Company overview
Founded in 1926, Publicis Groupe is the world's third-largest communications group, leveraging a unique blend of creativity and technology to drive business transformation across the entire value chain Its modular Connecting Company model offers clients seamless access to top-tier services, supported by a Global Client Leader (GCL) for a borderless experience The organization is structured into four Solutions Hubs—Publicis Communications, Publicis Sapient, Publicis Media, and Publicis Health—allowing agency brands to maintain their identity while benefiting from a shared operational backbone This integration empowers them to harness the combined expertise of the Solutions Hubs, enabling them to compete effectively in evolving global markets.
As a Connecting Company, firm is able to deliver as the Power of One - driven by a common purpose, a powerful spirit, shared behaviors, great character and a relentless focus on our clients.
Publicis Vietnam, founded in 2016, operates through four key agencies: Manning Selvage & Lee (MSL), Publicis Media, Publicis, and Leo Burnett These agencies are responsible for two primary divisions: Publicis Communications and Publicis Media.
The needs of client are the core of the Connecting Company Model
Finance & Accounting DepartmentHuman Resource Department Admin Department Production Department
Chief Finance Officer (CFO)Chief Talent Officer HR executives Office Manager Admin executives Digital executives Event executives Planning executives Account excutives
Finance Manager Chief accountant Finance Assisstant
Mr Lukasz Rosz serves as the Chief Executive Officer, overseeing the company's operations in the Vietnamese market The management structure includes four shareholders, each responsible for key departments: Finance and Accounting, Human Resources, Administration, and Production.
General and Tax Accountant CFO
Publicis Groupe’s mission is to be the world leader in sustainable value creation through imaginative ideas and connections that build business with empowered people everywhere.
Be the preferred creative partner for our clients' marketing transformation.
Publicis Group offers two primary value propositions: innovation and brand/status.
Figure 2.Finance – Accounting Department Structure
Symptoms
Negative Cash Flow
Cash flow refers to the movement of cash and cash-equivalents in and out of a business, reflecting the company's capacity to create value for shareholders It is influenced by the organization's ability to generate positive cash flows, which is essential for maximizing long-term free cash flow A positive cash flow signifies that a company can meet its debt obligations, reinvest in its operations, distribute funds to shareholders, and cover ongoing expenses necessary for business continuity.
As the table below, company is facing a problem in managing its cash flow.
Net cash provided by operating activity (5,330) 2,233 (1,615) Net cash provided by investing activity (172) (1,972) -
Net cash provided by financing activity - (98) (2,702)
Figure 3.Net Cash Flow of the company
Figure 4.Change in net cash of the company
The company is experiencing significant challenges in managing its cash flow, as evidenced by fluctuations in net cash flow from 2017 to 2019, which dropped from 1,398 million VND to a negative 4,873 million VND In 2017, the company reported negative cash flow from operating activities, indicating an inability to generate sufficient cash to cover essential expenses such as labor and taxes Although there was an improvement in 2018, the situation deteriorated again in 2019, with cash flow declining to negative 1,615 million VND, highlighting poor cash flow management This inconsistency suggests that cash flow is not being adequately monitored, contributing to frequent shortages The current approach to cash flow management primarily focuses on securing funding annually, rather than on proactive analysis and management of cash inflows and outflows.
Decreased Profit Margin
Profit margin is a key profitability ratio that measures how effectively a business converts sales into profit, expressed as a percentage Specifically, it indicates the amount of profit generated for each VND of sales The net profit margin is calculated by dividing net income by sales revenue, serving as a crucial indicator of an organization's performance By monitoring changes in the net profit margin, companies can evaluate and improve their operational practices The calculation of net profit margin is as follows.
The below line describes the net profit margin of MSL from 2017 to 2019
Figure 5.Profit Margin of the company
The company faced a significant loss of 8.89% in 2020, contrasting with positive growth of 6.01% in 2017 and 7.04% in 2018 This decline may stem from inadequate cost management, leading to increased expenses while revenue has fluctuated over the past three years Consequently, addressing the profit margin is crucial to prevent adverse effects on the company's future profitability.
Long collecting period
The average collection period indicates the time it takes for a company to collect payments from its customers This financial metric is crucial for businesses to assess and manage their cash flow, ensuring they have enough liquidity to meet future financial commitments and operate effectively.
The collection period is crucial for a firm as it directly affects cash flow through receivables A shorter average collection period signifies effective payment collection, making it more advantageous than a longer collection period The average collection period can be calculated using specific formulas to assess a company's efficiency in managing its receivables.
Average collection period at MSL is described as below chart
Figure 6 Average collection period of the company Source:MSL Internal information of Finance Department
From 2017 to 2018, the collection days increased from 30.3 to 43.4, and in 2019, there was a significant rise to 67.9 days, indicating potential issues in payment collection This increase of approximately 24 days suggests weaknesses in the company's collection policies, management strategies, and collector efficiency, which could lead to insufficient cash flow for operations The collecting period serves as a distinct indicator of financial health, separate from negative cash flow, as it reflects the relationship between current assets and liabilities It highlights the effectiveness of the company's receivables management rather than merely comparing historical data.
Problem identification
Potential problems
Figure 7 Overheads RF vs Actual
Source: MSL Internal information of Finance Department
In 2017, the gap between actual and rolling forecast (RF) for overheads was 1% then in
2018, the portion decreased till negative -12% However, in 2019 the percentage of the gap increased to 10% which indicates forecast was not reflect well the overheads cost In
2018 overheads was under forecast while in 2019 the figure was over forecast with 10%.
It can be seen that weak overheads management is one of the potential problems.
Mr Minh highlighted that the current budgeting process for overhead costs lacks sufficient attention, resulting in unforeseen expenses that negatively affect the company's overhead budget and overall performance Specifically, the absence of bottom-up budgeting activities has hindered effective budget preparation and management, while the agency continues to struggle with top-down KPIs imposed by the regional office.
Ineffective overhead management results in poor workload distribution, leading to departmental budget failures and employee overload To address this, overhead budgets must align with relevant departments like human resources and office management, ensuring teams stay informed and can respond to unexpected costs However, finance assistants often juggle multiple responsibilities, from document verification to forecasting, without a standardized overhead management process This reliance on manual tasks limits their ability to analyze and anticipate overhead-related activities, leaving them overwhelmed and unable to effectively communicate with other departments or manage their budgets.
