Best in Class Finance Functions For Police Forces

Background

Police funding has risen by £4.8 billion and 77 per cent (39 per cent in real terms) since 1997. However the days where forces have enjoyed such levels of funding are over.

Chief Constables and senior management recognize that the annual cycle of looking for efficiencies year-on-year is not sustainable, and will not address the cash shortfall in years to come.
Facing slower funding growth and real cash deficits in their budgets, the Police Service must adopt innovative strategies which generate the productivity and efficiency gains needed to deliver high quality policing to the public.

The step-change in performance required to meet this challenge will only be achieved if the police service fully embraces effective resource management and makes efficient and productive use of its technology, partnerships and people.

The finance function has an essential role to play in addressing these challenges and supporting Forces’ objectives economically and efficiently.

Challenge

Police Forces tend to nurture a divisional and departmental culture rather than a corporate one, with individual procurement activities that do not exploit economies of scale. This is in part the result of over a decade of devolving functions from the center to the.divisions.

In order to reduce costs, improve efficiency and mitigate against the threat of “top down” mandatory, centrally-driven initiatives, Police Forces need to set up a corporate back office and induce behavioral change. This change must involve compliance with a corporate culture rather than a series of silos running through the organization.

Developing a Best in Class Finance Function

Traditionally finance functions within Police Forces have focused on transactional processing with only limited support for management information and business decision support. With a renewed focus on efficiencies, there is now a pressing need for finance departments to transform in order to add greater value to the force but with minimal costs.

1) Aligning to Force Strategy

As Police Forces need finance to function, it is imperative that finance and operations are closely aligned. This collaboration can be very powerful and help deliver significant improvements to a Force, but in order to achieve this model, there are many barriers to overcome. Finance Directors must look at whether their Force is ready for this collaboration, but more importantly, they must consider whether the Force itself can survive without it.

Finance requires a clear vision that centers around its role as a balanced business partner. However to achieve this vision a huge effort is required from the bottom up to understand the significant complexity in underlying systems and processes and to devise a way forward that can work for that particular organization.

The success of any change management program is dependent on its execution. Change is difficult and costly to execute correctly, and often, Police Forces lack the relevant experience to achieve such change. Although finance directors are required to hold appropriate professional qualifications (as opposed to being former police officers as was the case a few years ago) many have progressed within the Public Sector with limited opportunities for learning from and interaction with best in class methodologies. In addition cultural issues around self-preservation can present barriers to change.

Whilst it is relatively easy to get the message of finance transformation across, securing commitment to embark on bold change can be tough. Business cases often lack the quality required to drive through change and even where they are of exceptional quality senior police officers often lack the commercial awareness to trust them.

2) Supporting Force Decisions

Many Finance Directors are keen to develop their finance functions. The challenge they face is convincing the rest of the Force that the finance function can add value – by devoting more time and effort to financial analysis and providing senior management with the tools to understand the financial implications of major strategic decisions.

Maintaining Financial Controls and Managing Risk

Sarbanes Oxley, International Financial Reporting Standards (IFRS), Basel II and Individual Capital Assessments (ICA) have all put financial controls and reporting under the spotlight in the private sector. This in turn is increasing the spotlight on financial controls in the public sector.

A ‘Best in Class’ Police Force finance function will not just have the minimum controls to meet the regulatory requirements but will evaluate how the legislation and regulations that the finance function are required to comply with, can be leveraged to provide value to the organization. Providing strategic information that will enable the force to meet its objectives is a key task for a leading finance function.

3) Value to the Force

The drive for development over the last decade or so, has moved decision making to the Divisions and has led to an increase in costs in the finance function. Through utilizing a number of initiatives in a program of transformation, a Force can leverage up to 40% of savings on the cost of finance together with improving the responsiveness of finance teams and the quality of financial information. These initiatives include:

Centralization

By centralizing the finance function, a Police Force can create centers of excellence where industry best practice can be developed and shared. This will not only re-empower the department, creating greater independence and objectivity in assessing projects and performance, but also lead to more consistent management information and a higher degree of control. A Police Force can also develop a business partner group to act as strategic liaisons to departments and divisions. The business partners would, for example, advise on how the departmental and divisional commanders can meet the budget in future months instead of merely advising that the budget has been missed for the previous month.

