Upside/Downside - Grow Your Profits and Cash Flow
Poor profits and cash flow got you down?
My name is Matt Cooley and value creation has always been central to my career, from start-ups to multi-billion-dollar product lines. As a finance executive at successful companies, I've noticed a thing or two about what creates versus destroys value. In this podcast, we explore value creation and share a few laughs on the way to higher profits and cash flow.
Check out my website at www.upsidedownsidepodcast.com where you can share your email for my FREE one-pager: "10 places to look for higher profits and cash flow right now!"
I wish you the best on your value creation journey!
Matt Cooley
Upside/Downside - Grow Your Profits and Cash Flow
Ep 6: Building Sustainable Value Creation with Riccardo Govender, Customer Unit Controller at Ericsson
From his first job as a kid mowing lawns to today's role as Customer Unit Controller at Ericsson, Riccardo Govender shares how understanding the business and the flow of money are fundamental skills for Finance Business Partners. And improving your ability to listen, observe and be courageous will complement your impact. Riccardo joins from sunny Johannesburg, South Africa. Listen in!
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Matt
Hi, this is Matt Cooley, host of the podcast Upside Downside, where we explore what it takes to be the best finance business partners possible. I'm a finance business partner myself and former president of the New York City chapter of Financial Executives International. Prepare to meet professionals on the front lines of value creation and hear their stories. If you'd like to suggest a future guest for this podcast or be a guest yourself, please reach out. Now on to today's podcast. Please welcome Ricardo Governor, Customer Unit Controller at Ericsson. Welcome, Ricardo.
SPEAKER_01:Thank you, Matthew. Good afternoon. Hope all is well in your part of the world. And yes, I'm grateful and honored to be on your show, all the way from sunny South Africa, Johannesburg.
SPEAKER_00:That's excellent. And actually, you're my first guest on this podcast outside of the United States. And we have worked together at Ericsson and I was very anxious to get you to be a part of this. So thanks for being here. Ricardo, tell us about your business and how you came to the role that you have today, please.
SPEAKER_01:Yeah, interesting journey, I would say, Matthew. I think, let me start with that. I've always had a love for maths and numbers. And growing up, I thought that, okay, accounting and finance seemed like the most appropriate path to take. So a lot of effort in early days in that, but also what I had had done in my early days was to always look for business opportunities or ventures. I share with you that at one point I was using a lawnmower and cutting grass, right?
SPEAKER_00:Sounds familiar.
SPEAKER_01:So I started with that all the way to playing music at parties, selling food, and always thinking about how does money flow? At that point, I started making a living as a student. and then buying and selling cars and trying to think about it like that. So yes, so I think what I enjoyed about that was really thinking of a problem, trying to solve the problem and trying to really think about the flow of money for good, how to generate it, how to survive it and so forth. And then as I got my first role in finance, that role evolved from... start as traditional accounting, stayed out of university, you know, go into financial reporting, looking into statutory returns, tax, audit, and so forth. And it started to work more with the business. And I think I got back to that business type of thinking, where I started to look into operations, look into sales. And I was fortunate enough to join Ericsson and continue work in the sales environment as a business controller. So yes, I think I've come full circle back to that type of role where the role is really to support the sales and operations teams to actually deliver value both to the company as well as to the customer. Yeah.
SPEAKER_00:I love that and the flow of money and how you studied that across different jobs early in your life. That's really cool.
SPEAKER_01:Oh,
SPEAKER_00:that's neat.
SPEAKER_01:So I think, yeah, so I mean, if we continue with, you know, thinking about that, I mean, the role, I think what's important and what I feel that, what I love about the job to start with is that it really gives you an opportunity to make a difference. Yeah. I mean, you know, You have the ability and I think this is where maybe we as finance don't take for granted what we can actually do. We have the opportunity to really make a difference. Working with sales, working with operations, working with finance and having a solid and a good finance background actually allows you to understand the cause and effect. If I take this decision, what will be the effect on the balance sheet? What will be the effect from a tax perspective? What will be the potential effect from an audit perspective? So if I was in the shoes of an auditor looking at this transaction, what would I be thinking? If I was in the shoes of a tax consultant looking at the transaction, what will I be thinking? So not only to look at it from, okay, how do I report it to which GL account and if it's IFRS 15 compliant or not, but what are the other elements? And then not forgetting the performance side, right? How do you create value in a company? It's how to grow the business, create the value. So for every dollar being spent, for every dollar, am I putting 20 cents in the pocket of the shareholder? So it's really bringing all of those concepts together, all of those ideas and a That's
SPEAKER_00:excellent. And so on that note, what have you found are the unique attributes of a strong finance business partner?
