The Evolution of Management
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The Evolution of Management

What I am about to narrate to you is the result of more than thirty years of experience in financial information analysis from the perspective of accounting, auditing, and the constant recurring complaints of people who need to make timely decisions, based on comprehensive information on their companies, some of the comments heard are listed below.

“I must prepare a Board of Directors and I need to gather my entire team, this takes me from five to fifteen days, to integrate information from the following areas:
Financial Area: Budget, Forecast, Financial Statements, EBIDTA, Cash Flow, behavior of income-generating areas, Indicators.

  • Commercial: Sales, products, sectors, units.
  • Legal: Status of processes or situations that positively or negatively impact the business.
  • Accountant: Must be in previous meetings because the financier requires explanations about any figure.
  • Design: He is the one who designs the PowerPoint of any meeting
  • Production: Call production if you transform or are a service provider. It reports the volumes and costs for the purpose of determining the Cost of what is sold and a number of possibilities for decision making.
  • Audit: If it exists, it is used so that in most cases it is the one that endorses the financial information because everything must be previously audited.
  • Human Resources: It is one of the most important actors because it is necessary to understand the future impacts of any movement in this area and the cost or expense”.

The above describes the major players required to develop a very important Board of Directors and the associated costs to bring it to a successful result.

Then, on the day of the meeting, the rigorous protocols are complied with and in most cases it begins with the results of sales, cost of sales, gross profit (by cost centers), areas who sold more, and finally, as usually happens in these meetings, there is always the person who crosses the Financial Statements with the sales presentations, or with the cost of sales and requests an explanation about the irregular behavior of what the cost of sales represents on sales during the last twelve months, taking into account that you have the analysis and that you worry about the consistency of gross profits.

However, the information has not been clear, so a look of confusion among the members of the Board is normal, who have to call the Accountant (because no one has the courage to defend the argument made). As for a change, once again it is proposed that a report be rendered for the next meeting to clarify this transcendental concern.

Experience tells us that 95% of companies have problems with determining the cost of their sales, some of the readers will identify with the situations raised above, making sense to them and others may say that this has never happened to them.

However, reality shows that: Companies have an ocean of structured information (financial information system or the management of your business) and unstructured (Excel sheets and others that must be prepared manually). That is, information networks that contain points that are part of the system but that are islands or independent kingdoms that do not flow within the network.

The evolution of management is to obtain information without the need for third-party filters, for any time, place of occurrence and that this information provides us with the necessary knowledge for decision-making.

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Rodrigo Moreno Navarrete