With the mundane number crunching being performed in a shared service center, finance professionals will find they now have time to act as business partners to divisions and departments and focus on the strategic issues.

The cultural impact on the departments and divisional commanders should not be underestimated. Commanders will be concerned that:

o Their budgets will be centralized
o Workloads would increase
o There will be limited access to finance individuals
o There will not be on site support

However, if the centralized shared service center is designed appropriately none of the above should apply. In fact from centralization under a best practice model, leaders should accrue the following benefits:

o Strategic advice provided by business partners
o Increased flexibility
o Improved management information
o Faster transactions
o Reduced number of unresolved queries
o Greater clarity on service and cost of provision
o Forum for finance to be strategically aligned to the needs of the Force

A Force that moves from a de-centralized to a centralized system should try and ensure that the finance function does not lose touch with the Chief Constable and Divisional Commanders. Forces need to have a robust business case for finance transformation combined with a governance structure that spans operational, tactical and strategic requirements. There is a risk that potential benefits of implementing such a change may not be realized if the program is not carefully managed. Investment is needed to create a successful centralized finance function. Typically the future potential benefits of greater visibility and control, consistent processes, standardized management information, economies of scale, long-term cost savings and an empowered group of proud finance professionals, should outweigh those initial costs.

To reduce the commercial, operational and capability risks, the finance functions can be completely outsourced or partially outsourced to third parties. This will provide guaranteed cost benefits and may provide the opportunity to leverage relationships with vendors that provide best practice processes.

Process Efficiencies

Typically for Police Forces the focus on development has developed a silo based culture with disparate processes. As a result significant opportunities exist for standardization and simplification of processes which provide scalability, reduce manual effort and deliver business benefit. From simply rationalizing processes, a force can typically accrue a 40% reduction in the number of processes. An example of this is the use of electronic bank statements instead of using the manual bank statement for bank reconciliation and accounts receivable processes. This would save considerable effort that is involved in analyzing the data, moving the data onto different spreadsheet and inputting the data into the financial systems.

Organizations that possess a silo operating model tend to have significant inefficiencies and duplication in their processes, for example in HR and Payroll. This is largely due to the teams involved meeting their own goals but not aligning to the corporate objectives of an organization. Police Forces have a number of independent teams that are reliant on one another for data with finance in departments, divisions and headquarters sending and receiving information from each other as well as from the rest of the Force. The silo model leads to ineffective data being received by the teams that then have to carry out additional work to obtain the information required.

Whilst the argument for development has been well made in the context of moving decision making closer to operational service delivery, the added cost in terms of resources, duplication and misaligned processes has rarely featured in the debate. In the current financial climate these costs need to be recognized.

Culture

Within transactional processes, a leading finance function will set up targets for staff members on a daily basis. This target setting is an element of the metric based culture that leading finance functions develop. If the appropriate metrics of productivity and quality are applied and when these targets are challenging but not impossible, this is proven to result in improvements to productivity and quality.

A ‘Best in Class’ finance function in Police Forces will have a service focused culture, with the primary objectives of providing a high level of satisfaction for its customers (departments, divisions, employees & suppliers). A ‘Best in Class’ finance function will measure customer satisfaction on a timely basis through a metric based approach. This will be combined with a team wide focus on process improvement, with process owners, that will not necessarily be the team leads, owning force-wide improvement to each of the finance processes.

Organizational Improvements

Organizational structures within Police Forces are typically made up of supervisors leading teams of one to four team members. Through centralizing and consolidating the finance function, an opportunity exists to increase the span of control to best practice levels of 6 to 8 team members to one team lead / supervisor. By adjusting the organizational structure and increasing the span of control, Police Forces can accrue significant cashable benefit from a reduction in the number of team leads and team leads can accrue better management experience from managing larger teams.

Technology Enabled Improvements

There are a significant number of technology improvements that a Police Force could implement to help develop a ‘Best in Class’ finance function.