Ms Hanh, a finance assistant, highlighted the lack of a budget allocation process in overhead management, resulting in unstandardized procedures To improve this, it is essential to gather overhead spending information from relevant departments to ensure appropriate budget allocation Currently, the finance assistant collects data only when upcoming expenses arise, rather than involving finance and relevant teams from the outset This proactive approach is crucial for anticipating annual costs and making informed decisions to maximize profits and minimize expenses A proper overhead budget process should involve collecting comprehensive information from all departments to maintain cost control effectively.
3.1.2 Lack of standardized financial process
The finance department currently lacks a standardized financial process, as highlighted by Mr Minh, which is a key factor contributing to the decline in profit margins.
The company's chart of accounts reveals a significant deficiency in its financial processes, primarily due to centralized management practices that exclude employee contributions The forecasting process is inadequately structured, relying heavily on historical data and lacking a clear timeline for information collection, leading to decisions made without departmental input Managers translate regional targets into KPIs without a standardized forecasting method, resulting in unrealistic expectations that the finance team struggles to meet, ultimately causing cost overruns and diminished profit margins Operating expenses (OPEX) are adversely affected, further reducing profitability, compounded by declining sales that directly impact the profit and loss statement Addressing these issues requires a thorough analysis and the implementation of feasible solutions, as well as enhanced collaboration among company stakeholders and regional management to improve sales and optimize resource utilization.
In 2018, the collection period increased by 13 days, rising from 30 days in 2017 to 43 days This trend escalated dramatically in 2019, with collection days reaching approximately 68 Consequently, the ineffective collection process is identified as a significant concern.
Mr Minh highlights that collecting payments from clients poses a significant challenge for the company, as it directly impacts business operations and agency performance The status of account receivables is primarily influenced by the collection process, which currently lacks standardization Specifically, collectors only follow up with clients at the end of the month or quarter, rather than adhering to the established payment terms for each client This inconsistency contributes to the unstandardized collection activities Additionally, collectors are responsible for purchasing stationery and equipment for the company while also managing client updates and follow-ups.
Ms Hanh emphasized that effective working allocation within a company is crucial, as accountants must manage client payments while also verifying supplier quotations as part of their purchasing responsibilities This multitasking can negatively impact employee performance, leading to increased stress and a higher risk of burnout, which ultimately reduces productivity Research indicates that multitasking can slow down the performance of primary tasks and increase errors Consequently, employees may feel overwhelmed, and inconsistent collection procedures can hinder effective customer follow-up, resulting in prolonged collection periods This inefficiency directly affects the organization’s cash flow and trade working capital, creating further financial challenges.
The potential problems mention in this part displays as diagram 1
Diagram 1 Initial cause and effect map of Finance Department
Validating problems
To validate the potential problems identified in section 3.1, insights will be gathered from three key perspectives: finance assistants, finance managers, and employees Interviews will be conducted with finance assistants and managers to collect detailed data that sheds light on the current challenges faced by the finance department The focus will be on evaluating the department's performance, understanding interviewees' perceptions of their roles, and examining existing practices within the department The interview transcripts will be included in the appendices, and this section will also reference relevant literature to establish a foundation for the subsequent cause validation steps.
Ms Hanh highlighted that the company's financial performance has been unpredictably fluctuating due to various factors One key issue is the lack of separation between finance and accounting roles, which has led to increased employee workload and negatively impacted job efficiency Additionally, as Ms Hanh oversees the overhead budget—a growing concern—she must organize more meetings with all departments to effectively allocate budgets for each.
Hanh expressed that her experience with the budget inspired her to simplify templates and processes However, due to the current circumstances, she lacks the time necessary to propose and implement these improvements in workflow.
Mr Minh highlighted that MSL is facing challenges due to the absence of a standardized financial process, which must be addressed to improve negative cash flow He noted that insufficient analysis has hindered efforts to enhance the current cash flow situation, particularly during the preparation of funding requests Mr Minh's dual responsibility of supervising transactions and financing activities limits his ability to conduct an in-depth analysis of cash flow reports Additionally, he often encounters overly optimistic KPIs, which adversely affect the company's performance To resolve these issues, a standardized financial process is essential, incorporating both bottom-up input from leaders and top-down directives from relevant departments This approach will ensure that all concerns are addressed and that the company's targets are effectively communicated across departments through visible actions Regular discussions on KPIs are also necessary to translate critical goals into actionable outcomes.
Ms Linh, a receivable accountant, is responsible for managing the company's purchasing needs, including equipment, laptops, and insurance, which consumes significant time for order verification and tracking While her primary role focuses on monitoring client payment statuses and following up on payment schedules, the additional responsibilities can lead to feelings of overwhelm among employees, as they juggle unrelated tasks simultaneously.
3.2.4 The importance of main problem
The finance function is crucial for any organization, serving as a standardized process that empowers finance teams to manage key responsibilities such as budgeting, forecasting, and financial control.
25 well as analyze financial information to ensure that Finance Department run smoothly and
A standardized financial process enhances decision-making efficiency, leading to improved company performance Without such standardization, companies may experience poor cash flow management, prolonged collection periods, and reduced profit margins An effective finance team can better manage budgets and foster collaboration with other departments, aligning efforts to achieve business objectives As highlighted by D.Arcy and Mark (1996), a proficient finance department not only reduces overall costs but also enhances customer perception, evolving into a finance business partner that prioritizes value-added services beyond mere transaction processing and reporting.
To improve the current financial situation, organizations must embrace transformation in their finance processes, which enhances performance, stewardship, and control This shift enables chief financial officers and their teams to significantly influence strategy formulation and execution across the enterprise Consequently, finance processes should leverage their capabilities to align with company goals, ensuring efficient operations and the delivery of high-quality financial information Addressing the root causes of inadequate financial processes is crucial for optimizing resource utilization and enhancing team effectiveness, ultimately driving the Finance Department's performance to new heights.
Cause validation
Potential causes
Based on the previous analysis and literature review, there are some causes of the main problems will be described as below updated cause-effect map of the department
Diagram 2 Updated cause - effect map of F&A Department
The Committee of Sponsoring Organizations of the Treadway Commission (COSO, 2013) defines internal control as a process implemented by an entity’s board of directors, management, and personnel to ensure reasonable assurance in achieving operational, reporting, and compliance objectives Konrath (2002) emphasizes that internal controls are designed by management and the board to provide assurance in achieving these objectives, which include operating controls for resource efficiency, financial reporting controls for reliable financial statements, and compliance controls to adhere to laws and regulations Kinney Jr (2002) notes that research on internal controls spans business, accounting, and auditing, focusing on measuring efficiency, effectiveness, information relevance, and risk assessment Control activities aim to generate and utilize financial information to guide operational actions toward organizational objectives, highlighting that inadequate internal controls can result in failures to manage various risks, including those related to personnel, reporting, asset security, and regulatory compliance.
