I continue to get mixed signals regarding how advanced CFOs are with their journey to become a strategic adviser. Numerous articles describing the vision of CFOs and their staff after completing a successful financial transformation of their processes have been published in finance and accounting magazines and consulting firms' center of excellence websites. I, too, have written inspirational blogs and articles about accountants transitioning from bean counters to bean growers -- but I am unsure how much the evidence supports the vision.
CFOs who are bold may candidly describe their managerial accounting practices and systems as “aged” and, at the extreme, as “Medieval.” The bold CFOs are unafraid to admit that their existing reported information may be both flawed and incomplete. The flawed aspect deals with continued use of non-causal cost allocation factors that lead to misleading simultaneous under and over-costed products and services (because cost allocations must have a zero-sum error to reconcile). The incomplete aspect deals with not tracing and assigning the channel and customer-related expenses reported below the gross profit margin line. These channel, selling, customer service and marketing-related “costs to serve” are arguably more important than product costs. Why? Because as products and standard service lines are increasingly viewed by customers as commodities, suppliers must shift to differentiated services, deals, offers and discounts that are tailored to grow sales and profits from different types of customer micro-segments.
Register or login for access to this item and much more
All Information Management content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access