These include:

A) Scanning and workflow

Through adopting a scanning and workflow solution to replace manual processes, improved visibility, transparency and efficiencies can be reaped.

B) Call logging, tracking and workflow tool

Police Forces generally have a number of individuals responding to internal and supplier queries. These queries are neither logged nor tracked. The consequence of this is dual:

o Queries consume considerable effort within a particular finance team. There is a high risk of duplicated effort from the lack of logging of queries. For example, a query could be responded to for 30 minutes by person A in the finance team. Due to this query not being logged, if the individual that raised the query called up again and spoke to a different person then just for one additional question, this could take up to 20 minutes to ensure that the background was appropriately explained.

o Queries can have numerous interfaces with the business. An unresolved query can be responded against by up to four separate teams with considerable delay in providing a clear answer for the supplier.

The implementation of a call logging, tracking and workflow tool to document, measure and close internal and supplier queries combined with the set up of a central queries team, would significantly reduce the effort involved in responding to queries within the finance departments and divisions, as well as within the actual divisions and departments, and procurement.

C) Database solution

Throughout finance departments there are a significant number of spreadsheets utilized prior to input into the financial system. There is a tendency to transfer information manually from one spreadsheet to another to meet the needs of different teams.

Replacing the spreadsheets with a database solution would rationalize the number of inputs and lead to effort savings for the front line Police Officers as well as Police Staff.

D) Customize reports

In obtaining management information from the financial systems, police staff run a series of reports, import these into excel, use lookups to match the data and implement pivots to illustrate the data as required. There is significant manual effort that is involved in carrying out this work. Through customizing reports the outputs from the financial system can be set up to provide the data in the formats required through the click of a button. This would have the benefit of reduced effort and improved motivation for team members that previously carried out these mundane tasks.

In designing, procuring and implementing new technology enabling tools, a Police Force will face a number of challenges including investment approval; IT capacity; capability; and procurement.

These challenges can be mitigated through partnering with a third party service company with whom the investment can be shared, the skills can be provided and the procurement cycle can be minimized.

Conclusion

It is clear that cultural, process and technology change is required if police forces are to deliver both sustainable efficiencies and high quality services. In an environment where for the first time forces face real cash deficits and face having to reduce police officer and support staff numbers whilst maintaining current performance levels the current finance delivery models requires new thinking.

While there a number of barriers to be overcome in achieving a best in class finance function, it won’t be long before such a decision becomes mandatory. Those who are ahead of the curve will inevitably find themselves in a stronger position.

Business Capital Solutions In Canada: Accessing Proper Cash Flow & Commercial Financing

Business capital requirements in Canada often boil down to some basic truths the business owner/financial mgr/entrepreneur needs to address when it comes to financing for businesses.

One of those truths? Knowing the true state of their financial condition and what financing they do and don’t qualify for when it comes to meeting commercial lending requirements in Canadian business.

Business Loans In Canada

Whether you are smaller or start-up firm looking for information on how to get a business loan or a larger established firm looking for growth financing or acquisition opportunities we’re highlighting 3 mistakes that commercial loan seekers like your company need to avoid making when addressing, sourcing and negotiating your cash flow / working capital and commercial financing needs.

1. Understand the true condition of your company finances – These are almost always successful addressed when you spend time on your financials and understand how your financial statements reflect your access to commercial loans & business credit in general

2. Ensure you have a plan in place for sales growth and financial needs as it relates to commercial financing

3. Understand that actual hard facts about cash flow which is, of course, the lifeblood of your company

Can you honestly answer or feel positive about all those 3 points. If so, pass Go and collect $ 100.00!

A good way to address your company’s finance plans is to ensure you understand growth finance solutions, as well as how to manage in a downturn – i.e. not growing, losing money, etc; It’s never fun to fund yourself in an economic or industry downturn such as the COVID pandemic of 2020!

When we talk to clients of new or established businesses it seems they are almost always talking about sales, so the ability to understand and focus on the differences in their profits and cash fluctuations is key.

How do cash flow and sales plans and projections affect the type of financing you require? For one thing sales growth usually starts out by consuming your cash, not generating it. A poor finance plan will drag your business down and addressing financing simply gets tougher and tougher.

