Vinay Bansal, Head – Finance
& Operations, Crocs India
In my opinion, an organization’s topline is driven by sales and marketing activities; however, the bottom line depends on effectiveness of financial planning. Financial consulting is often misread as audit consulting, accounting, taxation. In fact financial consulting is much extensive and integral part of business. Financial consulting is all about predicating future probable results based on past data, current situation and future likelihood.
Businesses are becoming more complex due to digitalization and innovations. Customer satisfaction is the prime focus, so more and more differentiate products are getting introduced to cater dissimilar segments; making the position even more complex. Stakeholders want to know the sustainability of business; Angel investors require long term business plan and their availability, senior management teams require detailed financial analysis to decide short and long term strategy.
Evaluation of financial consulting in India – Some of you might remember the time in 1950 to 70s, the big, long red books maintained to record day to day transactions, and then red books replaced by typewriters. It takes months to prepare summary of these transactions. So it is all about recording transactions which have already happened. In 1980-1995, computers change the way of accounting and I would say start of financial consulting. As historical data was available for financial analysis, so most of the financial analysis was based on historical data and people experience with minimal visibility of future. The real financial analysis started after 1995 with introduction of internet. With internet the global trends and data was accessible to evaluate the various problems. In last 10 years, with the introduction of various softwares to analyze past trends, global behavior and fluctuations, now financial analysis is based on more facts rather than sheer experience. Now financial consultants can provide various reports which are prepared after analyzing humongous data available from various sources.
However, financial consulting in India is still like high school kid. Like no one was able to predict the growth of telecom in early 20s and same is the story of ecommerce even today. As most of the business decisions are still based on historical data. Now many global companies are expanding their businesses to India and are struggling. The reason behind this is non-availability of various data like customer behaviors, market segmentation, spending patterns So all the business decisions are based on very little data available. Here financial consultants can play an important role in providing more detailed reports to investors and senior managements to take more sustainable decisions.
India is a land of diversities, one solution or product or strategy will not work. We need different strategies for different set of people. Here financial consultants can play a vital role in providing detailed analysis of various business possibilities and the probable end results. Financial consultants are required to monitor day to day activities as well. So that, triggers can be raised for any positive or negative happenings and immediate corrective actions can be implemented.
We generally think that financial consulting is only limited to Finance department. However financial consultants are important in customer services, sales initiatives, marketing activities, production planning etc. Each vertical of business need involvement of financial consultant to analyze the various parameters. Like in marketing, financial consultants are required to measure the impact of various programs launched. We all say the marketing is all about brand awareness, customer service is only for customer satisfaction, how we can relate these to financial results. However in the end, all these activities will results in more revenues and more profitability. So everything can be measured.
Financial consulting brings the sense of responsibility in organization. Also works as eye opener. All business has one objective to increase wealth of stakeholders so measurement of wealth is the most important activity. To measure the wealth you need people who know who to measure. The people who know this are called Financial Consultants.