CaseStudy
Finance accelerated
Listed multinational car dealer Inchcape’s financial reporting systems were disjointed and inconsistent. Chris Gully explains how it was transformed into a sleek, sharp and easily understandable system
Finance accelerated
Project Casebook
Company data
Revenue
Profit
Staff *19,000 after Derco acquisition
Results
EBITDA
Subscriptions
Subscribers
The challenge
To improve reporting standards by streamlining and automating operations and quality of management information across every regional subsidiary.
Finance
Headcount: 154 employees across Inchcape’s finance function.
Key teams: Between eight and 10 people involved in the core transformation team and a further 10 in the group finance team.
Approach
Scoping out every regional subsidiary to identify issues and revamp global ledgers and accounts across all regions.
Results
Reduced month-end accounts from seven days a month to three days a month.
Moved month-end reporting manual activities from around 40 separate locations to three central hubs enabling local resources to focus on value add.
Standardised chart of accounts across markets.
Targets
Remove risk of manual errors and incorrect reporting.
Reduce month-end and year-end timelines significantly.
Set the financial reporting systems up to be robust and futureproof.
Future plans
According to its 2022 annual report, Inchcape intends to make greater use of its rich data from all its territories to better understand its customers and respond rapidly to their needs at a local level.
Listed multinational car dealer Inchcape’s financial reporting systems were disjointed and inconsistent. Chris Gully explains how it was transformed into a sleek, sharp and easily understandable system
Words Annie Makoff Photography Richard Gleed
With ever-growing global operations and over 19,000 employees on its payroll, and with more than 100 years of history under its belt, it was perhaps inevitable that at some point, Inchcape would need some sort of financial revamp to streamline operations and align business goals and objectives with clean, accurate data.
The multinational car dealer, being such a large, externally facing company, needed to ensure it provided timely and up-to-date information to the FTSE which covered a broad range of investor needs and was extremely robust. Any areas which were not completely accurate would spook investors and reduce confidence in the company, a substantive concern.
The drive to ensure excellent reporting standards hit a peak five years ago when Inchcape realised that standards needed to be significantly improved.
Chris Gully, who now works as finance transformation consultant at PepsiCo, was called in by Inchcape as a consultant to deliver a financial transformation project.
“If a public company on the stock exchange is reporting data which concerns shareholders, that’s not a good place to be. Inchcape had to ensure this wasn’t the case,” says Gully. “I was appointed to deliver a full top-to-bottom project which completely revamped their financial reporting operations.”
It was a major task, involving collaboration and data sharing with every regional subsidiary across the globe as well as every business department in Inchcape’s London headquarters. Gully worked closely with teams from every single one of Inchcape’s regional subsidiaries to understand how they operated on a local level and identify what had been working and what didn’t.
“Some countries were working around legacy systems or had long-running data issues and it had tangled them in knots,” he explains. “Some had a large amount of offline work that was contained within complex spreadsheets or in the mind of one person. Often, it was due to unclear communication and a lack of understanding between different stakeholders. Understanding all of these elements and mapping them out correctly was a cornerstone in improving the process.”
THE SECTOR
Inchcape is a listed multinational automotive distribution company
THE CHALLENGE
Streamlining management information and reporting processes across 40 markets
THE OUTCOME
Improved month-end reporting efficiency and a standardised accounts across markets
If a public company on the stock exchange is reporting data which concerns shareholders, that’s not a good place to be.
Making the local global
“Inchcape operations in each country operated hyper-locally, yet Inchcape has to report globally in a consistent manner.”
Four-wheel drive vehicles dominate much of the Asia-Pacific automotive market for example, while in Africa in particular, there’s a big market for tractors and farming vehicles.
“A significant goal of the financial transformation project was to improve the quality of management information each country received so they could make better decisions which would then feed into strategy. They would then know which areas to invest in and specific vehicle types to focus on.”
According to Gully, South America is a fast-growing market and Inchcape is now investing heavily in the region, making use of accurate financial reporting to drive strategy.
Speaking to every subsidiary was part of the first stage of the project. Then it was revamping whole accounts and ledgers across all regions and unpicking the data. “I stripped it all back to find out what was causing data inconsistencies and inaccuracies,” he explains. “The ultimate aim was to make accounts much more consistent globally.”
Inchcape operations in each country operated hyper-locally, yet Inchcape has to report globally
Creating a team
There was, inevitably, a huge amount of back and forth between people, teams and regions and a huge part of this was ensuring everyone was on board and people were fully engaged with the process.
During such a huge project, it’s inevitable that some people will be resistant to change and fearful of their jobs. Assuaging this became a “two-pronged approach”, where Gully took time to understand concerns while defining what the new world looked like, including how each person would benefit in the long-run. “Identifying existing challenges or pain points is a very effective way of getting buy-in to demonstrate how things will improve,” he says.
Impact on the business
The standardisation and consolidation of Inchcape’s accounting processes provides it with additional controls and supports rapid integration of mergers and acquisitions. In 2022, that capability was demonstrated with the £1.3bn acquisition of Latin America’s largest automotive distributor Derco, bringing the company’s overall headcount up from 14,500 to 19,000 and adding fast-growing Chinese brands into its portfolio.
For Gully, a greatly under-appreciated element is an improvement in job satisfaction that financial transformation can provide to teams. Trying to perform manual period end reporting and ‘auditor appeasement’ can be soul-destroying, but with automation, employees can focus on more interesting tasks.
“People working in finance functions are often ambitious and won’t tolerate being stuck doing arduous manual tasks for long so this massively improved job satisfaction,” Gully explains.
The project also reduced mistakes and made anomalies easier to spot. Shareholders too, have benefited: they obtain accurate financial information far quicker, enabling better decisions.
The new reporting system, which is streamlined across every business operation globally has reduced the month-end and year-end process significantly. Previously month-end would take seven days each month, but now it’s just three days — an improvement of 57%, freeing up time for more valuable tasks.
Yet, as Gully explains, financial transformation is just the starting point for businesses. “Too often, people see financial transformation as a job-done project with a clear finish line but that’s not what it’s about,” he insists. “Financial transformation is about where business and finance function support each other, enabling business growth through clean, streamlined operations. That’s key.”
Clean data
If information and data at the beginning is wrong and/or inaccurate, the output will be the same. It’s why Gully and his team conducted their scoping exercise across the entire global business.
A successful financial transformation programme, he explains, is one where finance is ‘hand-in-glove’ with every single aspect of the business, using the same data and the information. The aim is clean systems, clean data and end-to-end transparency.
“If someone new to the data sees it, they should understand it. It’s about making accurate information easy to analyse,” he says.
The solution Gully and his team produced utilised source system information from the base ledgers of various countries across the world and mapped the data through to group reporting. It contained both
the source information and the final output so there was full transparency and the ability to drill through to the general ledger to interrogate any data.
Additionally, the data was loaded ‘clean’ from source, without any adjustments. Any adjustments added later were done so directly into the system to make the results easy to understand and completely auditable.
Having defined a global chart of accounts which were used consistently, the outputs were easy to understand, both internally and externally. And submissions from the markets didn’t require the previous back-and-forth to get to an answer everyone was happy with, reducing timelines and improving morale.
Key takeaways
Involve all users before you ask them for anything, explaining the ‘why’ and giving them time to think about it before asking for something from them.
Ensure a comprehensive end-to-end project plan is in place and that all the details have been run through in advance as far as possible. A project like this is difficult to try and start planning when you’re in the weeds.
Be bold. Projects like this are broad, expensive and involved. In for a penny? You’ll be a lot more successful by being ambitious with what you think you can achieve from a project – think outside the immediate scope.