The effectiveness of finance departments is significantly influenced by the skills of their staff According to Quinn (2007), individual performance is shaped by their knowledge and abilities, indicating that unskilled employees may struggle to meet expectations compared to their more skilled counterparts For instance, if a manager assigns a task to an employee unfamiliar with the ERP system, such as submitting documents to create a new supplier code, it can result in delays that impact the entire team's progress, as this code is essential for the accounts team to submit contracts and quotations for projects.
Team cooperation encourages people to make an effort among team members and enhances individual performance (Wang, Yen, & Huang, 2011) Moreover, Wang et al.
Cooperation significantly enhances job performance, as noted in 2011 Collaborative social skills are increasingly important, adding value for both employees and employers (OECD, 2015) This emphasis on cooperation and participation in various labor and social organizations is recognized as a key factor in building effective teams and workgroups Consequently, team cooperation is becoming a highly sought-after competency in the business world, enabling firms to achieve results more effectively and efficiently.
Task assignment can often be challenging, as it may lead to decreased efficiency due to low job satisfaction and increased absenteeism Properly allocating tasks is essential for optimizing resources and reducing overall workload However, if not managed carefully, task allocation can overwhelm employees, negatively impacting their productivity and efficiency Workload is a critical factor influencing employee performance.
20 the number of tasks being completed by a group or a person in a given period of time and under the normal situations.
According to Carlson (2003), work overload can be categorized into two types: quantitative and qualitative Quantitative overload occurs when individuals have too many tasks to complete, while qualitative overload arises when the tasks at hand are excessively challenging or difficult.
Work overload occurs when employees are overwhelmed by excessive tasks and insufficient time to complete them According to Garg (2010), job stress arises from a mismatch between individual capabilities and organizational demands Meneze (2005) noted that increasing job stress poses significant challenges for employers, as higher levels of stress lead to decreased employee productivity Furthermore, research by Dar, Akmal, Naseem, and din Khan (2011) indicates that job stress significantly impairs employee performance.
Validating causes
The finance manager and assistant at MSL Company highlighted that the standardized financial process is significantly influenced by factors such as skilled staff, team cooperation, and effective work allocation The current challenges in the finance department stem from three key issues: a shortage of skilled personnel, insufficient team collaboration, and ineffective work distribution.
Mr Minh highlighted that MSL is currently facing a shortage of skilled staff due to company restructuring and the resignation of experienced employees who had been with the firm for over three years The business demands that employees not only handle paperwork but also monitor project progress and client requests Although MSL sought creative and dynamic interns for a three-month engagement, many lacked the interest and commitment to remain with the company Additionally, the organization is grappling with cash shortages, making the careful consideration of hiring experienced employees crucial in the current climate The insights gathered from interviews will culminate in a comprehensive cause-and-effect diagram, as illustrated in Diagram 3.
Mr Minh highlighted the issue of inadequate team cooperation, noting that teams typically report incurred costs only after receiving approval from department heads, without prior discussions with the finance department.
General and administrative costs, such as purchasing new furniture, are often processed by the finance team without the relevant teams being fully aware of these expenses in the capital expenditure budget Mr Minh emphasized that these costs should be communicated from both sides, highlighting the need for ongoing communication between finance and other teams regarding incurred costs This collaboration ensures that the finance team is informed about all business expenses, allowing for better cost control, while also encouraging relevant teams to take responsibility for cost-saving measures within the company.
Ms Hanh emphasized the need for improved management and operational strategies to address weak work allocation As a finance assistant, she is responsible for coding invoices and managing the company's overhead budget She proposed long-term solutions aimed at enhancing business clarity and efficiency Additionally, Ms Phuong, the AR accountant, highlighted the necessity of separating the roles of AR accounting and merchandising, as she is currently juggling both tasks This dual responsibility complicates her ability to monitor client payment statuses and verify supplier purchases effectively With over 50 clients to manage, the pressure on the AR accountant is significant, indicating a need for clearer role definitions and task distribution.
Through analysis and literature review, a fish bone diagram will be illustrated as below
Diagram 3 Fish bone analysis diagram of the lack standardized finance function
The identified causes of the significant issue of "Lack of Standardized Financial Processes" necessitate the proposal of various solutions and actions To enhance the current situation and boost overall profitability, it is crucial to identify effective and feasible solutions that align with the needs of the Finance Department.
To do so, all employees needs to take into consideration of together finding out the possible methods to increase company profit in general and department work flow.
The current departmental structure is disorganized, characterized by an absence of standardized financial functions, a shortage of skilled staff, and insufficient team collaboration To address these issues, implementing a comprehensive budgeting process is crucial for managing both overhead and overall company budgets This budgeting initiative serves as a proactive first step towards transforming the finance department Additionally, it is essential to invest in employee training programs and establish a KPI-based rewarding system to effectively assess and control the company's financial health.
Solution 1: Preparing and controlling the budgeting process
Budgets are essential tools for short-term planning and control within organizations, as highlighted by Anthony et al (2007) and Otley (1999) Tracy (2008) defines the budgeting process as the development, implementation, and evaluation of a plan for managing a firm's financial resources over a specific period to meet financial targets This process not only allows organizations to strategize for increased revenue and profits but also serves as a mechanism for executing their business plans (Eagle, 2010) Ultimately, the budgeting process addresses various financial challenges faced by organizations.
The budgeting process is crucial for companies to effectively manage and control their income and expenses, ensuring they stay on track with investment decisions and spending It involves analyzing a variety of data to facilitate standardization and informed decision-making By leveraging historical data and current business conditions, budgeting helps identify a company's strengths, weaknesses, threats, and opportunities in financial terms Additionally, a robust financial process aids in cash-flow management, capital expenditure forecasting, scenario planning, and capital budgeting, ultimately minimizing business risks and optimizing financial investments.
MSL is currently facing challenges in implementing its methods due to inaccurate data affecting decision-making and creating inefficiencies for employees However, with a well-structured plan and collaborative efforts, the benefits can surpass the drawbacks Once the company overcomes these obstacles, it can achieve its organizational goals To enhance performance in the advertising industry, MSL should improve its Finance Function and budgeting process to prevent unexpected issues that could impact results Mr Minh suggests a thorough review and reconstruction of the budgeting process to avoid overspending in overheads and other cost areas that affect profitability Additionally, reallocating responsibilities for the receivables accountant and finance assistant is essential to reduce workload and enable employees to focus on their tasks more effectively.
