China'S CFO Away From Financial Master'S Road

In view of the core position of Finance in enterprise management, in this new normal, CFO has been pushed to the stage of competition and transformation. But the question is whether the financial departments of Chinese enterprises have the ability to deal with challenges?

In the 2013 Chinese enterprise performance excellence Financial Research Report, Accenture conducted a benchmarking analysis with its global performance excellence financial research in 2011 to examine the differences and gaps between Chinese corporate finance organizations and world-class financial organizations ("financial master" enterprises).

In its 2011 global research, Accenture conducted a comprehensive survey of over 530 financial executives and some 300 chief executives of large global enterprises, and conducted in-depth interviews with financial executives and chief operating officers of leading international companies.

In 2013, "Accenture China enterprise performance excellence financial research" investigated 95 large enterprises, 40% of which were China's top 500, 51% of the research participants were enterprises CFO; feedback enterprises covered 15 industries, including energy, industrial equipment, electronics and high technology, construction and real estate and consumer goods and services; in addition, we conducted in-depth interviews with CFO/ chief accountants of 7 leading industry enterprises.

Through benchmarking, Accenture found that there are significant differences between the financial departments of Chinese domestic enterprises and the financial organizations of world-class enterprises in five aspects. Based on this, Accenture has made some suggestions and suggestions with the China Association of general accountants, hoping to help Chinese enterprises achieve outstanding financial management, realize transformation and upgrading, and create global competitiveness.

Insight and discovery: five big gaps

Gap 1: Chinese enterprises do not have enough capacity to cope with the fluctuation of external environment and ensure the sustainable development of enterprises in creating financial management with value as the core.

The key to the transformation of Chinese enterprises' finance lies in the construction of financial management capability centered on "value creation". In the survey, nearly half of the Chinese enterprises have already sort out the strategic problems and identified some value drivers, but have not ranked them according to their importance. These Chinese enterprises focus on the driving factors of current value, but pay little attention to the driving factors in the future. Their strategic planning formulation is isolated, and the business objectives and budgets vary only with the change of strategic planning.

In contrast, nearly 30% of the world-class enterprises have identified all the driving factors that affect the current and future value of the enterprise, and have prioritized arrangements. At the same time, they have also linked strategic planning with business objectives and resource allocation so that enterprises can better adapt to changing environment.

Establishing and advocating value oriented culture in the whole enterprise organization is the premise for the functional departments to create value creation as the core management capability. However, nearly half of Chinese enterprises say they lack "value oriented culture and financial sensitivity" in the whole enterprise, while less than 20% of the international first-class enterprises have this problem.

Gap two: the performance management capability of Chinese financial organizations, especially the core competencies of budgeting, capital and risk management, is still insufficient.

This study found that the financial organizations of Chinese enterprises are still busy controlling costs at the present stage - 60% of Chinese financial executives say that their current focus is cost control. In contrast, less than 40% of top class international financial executives focus on cost control.

Although some CFO of Chinese enterprises have realized that enterprise budget management is a comprehensive system management activity linking strategic planning and performance evaluation, it is not an isolated financial management link. However, the budget of many enterprises is still limited to the field of financial budget. In addition, China's large enterprises still remain in the static budget management stage, and only 15% of Chinese enterprises have replaced the annual budgeting process with rolling prediction based on enterprise value drivers. In this regard, Chinese enterprises must lag behind world-class enterprises.

Research shows that Chinese enterprises still face important challenges in the use of funds. The CFO of Chinese enterprises generally believes that capital costs continue to rise and capital utilization efficiency is low, which is the main difficulty facing fund management. Secondly, the capital management system is not sound and the risk of capital management is relatively high.

The risks faced by Chinese enterprises are increasingly diversified. CFO not only needs to deal with external market risks, but also needs to pay attention to the credit risks of upstream and downstream enterprises. It needs not only managing risks in enterprise operation such as capital risks, but also doing regulatory compliance work.

Therefore, CFO needs to establish a risk management portfolio view and optimize and manage risk as a risk portfolio. The survey shows that most Chinese enterprises can identify and assess risks, but the concept of risk combination has not yet formed.

Gap three: Chinese corporate finance organizations need to explore an excellent operation mode and further enhance their executive ability, and still have a long way to go in developing financial shared services.

Over the past twenty years, shared services have become one of the most advantageous business models in business support services. At present, more than 75% of the top 500 enterprises in the world say they have adopted some form of shared services. The sharing service department is gradually surpassing the traditional backstage functional mode of work and gradually becoming the strategic partner of the enterprise, helping enterprises to solve the end-to-end business problems, and creatively enhancing the overall enterprise value in a completely new way.

Although most Chinese enterprises have begun to move from extensive management to moderately intensive management, from the centralized processing ratio of daily accounting operation process management, the ratio of sharing and outsourcing of Chinese enterprises in each process is obviously lower than the international level. Research shows that in the business processes such as general ledger, travel and cost, accounts payable and so on, which are usually integrated into the sharing service or outsourcing management, the proportion of Chinese enterprises choosing shared services and outsourcing is not more than 20%, while the proportion of international first-class enterprises is close to or even more than 35%.

Gap four: in the era of big data, Chinese enterprises need to be improved in terms of financial standardization and system integration, data mining and analysis.

Research shows that in terms of information technology, Chinese enterprises CFO believes that financial standardization management to ensure consistency of financial management processes throughout the enterprise is the focus of the next two years' financial work plan. In contrast, CFO of world-class enterprises focuses on the implementation of advanced enterprise performance management tools and financial standardization.

The different emphasis of financial executives in domestic and international first-class enterprises reflects the difference of informatization level between them. Domestic enterprises are still in the stage of system improvement or information system improvement, and they hope to promote the unification and standardization of financial process in the process of system development. The first class enterprises in the world already have a relatively complete system, turning the focus to the implementation and use of more lean enterprise performance management tools, so as to help companies better carry out data mining and analysis, in order to support decision-making and create greater value.

Gap five: training and attracting high quality Financial talents It has become a major bottleneck for the financial departments of Chinese enterprises.

Discovering, cultivating and attracting high-quality financial talents is a big challenge for Chinese financial organizations. According to the survey, CFO of Chinese enterprises believes that the reason why it is difficult to attract highly skilled talents is that they can not afford to pay the right salary. Research shows that, in retaining talent, Chinese Enterprises CFO It is considered that rewards can be most effectively managed in combination with personal performance and enterprise performance, while world-class enterprises are more likely to retain and attract talents by providing competitive remuneration and benefits.

How to set Financial staff There is a gap between Chinese enterprises and world-class enterprises in terms of remuneration and how to conduct performance appraisal. The wage gap has always been an obstacle to the flow of talents among different types of enterprises. In addition, the domestic enterprises, especially the central enterprises, have great differences in their corporate culture with private enterprises and foreign-funded enterprises. This also causes difficulties in the flow of talents among different types of enterprises, while the lack of transparency in private enterprise governance and the high risk in accounting and compliance often make professional financial managers discouraged.

Research has also found that some of the existing financial staff skills outdated has become a common problem in Chinese enterprises. From the perspective of the whole financial system, the domestic financial sector has developed rapidly in recent years. As far as accounting is concerned, with the convergence of domestic accounting standards to international standards, discussions on transfer pricing to fair value are closely following the latest international trend. All these require financial personnel to have the ability of continuous learning.