on qualitative factors.
• You can silo yourself from the organization if you only speak with finance and only focus on your Excel files or ERP.
• Without technical skills, it’s hard to have a successful career.

The Final Verdict – Pros and Cons of Working in Finance

So there you have it – the pros and cons of working in finance. Ultimately, only you can decide whether a career in finance is right for you.

But if you’re up for the challenge, there’s no doubt that finance offers a unique and rewarding experience. Finally, check out my online course, which is the choice for many finance professionals!

What do you need to do in the year-end closing process? If you are working in Finance just like me, chances are that it’s getting busy.

In addition to the day-to-day activities, there are three things you should do to finish the year well.

Assess Your Balance Sheet Positions

One of the main accounting principles is the accrual principle. First, the transactions need to be recorded in the right period. After that, you need to review your balance sheet positions and book any impact on your profit and loss.

For assets: Review their value, and if needed, you need to book an impairment.
For provisions: Update your assumptions to your best knowledge to have an accurate provision.
Most importantly, remember to document these steps!

Furthermore, here are some areas to have a specific focus on at year-end:

• Personnel/HR provisions
• Litigations
• Bad debts
• Stock
• Warranty
• Invoices not received
• Any fixed or immaterial assets no more in use

Prepare Your Landing Scenario for The Year-End Closing

Now that you are closing in November start working on forecasting December. As a result, identify the risks and opportunities on your last forecasting. Then, discuss it with your business partners and your management. Moreover, in your exchanges, you will identify what are the key levers to make opportunities happen and mitigate risks.

Collect Cash

Most certainly, a lot of companies have included their operating cash flow as part of their objectives. Therefore, this means that the management can request the finance team to make an additional effort to maximize the cash collection.

The Bottom Line – Year-End Closing Process

Ultimately, being prepared, organized, and proactive with accounting practices throughout the fiscal year is the key to a smoother year-end closing process.

Also, let me know if you have any remarks or questions on this topic!

Moreover, if you want to receive more finance tips like this, feel free to sign up for my newsletter. If you subscribe, every two weeks, you will receive an email from where I share best practices, career advice, templates, and insights for Finance Professionals.

The CCC is a crucial business indicator that demonstrates a company’s efficiency. Furthermore, your company may monitor it to see how quickly it turns cash from sales into cash again. Also, it helps you see your current cash flow clearly.

What is CCC?

Definition: Days to convert inventory into cash flows from sales.

Explanation:

The cash conversion cycle expresses the amount of time your company needs to convert the investments in inventory to cash flow from sales.

Additionally, the CCC is known as the net operating cycle. In other words, the CCC aims to calculate the length of time that each net input dollar spends in the manufacturing and sales cycle before it is turned into cash received.

How to Calculate CCC?

Formula: CCC=DIO+DSO−DPO

Where:

• DIO=Days of inventory outstanding
• DSO=Days sales outstanding
• DPO=Days payables outstanding

Days Inventory Outstanding (DIO) measures how long it takes your business to convert its inventory into sales. To clarify, DIO is the number of days on average that your company keeps its inventory in stock before selling it.

Days Sales Outstanding (DSO) metric measures the average time it takes a business to collect its receivables. In other words, DSO calculates the time it takes a business to collect payment following a purchase.

Days Payable Outstanding (DPO) determines how long it usually takes a business to settle its payables. Therefore, DPO evaluates the average time it takes for a business to pay its trade creditors, or suppliers, for their bills.

Advantages of CCC

#1: Traces The Cash Lifecycle for A Business Activity

It displays your company’s overall cash flow. Therefore, the quicker you convert your cash, the better your cash flow will be.

#2: Directly Improves DIO, DSO or DPO

Having a positive Cash Conversion Cycle can speed up the average days in inventory, reduce the average days of receivable and extend your average days of payable.

The Bottom Line

To conclude, if your company has a lower CCC, it indicates that your company has a stable working capital, liquidity, cash flow, and profitability.

If you want to learn more and broaden your finance knowledge, you can take my course.

Are you looking for a way to determine your company’s strategic, financial, and operational achievements? Moreover, do you want to compare them to other businesses within the same sector? Then, the Headcount KPIs are the way to go!

What Are Headcount KPIs?

Headcount KPIs, or Headcount key performance indicators, are performance measurements. Furthermore, more precisely, they can help you evaluate the success of your organization or a specific activity.

For instance, you can measure against your targets or objectives. Moreover, they can help you compare your success to other industry peers.

However, there are a few types of KPIs to consider, such as strategic KPIs, operational, functional, or leading/lagging KPIs.

Most Important Headcount KPIs To Learn

Therefore, here are the most important Headcount KPIs to consider.

Headcount

Description: Number of active people working for a company at a certain time.

Formula: Number of active employees full-time & part-time + leasing employees

Full Time Equivalent (FTE) Headcount KPIs

Description: 1 FTE equivalent of a standard working hours contract. Example: a part-time at 50% = 0,5 FTE.

Formula: Number of hours in the employee contract / Standard working hours

Turnover Rate

(also called attrition or churn)

Description: Calculates the % of people leaving the company compared to the total number of employees.

Formula: Number of departure over a period / Average total headcount

Natural Attrition

Description: Number of employees planned to leave the company based on the actual contractual situation.

Formula: Planned retirement + Planned end of limited contract

Capacity

Description: Calculates the number of hours available from direct workforce.

Formula: Number of FTEs over a period x working hours available for one FTE

Capacity Increase Flexibility

Description: Calculates how much capacity can be increased without having to recruit new employees.

Formula: Flexible time account not used + Overtime + Temporary change of hours available in part-time contracts

Capacity Decrease Flexibility

Description: Calculates how much capacity can be decreased without having to discontinue employment contracts.

Formula: Flexible time account + Temporary change of hours available in part-time contracts + Temporary workers time

Noria Effect

Description: Effect of changes in compensation due to hiring and departures.

Formula: (New hires salary costs – Leavers salary costs) / Previous salary costs

Absenteeism KPIs

Description: Calculates the % of the time not worked due to illness.

Formula: Illness days / Total working days

Time To Fill

Description: Measures how long it takes to fill in an open position.

Formula: Average number of days between job opening and contract signed by the candidate

The Bottom Line – Headcount KPIs Are Important, but There Are Others Too

In conclusion, KPIs can help you effectively measure and track your performance across several metrics. But while KPIs are key in finance, it’s important to remember they vary from industry to industry, depending on performance criteria.

Finally, If you want to learn more about FP&A, budgeting, forecasting, as well as other finance topics, you can take my course.