Budgeting process can be split into process with six steps as following
Step 1: Re-engineering the financial and accounting system
The company will restructure its financial and accounting system by dividing its current operations into two main business units: Creative Projects and Media Projects This separation will provide a comprehensive overview of product breakdowns Creative Projects will encompass production, public relations, and design initiatives, while Media Projects will focus on the company's role as an agency for promoting products on online and social platforms Consequently, a standardized budgeting process will be established to guide all departments effectively.
A Building up the project chart
Before initiating the budgeting process, it's essential to create a project chart that outlines all participants and their key responsibilities This step is crucial for identifying who will manage and support the budget effectively The chart indicates that while the CEO serves as the project owner, the CFO is primarily responsible for overseeing all activities Additionally, various departments, such as production, planning, and events, will contribute by providing results and quotations with assistance from accounting staff The general accountant must ensure accurate reporting of all transactions, while the chief accountant and finance manager will operate under the CFO's guidance A detailed breakdown of each team's responsibilities will be provided in the accompanying table.
Figure 8 Project chart to run the budgeting process
Roles and Responsibilities Roles Working
-Direct total company to work under the the strategy of firm
- Review and establish necessary company policies to support the project
- Support Project Leaders in making-decision and solving problem during the process
- Identify potential changes to cope with them on time
Assistant All the meetings, workshop, training
- Connect and transfer information between CEO and CFO
- Instruct and supervise the executives
All the meetings, workshop, training
- Define and manage project objectives
- Work with CEO to create mission, vision and strategy for the project
- Plan, arrange and allocate resource for the project
- Manage, keep track and control all aspect of the project
- Supervise and support all departments
- Control strategy execution and implementation to ensure to deliver the outcomes as planned
- Make adjustment, decision, reporting in management if necessary.
All the meetings, workshop, training
- Establish the budget for two main business units based on the direction of Project Leader
- Collect all relevant documents and records in accordance with the regulations
- Identify and propose potential changes and actions accordingly
- Report issues affected to project outcome and quality.
Main Team All the meetings, workshop, training
- Collect and consolidate data from Supporting Team to create the process
- Record and keep track on compliance and non-compliance activities
- Report issues affected to project outcome and quality to Project Leader
- Transfer information for supporting team and Project Leader if necessary
Table 1.Roles and responsibilities of participants in budgeting plan
B Establishing the project management as an action plan
To successfully manage the project set to commence on January 1, 2021, and last for approximately 20 weeks, the company must establish a comprehensive project management plan This plan will encompass two key stages: the first phase, lasting 12 weeks until March 1, 2021, involves the CFO, Finance Manager, and Chief Accountant collaborating with their teams to gather bottom-up data and finalize top-down decisions During this stage, the main team will define business objectives based on financial insights, monitor revenue and costs, and assess assets and liabilities to present to senior management for decision-making The second stage focuses on executing the project goals, where higher-level managers will review the process, validate forecasts, and ensure all budgeting issues are addressed Detailed steps for developing the project management plan will follow.
PROJECT MANAGEMENT PLAN (START – January, 2021)
No Tasks Assigned No to
WEEK 1-12: SET UP THE BUSINESS OBJECTIVES AND STRATEGIC TARGETS
1 Prepare the business plan by individual business team
Executives Bottom - up process Create excel file for each team to input the incurred costs in the format to create the budget planning
Planning based on the budget of each team comfirmation
Data reasonable notes for revenue and expenses of estimated activities of
Daily / weekly control of revenue and expense estimated activities of Production, Admin and HR Team
Accounting software, reporting system, excel files
Revenue and expenses analysis is submitted by the Teams
3 Check and Review available feature in the system
Executives Review the use of
Accounting software and reporting system
Accounting software, reporting system, excel files
Access to the all the features in software system, and be used until the end of the deployment project
Check the assets, liabilities including AR,
AP, loans, fixed assets, etc Finalize target ending balance
Finance Department cooperates with the relevant Departments to check all assets and liabilities
Property form Property document and financial statement
Instruct and control the accuracy of the data Check the estimation Check revenue, expenses recorded in system
Excel file in the form for each project / contract / product
Excel file with revenue and costs
Present to the CEO with the results of each Teams' financial performance =>
Based on the financial parameters obtained according to the performance results, and estimates submitted by Teams, Board of Directors finalizes sales for Production Team / (Top-down process)
The excel file has assumptions for each project / contract / product
Finalize business goals for each Teams
WEEK 12-20: ASSETS, LIABILITIES AND CASH FLOW MANAGEMENT DESIGN
Accounting Department to complete items in AR, AP, loans, fixed assets
Build , update required information into Excel Program
Combining accounting software and excel file Dashboard and
Dashboard adds actual financial figures to compare with estimated data
Update, use excel files to update in system
Extract on accounting software to match with Excel
Outcomes on the Dashboard compared with excel file and accounting system
Review the AR, AP, calculate the number of days till the end of the year, Review fixed assets
Update, use excel files to update in system
Extract on accounting software to match with Excel
Outcomes on the Dashboard compared with excel file and accounting system 16/4 30/04 15
10 Re-input the number of days and re-run data to get the Dashboard
Update, use excel files to update in system
Extract on accounting software to match with Excel
Outcomes on the Dashboard compared with excel file and accounting system
Update, use excel files to update in system
Extract on accounting software to match with Excel
Outcomes on the Dashboard compared with excel file and accounting system
Detail all the accounts in the Accounting Software based on each team
Executives Accounting accounts decomposed by teams
Outcomes on the Dashboard compared with excel file and accounting system
Department on how to set up and use
Following Project management data & objectives
The new organizational structure of the Financial Accounting Department is able to account the daily figures and use the Dashboard
Re-check the overall performance of the entire company => solve the issues of budgeting plan
Improve the performance of the company and deal with issues may arise from new structure
Table 2.Project management plan for running the budgeting process
C Design the overall process to control all the activities and operations
Part C focuses on creating a comprehensive process that integrates budgeting to maintain control over all organizational activities It outlines essential steps, beginning with budget establishment and culminating in the completion of the company dashboard, ensuring proactive measures are in place to address any issues that may arise.
