Marketing, sales and finance are the key services in responding to change. However, their functions should evolve in response to market demands.
The Three Whales: Finance, Marketing and Sales
These departments' functions, role in the company and level of interaction depend on what effect each has on the company’s business. This usually depends on the company's area of activity. For example, in FMCG, sales and marketing are the driving force of the business, while other departments, including finance, provide service functions. But in agricultural, energy and gas production companies, the finance department plays an even more important role than sales.
Arguments over the boundaries of responsibility in a company's departments happen all the time, at least in a company where these departments really work rather than simply appear to work. Inevitably, cooperation between departments sometimes turns into a competition. But this is a natural process which only benefits the end result, if a proper approach is taken.
At our company, the finance department is always focused on a functional flexibility. We started considering other areas to pursue, including trade, both regular trade and trade in goods with minimal processing of a purchased product, several years ago, even before the crisis broke out. Marketing, i.e. the analysis of demand, adequate assessment of the market and its prospects, and marketing strategy, is a top priority for such a business.
Sales are even more in the spotlight during a crisis because they generate income. It is appropriate actions taken by sales that help a company survive challenging times and emerge as a winner after a crisis passes. In this situation, the task of both finance and other departments is to maximize assistance to sales.
Direct support of sales (calculation of transaction effectiveness, budgets, pricing, etc.) is an obvious priority. Like the company as a whole, the financial director and his or her department must ask themselves the question: what else can we do to support sales?
Financial Department and the crisis: great expectations
Obviously, finance department staff has unique expertise that other units of the company, even first-rate sales experts, do not have (or have only to a limited extent). This specific expertise is required to effectively conduct business, maximise profits and avoid unnecessary expenditures. This refers, for example, to familiarity with tax laws, the financial market, foreign exchange regulations and banking products that can be used when working with buyers (domestically and for exports).
Which finance department abilities can be used to boost sales and establish and improve relationships with customers? We propose three key ones:
- advising on changes in tax laws and foreign exchange regulations, and other regulatory documents that affect business processes. In practical terms, this involves consulting, contract modification, etc.;
- advising on the use of banking products, letters of credit, bank guarantees, and other instruments that may be useful both to vendors and customers;
- consulting with customers on taxes, helping them to figure out which sales conditions are the most profitable, helping in raising bank financing and using banking products.
If the sales department is interested in expanding the range of products under the new conditions, it can expect the financial department to:
- make real-time calculations of the sales effectiveness of new products, pricing and the break-even point;
- make reliable calculations for the sales development strategy;
- provide information about special regulatory conditions for trade in such products;
- organize funding for the initial investment in working capital and fixed assets;
- create a financial rapid-response team to support the project.
Special attention should be paid to risk management during a crisis, both when selling conventional products and trying new ones. To this end, one must be able to identify the most risk-prone areas, products and customer groups. Finance staff and the sales team work together to build a management system for sales-related risks. They must determine the degree of risk acceptable for the company for each product, and for customers and suppliers of goods and services. Within the agreed range of risk, the sales team can modify the price, offer preferential payment terms to the customer, etc. This will make sales more flexible and thus more effective.
Summing up, we can identify five main tips for a CFO during a crisis:
1. Form a general picture of the new operating conditions: what has changed and what works differently than before. Note both the general economic conditions in the country and the situation in your market and your company. Identify key changes and think of how to respond to them.
2. Discuss the challenges that marketing and sales face at your company. List actual needs and wishes addressed to finance. Find out what information and consultation support your sales department needs.
3. Take an inventory of finance functions. Some of your functions will cease to be essential in the new conditions, while others will unexpectedly come to be in high demand. Draft a plan for the development of required functions. Have this plan approved by company management and your marketing and sales colleagues.
4. Overhaul financial operations to conform to the new conditions, objectives and priorities.
5. Monitor results regularly. It is difficult at first to work with new market demands, but with proper modifications performance can be improved quickly during a crisis.
In conclusion, it is worth adding one crucial observation that appeared before the crisis but is relevant under any conditions, at any stage in the life cycle of the company. Powers must be shared with your colleagues. Whether this is instructing trainees or coaching senior managers or holding a workshop for experts, it is vital to spread expertise across the team. Then your colleagues will understand financial operations better, become more financially literate and, ultimately, the departments will collaborate much more effectively. With support like this, no crisis is intimidating.