SPEAKER_01:I would say that over the years, and I've also had trouble with applying this, is the listening, right? I think it starts with listening. And we want to jump in and we want to give a solution. We want to jump in and we want to move the discussion in a certain direction. But I think it's first to start with listen. Because what will that do, right? Listening helps you to understand and frame the problem statement or the and really get a sense of what does the internal or external stakeholder, what are they saying? What are they actually saying? So they might be verbalizing a statement, but unpack that statement to understand what do they want to solve. So when you know the root cause, I think that is when, as a true business partner, you'd be able to then find solutions that are satisfactory to the stakeholder. So I think the first part is really to listen and to frame the opportunity and to frame the problem statement. What does listening, it also brings out the softer skills, I think, in you. So you become more empathetic. You sort of connect to the speaker. You sort of find a wavelength that puts you in the same position as a speaker. And you start to get comfortable and start to build some sort of rapport or trust So I think listening is really the first step that I found that helps to start
SPEAKER_00:that.
SPEAKER_01:Once you listen, I think the next is observation. And yes, observation can be seen in many ways. But what does observation actually do? It really helps you to understand the broader context and helps you to triangulate as well a lot of the information that you would have gathered from your listening. Understand the broader context. a context for yourself, for your company, for your customer, your supplier, the country. I mean, I think as we've mentioned, Matt, we in Africa, we have not only the customer's challenges, but we have the country challenges. So that observation, what's happening around you also gives you insights into that opportunity or problem statement.
SPEAKER_00:And you have to distill all of those things into smart advisory to your business partner partner, smart decision making, et cetera, et cetera.
SPEAKER_01:Exactly. I mean, you know, as finance professionals, we have, we can understand what it means for the oil price to go up or down. I mean, the effect of the oil price going up or down in a country like Nigeria would eventually would mean that, yes, there's availability or not of foreign exchange. So U.S. dollars will be available for purchase of goods or will not be available. So if we are going to potentially do a sale type of deal and we see that six months out the FX availability will be constrained, then potentially doing that deal may not be the best thing right now. Or you find other solutions to secure that you can still have a flow of FX. So something as arbitrary as an oil price has an effect if you understand and observe the context, I would say. So it is those type of things that make you a stronger business partner because you are bringing to the discussion concepts, ideas, terminology that may be abstract to a salesperson or to operations but will actually impact what they do on a day-to-day. It will impact how they engage with the customer and actually it will impact their ability to deliver what the customer expects.
SPEAKER_00:So related to that, Ricardo, you've got some experience managing finance staff around the world. So in that context, what are some of the differences in style and approach that you've seen, all while creating value for the same company? Can you share any insights there? Yeah.
SPEAKER_01:I think it starts with trust, how to build trust with people from different cultural perspectives or backgrounds. Communication, we might think English is the business language but if English is not your first language then it's you know we got to understand that if English is not the first language but the second or the third in some cases then how do we communicate in a simple way even though so we get our message across so I really think that know the culture know the people is the first objective find a common language and secure that that the vision, the objectives are well understood. And then you can build a road together and take the journey together. I would say that.
SPEAKER_00:Okay, good. We probably have some CFOs listening out there who are wondering how to build closer partnerships. Perhaps at their companies, finance is focused more on the accounting side of things. What kind of advice could you offer those CFOs that want to build more of a partnership model than they might have today?