Developing an effective budgeting process requires a realistic and feasible approach, incorporating both top-down and bottom-up strategies The initial step involves gathering bottom-up data to identify the underlying costs and revenues for each department within the organization In the case of MSL, a detailed plan for this model has yet to be implemented, necessitating the creation of a suitable format This format will be grounded in the monthly profit or loss structure established for each business unit.
Accurately forecasting profit or loss is crucial for two primary business units: Creative Projects and Media Projects The following figure illustrates the format for inputting bottom-up data for the year 2021.
Figure 9.Format for bottom-up budgeting - SBU 1 - advertising project
Step 3: Profit and Loss (P&L) calculation
In this crucial calculation step, the CFO assesses the project's profitability by analyzing the total Profit and Loss (P&L) statement This statement encompasses key financial metrics, including total profit, costs, taxes, and interest, along with Earnings Before Interest and Tax (EBIT) and Earnings After Tax (EAT), all of which must be clearly outlined.
Figure 10.Format for bottom-up profit & loss statement
The top-down approach involves higher management setting specific targets and guidelines for lower departments, following the collection of templates and bottom-up data from all divisions The Finance Department consolidates this data and submits it to the CFO, who reviews the company's complete Profit and Loss statement If adjustments are necessary to enhance financial performance in line with company objectives, the CFO may make decisions, such as reducing overhead costs while ensuring essential activities remain funded This decision-making process is crucial, especially when budgets are constrained, as it can significantly impact other company activities.
Figure 11.Format for top-down budgeting - BU 1 - Creative project
Step 5: Assets, Liabilities forecasting and cash flow management
Effective cash flow forecasting, based on collected P&L components, is essential for managing cash and assets within an organization This process not only minimizes losses but also ensures that all operational costs are covered By implementing robust cash flow management strategies, firms can allocate resources efficiently, estimate expenses accurately, and maintain reserves for unforeseen circumstances.
3 Fixed Assets details (gross book value, net book value, depreciation)
2 Assets forecasting and cash flow management o Complete P&L forecast o Develop cash flow management and timely tracking report
The figure below displays the general budget preparation for the company which is also a source for the training materials.
Step 6: Developing a dashboard for financial management
Creating a financial management dashboard is essential for companies, as it provides a visual report that highlights critical information for analysis This dashboard incorporates key elements related to profit and loss (P&L) items, enabling businesses to monitor their current financial performance and conduct in-depth analyses of specific issues For example, to manage overdue receivables effectively, the dashboard presents factual data through charts and figures, categorizing overdue days into ranges of 30-60 days, 60-90 days, 90-120 days, and beyond.
The dashboard provides a clear breakdown of overdue days and client receivables over a 120-day period, enabling effective interpretation of data By regularly updating customer payment statuses, management can make informed decisions and address any issues that arise The visual data allows the management team to analyze problems swiftly and determine appropriate actions, ultimately enhancing timely decision-making and improving overall business operations.
Solution 2: Implement training program to improve company financial status
To address the issue of a "lack of skilled employees" in the Finance Department, implementing a training program is essential for enhancing productivity and improving departmental outcomes Such programs empower employees to strengthen necessary skills, leading to better performance and increased productivity Training is crucial for achieving organizational goals, as it aligns individual and company interests (Argyris, 2017; Ahmad and Bakar, 2003) Research indicates that trained employees are more effective in meeting expectations and collaborating with teammates (Devins et al., 2012) Additionally, employees who undergo regular training demonstrate greater confidence in their tasks and decision-making abilities, and they are more likely to generate innovative ideas in the workplace (Devins et al., 2012).
In today's competitive landscape, skilled and trained human resources are crucial for achieving and maintaining a competitive advantage, prompting many companies to view training as an investment rather than an expense However, while training offers numerous benefits to organizations, it also presents challenges, including time consumption, employee disengagement, high costs, and difficulties in measuring results.
Numerous studies indicate that the benefits of effective human resource management practices significantly surpass the drawbacks Research by Purcell et al (2003) demonstrates a robust connection between these practices and enhanced organizational performance Furthermore, Chew and Chan (2008) highlight the critical importance of human resource development in improving employee performance by providing adequate training and education, which ultimately contributes to overall organizational success Therefore, it is essential for organizations to prioritize these development initiatives.
50 to take into account when they are decided to design and plan the training program as it will evolve a
Investing significant time, effort, and resources in employee training can alleviate anxiety and frustration associated with work requirements, as trained employees become more adept at handling tasks effectively (Blatter et al., 2015; Chen et al., 2004) Consequently, the study indicates that employees who lack competence in their tasks are more likely to leave their positions Furthermore, Kanelopoulos and Akrivos (2006) noted that when employees decide to remain in their roles despite challenges, their productivity tends to be suboptimal.
Implementing a training program is crucial to address the shortage of skilled employees, particularly if the proposed budgeting plan is approved Enhancing company performance necessitates the introduction of a training initiative, especially as the Finance Department grapples with staffing challenges It is essential to launch a training program for both current employees and interns to improve their performance and adapt to system changes Additionally, with the applied budgeting model, new employees and relevant departments must participate to ensure all staff are well-versed in the necessary guidelines and procedures for the current system Consequently, the training program will focus on two key areas.
1 Training all relevant department’s employees to help them get familiar with the Oracle system which related to all procedures to update business information for Finance to catch up and update to budget It will include features which are expense claims, production cost estimation, purchase order creation, client or supplier code creation.
2 Training relevant departments to ensure each department understand, participate as well as perform company’s process and budgeting plan more efficiently.
Schedule for training program plan will be scheduled as below
No Course Objectives Action Responsibility 20-
Consolidate and Analyze important features on the current system which needed to train for all employees
Train employees to become proficient in their roles while providing clear guidelines on participating in the budgeting process, which is essential for enhancing the company's financial performance.
Hold a meeting to share the direction on the purpose and how to launch the training Summarize the main content before having the meetings with staffs Assistant
Consolidate current system’s changes and feedback from all departments
Inform all department the importance of training program and budgeting plan
Collect difficulties staffs are facing currently
Collect and list out all the problems and difficulties currently in the business
Get feedback, suggestion from staffs via online survey about the current issues and ideas to add in the training plans.
-List out all the roles of each
Specific procedures for each department
Finance department with details supporting documents and
- Administration department: guidelines submit G&A expense claims, supplier/client code creation Cost estimation for the training
- Production department: purchase training program with specific plans and cost order creation, supplier/client code creations, production cost assistant and Finance estimation estimation Manager
- Finance department: profit retrieve, review and close job, data extract
-HR Department: employee code creation/termination.