Three basics always emerge when it comes to your search for the right business capital and financing.

1. The amount of financing you need

2. The type of financing (debt/cash flow/asset monetization) The business loan interest rate will be dramatically affected by whether you choose traditional or alternative financing solutions. Private business loans in Canada come from non regulated commercial finance companies most often known as ‘ alternative lenders ‘. These lenders are typically highly specialized in one ‘ niche ‘ of business financing and may be Canadian firms or branches of U.S. banks and non-bank lenders

3. How the financing is structured to be manageable with your day to day operations

What Finance Company In Canada Can Meet Your Borrowing Needs & Why Is Capital Important In Business

Let’s identify and break down key financings your firm should know about and understand if they are applicable and achievable to your business. They include:

A/R Financing / Factoring / Confidential Receivable Finance

Inventory finance / floor planning / retail inventory

Working Capital term loans

Unsecured cash flow loans

Merchant working capital loans/advances – these loans are geared toward short term cash needs and are typically one year in duration. Loan amounts are typically 15-20% of your annual sales revenues.

Royalty finance

Asset based non bank business lines of credit

Tax credit financing (SR&ED bridge loans)

Equipment Leasing / Sale leasebacks – Equipment financing in Canada is used by almost 80% of all companies looking to acquire new, and used, assets.

Govt Guaranteed Small Business Loan program – Government Loans in Canada are sometimes referred to as ‘ SBL’, aka Note: BDC Finance solutions are available from this Canadian non-bricks and morter crown corporation. A small business loan via the government-guaranteed loan program comes with true flexibility around term loan duration, market rates, no pre payment penalties, and of course the low personal guarantee that is required by borrowers. These two ‘ government ‘ loan solutions are often perfect for financing a new business.

If you’re focused on not making mistakes in your business finance needs and want to capitalize on the solutions your competitors are probably already using seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your cash flow and commercial financing needs.

Stan has had a successful career with some of the world’s largest and most successful corporations.

His employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) In 2004 Stan founded 7 PARK AVENUE FINANCIAL – He is an expert in Canadian Business Financing.