SPEAKER_01:Yeah, good question. I think we struggle with this. Most companies, I mean, finances seem to be back office. So the first challenge that we would have is how to bring the finance community from a back office perspective or perception to a front office. And that means that we have to show what value we bring to the table. So I think for the first thing is to really give people an understanding of the closing and reporting process and why that is important. So once the community and the stakeholders understand, yes, this is regulatory, this is stat Statutory, we have to do this. It has to be done in seven days after the month end as we need investor information to be shared as an example. So that's why the closing is compressed and we need to close the books on the last day of the month or we need you to do X, Y, Z. Financial reporting, IFRS 9 provisions. This is important because of this, this and this. So let them understand the accounting objectives, the financial reporting objectives and get them get that sort of out the way, if I say it like that. Then the second is to really understand, okay, what are the objectives of the stakeholders? What are they looking to achieve? What KPIs do they have for the quarter, for the full year? And how can we help them to achieve those objectives? So while staying compliant and while staying under the regulatory framework, what financial information insights do we see that can help them achieve the objective? can we go to the customer and improve the invoicing process so that they can, so we don't have a buildup of invoices that are rejected as an example. So find a common language, understand your stakeholders, understand the operations, understand the sales KPIs, understand their performance objectives, understand their customer perspective and find that step-by-step approach to moving from back office to front office using financial insights and the professional skills that we have to help them solve their problems.
SPEAKER_00:Excellent advice. I like that. I'd like to ask my guests, Ricardo, where they think the finance business partner role is heading. And in particular, what should we all be doing now to prepare for that future?
SPEAKER_01:Yeah, you know, there's been lots of discussion about the finance of the future, automation, robotics or RPA, transactions becoming offshore in hubs. I mean, the shared service centers was an early start of that. And I think when I look at 2020 and specifically for business partners, I mean, the pandemic is something that we would not have expected and spoke about six months ago, right? And what has this taught us? I mean, yes, you will always have the traditional steps and roadmaps that you would take to become efficient. And the new steps toward efficiency is really automation, robotics, and so forth. But I think what's key for finance business partners is to really understand the business and how the money flows. If I go back to that first comment, because that is what will keep you you relevant and that is what will keep and when I say relevant it's not relevant for the sake of being relevant it is relevant to secure sustainable value creation we are at the center of how I mean finance professionals can be and should be at the center of value creation and with value creation you got to understand the business how does the company make money How is the company going to make money in the future? And how do we support that with the tax framework, the audit framework, the financial reporting framework, and the management accounting framework? So taking those frameworks, how will that help the business achieve its goals and create value in a sustainable way? So I think it's really... the softer skills and the business skills coupled with using automation, AI technology. That's really the sweet spot, if I say it like that, Matt. And some of the softer skills will be really, you know, keep to the facts, know your numbers. When I say keep to the facts, it's really about knowing your numbers. So, you know, we talk about it in, you and I, Matt, about core finance. So, you know, know the basics. know your stuff, right? You have to have a strong foundation. Be courageous. Don't be afraid to act. Take decisions. I think a true business partner shows that they can take decisions. And not all decisions will be a success. You've got to also recognize when some of the decisions might not be a success. Recognize the failure. Learn from the failure. And move on. Because that is something that gives you the strength. You build upon your failures.
SPEAKER_00:Sure. And that can vary by organization quite a bit. I think we all have friends outside of our company that have organizations that can punish failures. We're fortunate that we don't work in such an organization, but I still hear that all the time. You made a mistake and you're going to pay.
SPEAKER_01:For sure. And I think that's the change in leadership, right? That's probably one key area of leadership is that there's this stick and carrot. carrot effect, right? Maybe that needs to change, right? It's learn by doing. And I mean, if you look at automation and AI, I mean, the transactions, you'll never have mistakes in a transactional type of environment or you could have potentially fewer mistakes, system generated mistakes. But when you talk about logic and about using advisory skills and using your ability to argue a pro and a con or why should business be done in this way versus that. There's never a right or wrong because there's so many nuances to that. There's so many factors that you need to take into account. I mean, today the oil price is$39. It has a huge impact on the ability of FX in a lot of countries in Africa to be able to import goods and services. Tomorrow it could turn to$75 a barrel and that will then open up a whole new world of business opportunities, right? So it's our ability to understand these levers that is key for the future. I mean, that takes us to the change, that change is the only certainty. And finance business partners, I think, need to understand the flags, the signals of change and how to secure that their businesses can react to those changes, both by preparing for it, mitigating the risk and making business decisions Well
SPEAKER_00:put, sir. And on that note, listen, I'd like to say once again, thank you so much for being here and sharing these insights with our listeners. Thank you, Ricardo.
SPEAKER_01:Thank you, Matt. Thank you for having me. Look forward to hear other insights from others and really look forward to build the finance business partner role in many, you know, as we go forward in our professional lives. It's
SPEAKER_00:great to hear. That's great to hear. And thank you to our subscribers for listening to this episode of Upside Downside. And we'll see you next time.
