As we move into the last quarter of the year business owners and CFOs are asking how they can grow their businesses in a looming recession where inflation is a key concern.
Focusing on costs, skillset shortages and potential risks will help companies navigate the turbulent environment ahead and for mid-sized companies, ranging in size from 500 to 5,000 employees, MHR’s software can help streamline that task.
“Businesses need to be software ready for 2023,” says MHR chief financial officer Mark Jenkins. “That will help them to prepare for the challenges that lie ahead. They need to be on top of their game regarding what they are in control of in their own business and what they are not in control of in terms of inflation and interest rates and so on.
“They need to be able to respond to those things as quickly as possible. If you don’t have the information to hand that enables you to model and scenario plan those things, how can you avoid the iceberg?”
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“When the economy is in a challenging state, opportunities arise. Businesses need information to be able to take advantage of those possibilities”
Averting trouble is not the only reason. “Just as important, when the economy is in a challenging state, is that opportunities arise,” he says. “Businesses need information to be able to take advantage of those possibilities. They might be acquisition opportunities, opportunities to present different solutions to customers or to employ different procurement methods. Having that information makes businesses more resilient and can potentially make them more attractive to customers.”
Software solutions from MHR deliver that information to businesses in an easily understood and digestible form. “Our financial planning and analysis (FP&A) solution allows businesses to look at their finances and costs and model them out for different scenarios,” Jenkins explains. “Not everyone is an accountant and wants to consume a page of numbers with no context so the information is presented in a form that is easy to read and understand and provides a sound basis for decision making.”
Another solution from MHR allows for the combination of financial and non-financial data. “It enables businesses to look at systems like production or procurement,” he notes. “It can link absolutely any setup that is running in the business, including payroll. Being able to link all these disparate structures gives the business a single source of truth.”
It enables quite complex modelling, xP&A, where users can input variables in one area of the business and see their impact on other areas. “In procurement, for example, you can look at price variances and see how they would impact the overall business. By linking all the different systems, you can get a whole of business view that is readily understood.”
“In a challenging time, efficiency is increasingly important. Departments think they are doing OK, but they are actually working against each other. Our solutions help to avoid those situations”
That overview can also offer very valuable insights into strategic points of failure. “It offers a more holistic perspective,” Jenkins points out. “When the C-suite is discussing strategy there is often a failure to align different systems and they don’t realise that the KPIs set for different departments could be working against each other.”
He gives the example of procurement and production departments, both of which are striving to meet apparently logical KPIs, but that are actually in conflict with each other. “Procurement is told to get materials in as cheaply as possible,” he says. “The KPI is price variances. Production is told to operate as efficiently as possible but is getting cheaper materials which can lead to more wastage. This is not congruent to what the company is looking for. If you connect the dots and get people talking to each other, you can recalibrate the KPIs to ensure they are in alignment. This also engenders teamwork across departments. Some people work well in one department but do not play nicely across the organisation. Having the information available to join the dots gives visibility and transparency and helps everyone move in the same direction. The term for this is goal congruence.”
Avoiding these issues is critically important for businesses in the current environment, he adds. “In a challenging time, efficiency is increasingly important. Departments think they are doing OK, but they are actually working against each other. Our solutions help to avoid those situations.”
Financial information is of the utmost importance as well, of course. “It’s not about the software spewing out lots of numbers, it’s about producing financial information that is capable of being interpreted,” Jenkins points out. “The most important thing for a business is not profit, it’s cash flow. It is difficult to forecast when your customers will buy from you, but you can keep control of your costs. If you aren’t clear what your costs are you are driving blindly and that will kill a business quicker than a lack of profitability. Even businesses with a strong balance sheet can get into difficulties if they are not in control of their costs. In the current economic environment, you really need to be on top of what you are spending. MHR solutions put businesses in control of their costs.”
And the biggest single cost for many businesses is payroll. “The proportion varies depending on how big the company is and the nature of its business, but in a service business, staff pay is by far the biggest cost. Our payroll solution includes a modelling tool that enables businesses to look at things like the national insurance changes in the UK and quantify very quickly the impact this will have on the business in the current financial year. That’s the same with all the solutions we offer. They give information to people as quickly as possible to enable them to make informed decisions quickly.”
Speed is often of the essence, he continues. “Small businesses are able to pivot quickly because of their size,” Jenkins notes. “But they need the right information to make informed decisions on those pivots. If they take too long to make decisions the opportunity might have passed, or they might lose out on margins because they have given competitors time to act. Being software ready means businesses will be more resilient in the face of disruption and be able to avail of the opportunities when they arise.”
MHR has demonstrated the value of its own solutions over the years, he concludes. “Throughout the pandemic we never took business continuity loans, we didn’t furlough any staff, and we always paid our suppliers on time. We were also able to assist customers who were encountering payment problems. This was partly because of our strong software enabled business platform, partly because of the sector we are in, which was classified as an essential service, and partly because of our values as a family-owned business. We also see our employees as major stakeholders in the business, they are our biggest asset. Those values resonate with our customers.”
For more information, please contact MHR International www.mhrglobal.com