Human resource about the training program
List out the main content to provide in the course with the purpose of the training and required knowledge for both trainer and trainees
Build and set up required criteria to list out key responsibilities of employees to apply and improve in the current work Assistant, HR
Ensure the quality and outcome of the training program
Enable staffs to apply the knowledge from the training to apply and perform in the current tasks and contribute in related budget planning activities.
Finance staff are tasked with creating a comprehensive training plan, which must be submitted to the CFO for approval Once the program is endorsed, high-level management will review and sign off on it The training plan will encompass essential details, including the timeline and location of the training sessions.
-Main purpose of the training -Process and guidelines -Question and answer -Key contact points -Method and unit in charge of each training section
All department leaders will be informed
CFO,Assistant, HR, Department leaders about the training and re-allocation appropriate team members to join in the training section.
Execute base on the approved plan: training will be conducted step by step
Improve employee’s capabilities, knowledge and skills
Implement the training plans after getting approval from CFO All related staffs in the training program
Evaluate the results of the training program to keep track and make decision on maintaining or changing the direction for the company
In-charged Finance employees who responsible for the training program will continue with Finance assistant to collect all concerns, ideas and result to CFO
Moreover, trainer will hold a meeting to review the training lessons to go through the outcomes of the training.
Table 3.Training program to improve company financial status
Solution 3: Apply KPI – rewarding system
Employees are a crucial strategic asset for organizations, as highlighted by Grunig (2011) and Kim and Rhee (2011) According to Grant (2010), investing in knowledge workers is essential for gaining a sustainable competitive advantage As organizations strive to foster long-lasting relationships with their employees, enhancing worker productivity has emerged as a key management challenge of the 21st century (Drucker, 1999b) To effectively evaluate employee productivity, organizations should implement proper performance measures, such as Key Performance Indicators (KPIs), which assess individual and team achievements against organizational objectives KPIs play a vital role in aligning business goals with decision-making processes, necessitating clear communication of these objectives to ensure employees understand their responsibilities in relation to their KPIs.
In Finance Department of MSL, there is no clear KPIs assessment when it comes t performance measurement That is the reason why this solution will solve the cause of
Implementing a KPI system can address the issue of a lack of skilled staff by enhancing employee recognition, identifying organizational weaknesses, and developing strategies for competitive advantage However, if KPIs are poorly designed or communicated, this approach may backfire, leading to employee demotivation instead of improved performance When employees perceive KPIs as burdensome and unsatisfactory, it can diminish their enthusiasm and hinder overall productivity.
The advantages of this solution outweigh its disadvantages, making it applicable in a two-stage process Initially, simple KPIs will be established to align with the current financial situation Following this, more sophisticated KPIs will be developed that are consistent with the company's budget and employee capabilities The entire implementation will take approximately nine weeks, with one week allocated for the first step, four weeks for the second, and the remaining two weeks for the final step.
Step 1: KPO and KPI setting up for entire firm
The initial step involves establishing key performance objectives (KPO), which serve as the foundation for creating key performance indicators (KPI) KPO reflects the company's overarching strategy, originating from upper management and cascading down through the organizational hierarchy Consequently, KPI acts as a tool for monitoring progress During this phase, the company should implement a comprehensive framework at the organizational level Following this, strategic objectives, key responsibilities, and relevant metrics will be assigned to lower levels, including departments, teams, and individuals Departments and teams will align their responsibilities, while employees are expected to take action in accordance with the designated objectives.
To effectively achieve business objectives, companies should implement Key Performance Indicators (KPIs) based on a reliable framework like the Balanced Scorecard (BSC) The BSC serves as a strategic planning and management system that enhances communication, aligns daily operations, prioritizes projects and services, and measures progress towards strategic goals According to Kaplan and Norton (1996), when properly understood and implemented, the BSC is a powerful management tool Grasseova (2010) further emphasizes that the BSC translates strategic objectives into actionable steps, encompassing four key perspectives: financial stewardship, customer focus, internal processes, and organizational learning and growth.
Financial performance measurement is crucial for assessing a firm's sustainability and resource efficiency Key performance indicators (KPIs) focus on cost management, asset utilization, and optimizing working capital, all of which contribute to long-term economic value.
Customer focus: consists of customer satisfaction, share and attributes of products and services In other words, it focuses on customer value to maintain customer retention.
Internal process: involves internal goals included efficiency and quality such as optimizing technology deliver tasks in a timely manner with high outcomes.
Learning and Growth: focuses on drives of success such as human resources such as skills, learning capacity, leadership, creativity, adaptability and innovation in the progress of developing organization.
Figure 13 KPI allocation from company lever to lower hierarchical levels
Step 2: Allocating and scoring departmental responsibilities by PSC format
In this phase, each department will be allocated specific responsibilities following the PSC format, which stands for Primary, Secondary, and Contribute This framework is utilized by higher management, such as managers, to delineate and assign precise roles for teams and individuals The PSC format comprises six key elements: 'P' signifies Primary, encompassing accountability for task completion and responsibility for duties performed; 'S' denotes Secondary, which involves providing support, ensuring quality control, and supervising tasks according to timelines; and 'C' represents Contribute, highlighting the collaborative efforts required from all team members.
57 to effect and involvement including components directly make impacts on tasks
58 completion To be specific, this location will be taken after by HR executives as well as leaders of departments PSC Principles is illustrated as below
The Department (Individual) is responsible for the accuracyandcomprehensionofajob
R 4 Responsible The Department (Individual) will directly perform tasks They take responsibilities for completing the allocated work
S 3 Support The Department (Individual) provides input and support for the tasks in order to complete the job
C 2 Control The Department (Individual) will check, review, supervise to ensure the tasks are delivered on time with good quality
The Department (Individual) does not directly execute, support or provide input for the tasks but still make an impact indirectly to complete the task
The Department (Individual) does not directly execute, support, or input data for the task, yet it still exerts an indirect influence This distinguishes it from "E," as it does not involve the completion of tasks.
Clarifying the responsibilities of each department is essential for accurately calculating total points from a Balanced Scorecard (BSC) perspective Each department's function dictates the total marks assigned for task completion; for instance, the production team earns points for delivering video advertisements to clients, while the human resource team, not involved in this process, receives no points during the scoring stage.