10 Things You Need to Know Before Starting a Business

Having started 9 successful small business during my 11 year business career I am routinely asked, “How did you make the jump into self-employment?” and “What are the most important things you need to do before you start a business?” These questions are then usually followed up by a barrage of questions about the minutia that goes into small business ownership and development. Questions such as, “Where do I get a Tax I.D. number?” or “How do I get capital?” or “How do I register my website?” are often asked. Although these minutia-focused questions do have some validity and some credence to them, the real important stuff that every entrepreneur needs to know is more general. The important information that an entrepreneur needs to know is the winning-mindset stuff. The stuff that determines whether an entrepreneur succeeds or not is not in the minutia. I can teach a moron how to get a Tax I.D. number, but I can’t teach a moron how to fully embrace, and passionate implement the “10 Things That You Need To Know Before Starting A Business.” These 10 things, concepts and ideas have the power to alter your entire success trajectory or they have the potential to do nothing. How these 10 things impact your life is 100% up to you. And so without any further ado, here we go:1. A business is not a business until you are actually selling something.I know, I get it. Trust me. Buying furniture and phones is fun. I know that designing your own logo is cool and thrilling. I know that buying your very own custom-wrapped vehicle sounds appealing. I know that ordering letter-head with your name on it is awesome. I know that the new Voice-Over-The-Internet phone system is truly revolutionary. However none of those things matter at all until you make your first sale. If you can’t sale you do not have a business. If you have not made your first sale, all you have is a “justification to buy professional office gadgets.” If you have not yet been handed cash by a customer in exchange for a product or service that you have added value to or rendered then your business is bogus.2. The best way to market your new product or service is by harassing the power of deep discounts based on richly anchored prices.If you want to enter and potentially exit on top of a new market during your lifetime, the only way to do it effectively without using a huge amount of marketing capital and time is by offering deeply discounted prices based on richly anchored prices. Here is an example. If you wanted to enter into the landscaping business in your town the chances are that there is already a top dog in your market. There is probably already somebody in your town that has market share by a wide margin. This company probably already has an army of landscaping crews and probably already has a certain well known marketing strategy. So how do you enter the market victoriously? If you want to win. You need to offer your customers the trojan horse. Not that you are misleading them in anyway, but you want to give them a FREE GIFT SAMPLE or a DEEPLY DISCOUNTED TRIAL PERIOD of your product and service. Once they experience the magic of your product or service, your high-prices will soon no longer matter. Soon your prices will seem justified by the extremely high quality of your product and service. Think about the iPhone, how much are those things? How much does it actually cost to buy one of those phones without buying a phone plan? A lot. Why are Americans willing to buy a new iPhone? Because they got their first iPhone deeply discounted with their phone plan.3. At the end of the day, if you or your company can’t sell, then your business is going to hell.You might be a genius and your product might be the best. You might be the best author in American history, but if your cover stinks and Americans never buy your book then your contents will never be read and your ideas will never make it out to the marketplace. Is this fair? Yes. Americans do judge books by their covers and they do judge businesses based on their perceived value. If your website stinks, they think you stink. If your sales presentation stinks, they think your product stinks. My friend, if you can’t sell your product to the people then do not start a business. If you can’t convince people that you have added a significant amount of value to the product or service, then you need to stop with the process of starting a business before you start.4. Do not EVER build a business model that is not ultimately scalable and duplicatable without your direct participation in the business.Although there is nothing wrong with hard work, there is something very wrong about exchanging your time for more indefinitely. Short term, we all have to exchange our time for money. To start my first businesses I had to work nearly 80 hours per week on a concrete construction site by day while working as a home-health aid for the elderly at night. Did I have to exchange my time for money? Yes. But ultimately I was able to exchange this money for a business that I was able to create. At first this business was a part of me. It did not work without me. It had no pulse without me. Without me it did not breathe. When I took a week off, it took took a week off. When I lost focus, the people around me lost focus. However, over time and with the intense encouragement of my wife and the intense desire I had to achieve more in life I was able to overcome the mental obstacle block and belief that, “I had to do everything related to my business.” My friend as you build and grow your business make sure that you avoid getting yourself into a business trap. Do not build a business around the personality and drive of a single person. Although this business model will make you feel sexy and popular, it will limit your growth and your time freedom. As you grow your business, make sure it can expand with the infusion of extra capital, more real estate and more people, not just more and more of you (because your family needs you too).”The secret of success lies not in doing your own work, but in recognizing the right man to do it” – Andrew Carnegie5. Before you invest a dime into any business, determine exactly how much money you are willing to invest in its success or failure.As you get yourself mentally geared up to start any business, you are going to be the most positive of mindsets. Every new business is exciting on paper. When it is just an idea it is fun, ambitious and inspiring. However, once you give life to this idea by infusing it with your hard earned capital it is no longer so fun. It is now a job. And once it is a job, things get serious. As things get serious, more and