Enhancement Of Business & Finance Via Technology

Over the last 25 years, Venkat is engaged in strategizing and implementing business plans, to transform the advisory business.

How does proper Business planning and business Structure hold the success for any enterprise? Please let us know the uniqueness of Practus' in this.
Running a business without a business plan is the equivalent of starting a car trip to a first time destination without switching on google maps. All businesses and business owners have the ambitions and aspirations to scale, but the details around how much scale, what they need to scale, when they need to do it and who will do it is often fuzzy. Business Owners are generally resilient, patient, optimistic, hardworking and intelligent people. They are able and willing to 'run hard', but are they running in the right direction? Proper business planning ensures that the direction, trajectory and pace of business are right. The key value of business planning is that it defines upfront 'what constitutes success'. It enables Business Owners to measure at periodic intervals whether the business is achieving the goals that they set for themselves.

Practus' role is that of a mirror. We show the business as they really are. Most business 'mirrors' are not clean(i.e. not updated or worse inaccurate). We keep the glass clean so that business understands where they are and where they need to go.

Increased funding flows from banks, overseas investors and stock markets require a larger number of CFOs to manage this funding

Secondly, Practus provides the dashboard in the car journey. We show the speed (scale of growth), maps (path to growth), fuel levels (cash available in the company), so that a business can navigate its journey better. Importantly, we provide these dashboards with key business metrics on a real time, self-serve basis, so that businesses are able to measure and monitor their performance themselves, without external dependencies.

Thirdly and lastly, we keep the 'windscreen' clean i.e. we provide a view into various scenarios for the future. This allows our clients to pivot today to shape a better tomorrow.

How the implementation of technology will help to performance of a service industry?
Implementation of Technology can help in these three Areas:
a. Employee Productivity Monitoring & Enhancements: Project Management and time sheeting tools like Workday, Scoro and related can help in better tracking of employee time utilisation and productivity. IT gives the business a clear view into project level and client level profitability and helps in pricing new projects more accurately. Technology helps in tracking idle time, task level time spent and also helps monitor whether employees are overworked, are taking adequate time for annual breaks, investing adequate time in learning and development.

b. WIP & Invoicing Systems: Technology helps to monitor and reduce work in progress (uninvoiced time) and outstanding invoices due from clients. Uninvoiced time is a big contributor to working capital blockages and creates serious gaps between cash outflow (salaries need to be paid at the end of the month, with no 'credit period') and cash inflow (delayed collections arising out of delayed invoicing). Most tools have red flags that go up if unbilled time exceeds, say 15 percent, of the budgeted project cost. Tools can also flag time write offs, discounts given to clients from standard charge out rates and unauthorised work beyond agreed scope. Automated reminders to clients on balance outstanding can help bring down DSO(Days Sales Outstanding)levels.

c. Out of Pocket Spend Monitoring: Professional services firms like technology consulting companies, law firms, accounting firms, architecture firms, ERP implementation firms and more have a large percentage of their field force on client locations. Management of out of pocket spends (which can be as much as 10 percent of a firms' revenue) can be a nightmare if done manually; its not just complicated from an administrative standpoint but causes revenue leakages in the form of unbilled and unrecovered OPE from client. Tools like Expenzing, Expensify, Tradogram can help mitigate these losses. Please assist us in comprehending the macro function of CFOs. Tell us how crucial CFOs are to the startup paradigm as well.

CFOs have a key role to play in shaping company strategy, whether it is a startup or an established business. Fundamentally, every CFO needs to solve the following trade-offs:
a.Capital allocation between competing areas of spends/investments.
b.Chase opportunities vs mitigate risks.
c.Short term spends which depress profits for possible payoffs in the longer term.

Of these, the capital allocation role is the most critical one. Where you choose to invest today and how much you choose to invest in which area will shape how a company will grow in the future and at what pace.

Can you explain how Practus approaches different sectors as it deals with so many different ones?
Regardless of the industry sector, business model, ownership type, managerial style, location, size, stage of a growth of a business, the principles of Business planning remain the same. The ‘Why’ of why business planning is required is the same. What also remains the same is the fundamental components of business planning viz:
a.Measurable goals.
b.Constraints (of time, resources, money).
c.Responsibilities (who within the business will do what)

What changes with the industry sector or size or stage of growth is the process of planning i.e. the ‘How’. Frequency, level of detailing, expectations from the planning process could vary. At Practus, we follow the 'first principles' approach when it comes to playing a CFO role, regardless of the industry sector we operate in or the stage of growth of the company. We focus on:

a.Keeping our clients profitable at all times(Net Margin percent).
b.Ensuring that the profits are realised in cash(and is not just sitting in the P&L)(P&L to cash balance conversion ratio).
c.Ensuring the efficient generation of the profit (RoCE).
d.Quality of earnings (repeat value of customers, quality of customer logos, cost of business acquisition)

What is your view about the CFO market changes from the recent past to now and what it will be like in the next five years?
Three factors have caused the demand for CFOs to rise exponentially in the last 10 years:

a.Inflow of PE and VC money(requiring active managmenet of end use of funding).
b.Deleveraging of Indian balance sheets (equity money requires more monitoring that debt).
c.Improved awareness and adoption of governance practices.
d.Modernisation of thought processes of Indian Founder and Family Managed Businesses.

Increased funding flows from banks, overseas investors and stock markets require a larger number of CFOs to manage this funding. At Practus, we see the fund flows only increasing even further, as India's continues to outperform the global economy and as we take strides towards becoming a $5 trillion economy. CFOs will be in even greater demand than today. Only condition is that CFOs will need to have a strong business partnering and transformational mindset to succeed and do well.

Within this ecosystem, the Institutional CFO Services market, where Practus is a leader, is a very small proportion. Our estimate is all players put together are 1 percent. In such a fragmented market, and that too a growing market, the scope for gaining market share in a talent starved market is massive. The opportunity to scale, consolidate and grow is immense for organised and forward looking CFO services firms.