The allocation of responsibilities is overseen by the CEO, departmental leaders, and HR executives The scoring process must be initiated by the leaders of each department in collaboration with the HR team This second step typically lasts around two weeks Below is a sample PSC format used to evaluate departments based on Balanced Scorecard perspectives.
KPO KPIs 2020 PSC RESPONSIBILITIES PSC SCORING Unit Annual % Frequency Results Completi Scoring Note target of the Percentage on company
PRODUCT EVENT DIGITAL ACCOUNT FINANCE & HR PRODUCTIO EVENT DIGITA ACCOUN FINANCE & HR
F1 REVENUE Revenue AR AR AR AR C 10 10 10 10 VND 45% Monthly
F2 COST Cost of goods sold S
Selling expense AR AR AR AR AR 10 10 10 10 T
Number of receivable days S S S S AR 4 4 4 4 Day 40% Monthly
Number of payable days R 2 2 2 2 Day 30% Monthly
C1 OLD CUSTOMER Customer retention rate AR AR S S C 10 10 2 2 % 100% Monthly
CUSTOMER New customer growth rate AR AR S S 10 10 2 2 % 20% Monthly
C3 CATALOG Quantity of products in catalog
(number of new customers / total customers)
ERY Percentage of using standardized process / Total
ACCOUNTING number of operations in use
L1 UNDERSTANDI Percentage of employees R E R E C AR 1 3 3 3 3 10 % 100% Monthly
INTERNAL is disseminated guidelines, internal
POLICIESAND policies / Total STRATEGIES management employees L2 QUALITY OF Proportion of teamwork
WORKING IN acivities / Number of
Table 5.PSC example format when allocating and scoring each department
The final stage of the KPI rewarding system involves a cascading process where PSC responsibilities are assigned to employees, followed by individual scoring At MSL, this task falls to department leaders and the human resources team, who will evaluate the selected KPIs and assign scores accordingly By calculating the personal responsibility score—derived from multiplying the PSC score by the KPI weight—leaders can effectively measure each employee's contribution This total personal responsibility score is aggregated within the department However, managing all aspects of this process can be challenging, which is why this step is expected to take approximately three weeks to complete.
To be specific, below table is described in more detail about cascading in the company and it focuses on individual KPIs
X Y Z X Y Z Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
REVENUE Revenue Manage and implement the target year of the group
Contact customers, an average contact of 5 customers / months
Continue new contract with existing clients Check market trending information (price, demand, product): 1 time / week Confirm the amount of periodic sales with Finance Department
To effectively manage expenses, it is essential to monitor and reduce the cost of goods sold, as well as control and minimize selling and administrative expenses Additionally, maintaining oversight of other costs can contribute to overall financial efficiency.
Administration Expense Interest expenses Managetaxexpenses
Number of receivable days reduction
Collecting right within the contract term must reach 80%
Late collection after 180 days: review Review, remind client to update weekly for AR status
Number of day to pay Update reason for late payment
OLD CUSTOMER Customer retention rate
Maintain contract with existing customers Product increases per customer Customer client feedback report consolidation every day
New customer growth rate (number of new customers / total customers)
Increase number of new customers: Plan(specific) to develop number of customers & product areas update monthlyreport
CATALOG Quantity of products in catalog
Update monthly report on going projects and new projects
Check the winning contractUpdate the proposal before having the meetings with customers
Percentage of using standardized process / Total number of operations in use
All the process must follow the strategy and business objectives
Solving the problems during the internal process
Send monthly report to capture all the situations
Check the orders carefully to avoid mismatch
Percentage of employees is disseminated guidelines, internal policies / Total management employees
Participate training sessions organized by the company
Participate in all meetings organized by the company and departments
The relationship among employees and towards superior managers
Proportion of teamwork acivities / Number of expected activities
Table 6.Example format for cascading: Individual KPI
Supporting information
No Name Gender Position Working experience
Time of interviews (starting day)
Female Assistant 4 years 3 years January
Male Sales staff 4 year 4 years Oct Januray
- Explain the purpose of the interview and ensure all information is secured
- Full name and job position of interviewees.
1 How long have you worked as your current position (working experience)?
2 How long have you worked at MSL?
Working at MSL evokes a range of emotions, with many employees expressing satisfaction and happiness in their roles The general sentiment towards their current positions is positive, as team members appreciate the opportunities for growth and collaboration Additionally, employees feel a sense of responsibility in their roles, which contributes to their overall effectiveness and fulfillment at work.
Probe: Could you give several examples of experience in your job?
Prompt: Working environment, managers and other employees, commissions, benefits, career opportunities, working allocation, etc.
The performance of the MSL and Finance Departments since the company's inception has been a mixed bag, showcasing both strengths and areas for improvement On the positive side, these departments have demonstrated effective productivity and a fair allocation of resources, contributing to the company's overall growth However, there are notable challenges, particularly in communication and respect among team members, which can hinder collaboration and efficiency To enhance effectiveness, it is crucial to address these communication gaps and foster a more respectful work environment, ensuring that all employees feel valued and engaged in their roles.
5 What do you think about the cash flow of the company? Why is it not effective? Prompt: Cash flow, finance function.
6 Why does the department submit quarterly report instead of monthly or yearly?
7 What impacts on the dramatic decrease of profit and significant increase in collection period? What are the consequences of those impacts on the company’s performance?
8 What does it means when you say “temporarily unnecessary selling & administration expense””? What do you think those items impacting on the profit?
9 What do you think about the benefits of the firm?
10 What is your opinion on MSL, departmental and your personal issues? What solutions do you think it can help you to solve your problem?
11 Could you help me to draw conclusion about the quality of finance function in the company? Please
69 give some suggestions if you think it would enhance this function in Finance Department? Ask more about: pressure, duty, job description, job challenge, workload, work-life balance, etc.
12 Is there anything else you want to share?
Thank you and close the interview
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Appendix 1: Finance and Accounting Department’s internal information
Data 1: Change in net cash from 2017 to 2019
Data 2: Actual and Forecast Profit and Loss report from 2017 to 2019
Question and Answer Coding Category
Full name, job position and job description of interviewees
Ms Hanh: My name is Doan Hong Hanh and I am an assistant under the guidance of Mr Minh – the Finance Manager
Mr Minh: My name is Nguyen Binh Minh and I am a Finance
Ms Linh: My name is Nguyen Thuy Linh and I am account receivables accountant.
Ms Diep: My name is Dinh Thi Diep – a finance executive in Finance Department.