more capital is needed to buy a few more of these things and those things. A little more marketing is needed, and a few more pieces of new technology are needed. Soon money is flowing out of your wallet, like its the final 2 weeks before Christmas. If you are not careful, you will lose your shirt during this time. Do not fall into this trap. Set a limit on the amount of cash you are willing to infuse into your business and do not exceed this amount no matter what. Do your planning. Build your proformas and then stick to it. Do not get excited. Stay focused on making a profit.6. Focus on becoming an expert and guru in your area of strength instead of focusing on improving your weaknesses.I don’t enjoy small talk. I hate minutia. I do not like long-winded conversations about nothing. I am irritated by those that provide general criticisms. Those who talk and are not doers annoy the hell out of me. I am able to be in the presence of mediocrity without confronting it. I cannot stand accounting minutia. Filling out forms causes me anxiety attacks. I can’t remember my address, or nearly any information that I don’t deem to be necessary for everyday function. These are my weaknesses. What are yours?I think and talk about the big picture. I love “big ideas.” I get lots of things done because I keep conversations short. I often arrive to work at 1:00 AM on Monday morning so that I can get everything done that I feel I need to get done. I have relentless followup with subordinates who would otherwise fail if left to their own, “I didn’t have time” alibis. I delegate the accounting minutia. I have my wife and coworkers fill out all forms for me. I have my address typed into a document that I can easily access from my computer. I refuse to attempt to memorize anything, so I make checklists for everything. These are my strengths.My friend, if you lived 3 life-times we would not have enough time to improve all of our weaknesses. So why even attempt to? Spend your time honing your God-given skills. God gave you skills. Use them to get paid. People will pay you to watch you pursue your passions. People will never pay to watch me make small talk at a birthday party. People will pay me for getting things done. People will never pay me for being good at filling out forms. People will pay us, if my assistant fills out the contractor identification form correctly. Spend your time improving your God given skills. Avoid what you are not good at and delegate what you cannot stand doing.7. Focus your effort on one thing and one problem until you solve it.So many entrepreneurs hop from one idea to the next. They love moving to greener pastures. You will never gain success in your industry or line of work until you have developed mastery in it. How many hours are needed to develop mastery of something? In Malcolm Gladwell’s book the Outliers, he delves into the factors that went into creating the highest levels of success on the planet. His thesis is essentially that those who spend a disproportionate amount of time doing one thing ultimately become the best masters at this one thing, thus they get paid the most for their mastery of this one thing. His study focuses on the lives of Bill Gates, Robert Oppenheimer (the genius who created the A-bomb), and numerous other top performers. Essentially he believes that the “10,000 Hour Rule” is the true key to top success in any field. However, regardless of how you feel about Gladwell’s research, the basic truth remains. You will never be good at something unless you stick with it until you master it.”Concentrate your energies, your thoughts and your capital. The wise man puts all his eggs in one basket and watches the basket.” – Andrew Carnegie”The men who have succeeded are men who have chosen one line and stuck to it.” – Andrew Carnegie8. Your opinion is not valid, but the customer’s is.In the world of entrepreneurship we can often get excited about our new idea. We have this new idea that we believe that everyone will love. However, after we explain to a group of guys a church camp and a group of people at work and then a few more people at the local gym, we begin to realize that this idea makes the concept of marketing “dehydrated water packets” to be a good one. The fact is, the more you explain the idea, the more people ask you, “What the hell are you talking about?” As you slowly become more and more frustrated with “the people that just don’t get your ideas” you have two options available.You can act like Colonel Sanders and spend your entire life trying to convince America that your idea is good (KFC did not become a reality until the last few years of the legendary Colonel Sanders’ life), or you can realize that its time to move on to another “great idea.” As for me, I do not want to be a life-time sacrificial martyr for a good idea. However, you might want to be.
As a general rule I would encourage you to keep this in mind. Humans are the ones that buy your products and services. If they don’t get it, they won’t buy it. Crystal Clear Pepsi was cool, but the people didn’t get it.9. Realize that 80% of your success will ultimately come from 20% of your efforts.If you want to Google “Pareto’s Principle” then you will quickly discover what I am talking about here. Essentially it all breaks down like this. As your company markets and markets, you will soon find that 80% of your business comes from 20% of the marketing sources. As you begin spending more and more time in the office, you will begin to see that 80% of your effectiveness comes from 20% of the activities that you do on a daily basis. So without getting too philosophical with you on this point, I will encourage you to periodically stop and ask yourself, “What 20% of activities am I personally doing to create 80% of my success?”10. Win-Win situations are the only sustainable business solutions.Everybody is always trying to pull a fast one on somebody else. He is always trying to take advantage of them. They are always trying to get what he has without him knowing. The two of them are always trying to plot to make a quick-buck from those guys. But at the end of the day, the only sustainable solution is creating an endless stream of “mutually beneficial relationships.” The late great Andrew Carnegie believed so much in this philosophy that he devoted nearly his entire post working-career to writing, and spreading this “Gospel of Wealth” as he called it. He believed that American business would thrive like never before if only the people would realize the power of working in harmony with our fellow man in a synergistic way that allows both parties to achieve their goals. Carnegie believed in this principle because it worked for him.