Ms Hien: My name is Nguyen Thu Hien and I am also a fiancé executive in Finance Department.
Ms Anh: My name is Tran Phuong Anh and I am working in admin team under the Admin(Office) Department.
- Finance Department staff Admin staff
Q1 & Q2: How long have you worked as your current position (working experience)? How long have you worked at MSL?
Ms Hanh: 4-year experience and 3 years working for MSL.
Mr Minh: I have been working for MSL for 10 year I have
Ms Linh: 6 years and 4 years working for MSL
Ms Diep: I have 7-month experience as a Finance executive at MSL
Ms Hien: I have worked here since 2017 so I have been working at MSL for 3 years and I have 3 –year experience
Ms Anh: I have been working as an receptionist for 3 years before moving to admin team since early 2019 I have 4- year experience in total at MSL.
Q3: How do you feel about your job at MSL?
Ms.Hanh : My job is quite hard and challenging as I have various responsibilities, as a result, sometimes
I feel overloaded and could not focus on the main tasks.
Mr Minh expressed his stress regarding the current workload, as the company is facing a significant employee shortage Despite some employees having been with the company for over three years, and even up to eight years, they are now required to take on additional responsibilities This situation has led to remaining staff feeling overwhelmed, as they are often new to certain tasks while still managing their existing duties.
Ms Linh manages a busy workload, balancing client payment status with purchasing responsibilities She often receives requests to procure new equipment for the company while simultaneously updating essential information.
- Hard, Challenge and feel overloaded
- Stressful and heavy work loaded
- Busy, overloaded as handle two roles AR
Employees’ feelings and opinions payment term for customers and complete AR report every month-end closing I feel quite overloaded more often.
Ms Diep finds her job and position fulfilling, as they offer her opportunities to learn new skills Taking on new responsibilities has taught her the importance of effective time and task management to ensure timely results.
I am dissatisfied with the current work allocation, as I am required to manage paperwork instead of focusing on the production team, which negatively affects my month-end closing process.
Ms Hien emphasizes that both she and Ms Diep oversee not only accounting and finance but also essential activities for the production team, including generating employee codes and creating purchase orders for suppliers.
MSL, I am informed to take responsibilities of activities of
Ms Anh believes that this position is a great fit for her, as it offers the potential for advancement to the administrative team, allowing her to broaden her responsibilities and engage more deeply with the company's operations.
The current invoicing process for company furniture and equipment is complicated and lacks alignment between the admin and finance teams Since joining the team, I have noticed a lack of clear guidance on the process, leading to confusion when invoices are submitted I believe that both the finance and admin teams should collaborate to discuss and finalize quotations before placing orders Despite this complexity in work allocation, the overall functioning of my department remains satisfactory.
- Not bad but sometimes unhappy with work allocation
- Fine but unhappy with work allocation as well
Quite good but feel complicated with the current way of working for the process
Q4: What do you think about MSL and Finance
Ms Hanh: Currently, some of employees who takes main charge with clients have already resigned Therefore, Finance
A high-performing team must regularly update and track work progress from colleagues This involves various activities, including system access, expense claims, and the project liquidation process Notably, the Finance team plays a crucial role in connecting the production and accounting teams throughout the entire product lifecycle, from inception to liquidation.
Finance Department is stressed out because all concern related to process from others team always roots to team for explanation and instruction That is also the reason why
Finance Department has to take care lots of activities as currently so one of the main tasks is boosting company financial performance is still low in progress.
Mr Minh: Before, the performance was quite good back in
Since 2016, the company's financial performance has been inconsistent, with recent data revealing negative profits Key issues contributing to this situation include delayed debt collection, which has led to a cash shortage Although some accounts receivable have aged significantly, there are positive signs for recovery, as the accounts receivable accountant is managing over 30 clients simultaneously, indicating potential for improvement in collection efforts.
Mr Diep: From my point of view, besides the working allocation, I think the company performance compared to previous is a quite lower as many employees resigned.
Ms Hien noted that during her monthly data consolidation and report preparation, she observed fluctuations in revenue and profit She also pointed out that some overdue costs remain unpaid and has brought this issue to Mr [Last Name].
Minh and he is planning to figure out more effective way with
CFO to make decision on collecting and payment schedule. staffs, resignation, complicated Finance departmental structure and unproductivity
- Fluctuated compared to 2016, negative profit, delayed in boosting financial Performance
- Resignation with poor work allocation
- Decreased profit margin, overdue costs, Finance Manager over workload
Q5: What do you think about the flow of cash in the company? Why is it not effective?
Mr Minh highlighted a significant cash flow management issue in the area, exacerbated by a cash shortage He noted that cash flow is primarily considered during funding requests to regional authorities, with forecasting often treated as a mere exercise rather than a strategic tool The absence of a clear budget and targets hampers effective control over cash inflow and outflow While the company is working on budgeting, the limited training time for Ms Hien has restricted her ability to fully grasp essential concepts, resulting in a lack of actionable solutions To address these challenges, implementing a standardized financial function is crucial for better workload allocation and enhanced control measures within the company.
Linh and I therefore could spend more time on the cash flow management frequently.
- Poor finance function because AR accountant and Finance Manager overloaded with other duties.
Cash flow management and finance function
Q6: Why does the department submit quarterly report for client profitability report instead of monthly or yearly?
Ms Hanh emphasized that, in line with company policy, the regional team must consolidate and analyze the client profitability report quarterly This process ensures that all costs associated with clients are accurately reported, enabling both regional and local teams to allocate project expenses appropriately By providing investors with a comprehensive overview of current business performance, the company can enhance its chances of securing additional funding for market expansion The Finance department will be responsible for submitting these reports.
Sometimes, there would be only one project in a quarter
Q7: What impacts on the dramatic decrease of profit margin and significant increase in collection period? What are the consequences of those impacts on the company’s performance?
Mr Minh identifies several issues affecting the collection period, including a lack of strict policies, poor work allocation, unskilled employees, and an absence of a solid plan These factors contribute to difficulties in following up with client payments, leading to an increase in collection days Additionally, he points out that poor cost management is the primary reason for rising expenses, while revenue remains unstable Specifically, unnecessary general and administrative costs related to furniture and equipment are exacerbating the company's financial burden Consequently, cash flow shortages may worsen, potentially impacting future investments and outcomes.
- Lack of process (un-strict policy)
- Fail to follow up client payment
Decreased profit margin’s problems Long collection period issues
Q8: What does it means when you say “temporarily unnecessary general & administration expense”