Doesn’t the CFO office have many other challenges to worry about? We say .. let’s explore.

Most conversations related to a Bid Management software land at the desk of the Head for Bid Management or Head of Pre-sales or Head of Sales. And right fully so. They are the primary users of such an application. But other stakeholders also get involved, especially Finance.

How can a system for Bid Management help the Finance organization meet their Sales and Bid related obligations more effectively? Four areas emerge:

Plug Revenue Leakages – While the major milestones like invoicing are well managed by the accounts team, it’s the minor ones that lapse or go unnoticed. An IT OEM organization who had signed a multi-year contract with a telecom service provider, was mandated to upgrade its software/hardware at pre-defined time intervals, irrespective of other project considerations. But since the account manager changed and the manual system missed tracking it, the company ended up processing the upgrade revenue two months later! Now that’s a serious miss.

As another example, organisations who routinely submit tenders also need to submit EMD (Earnest Money Deposit) with every submission, irrespective of whether they win or not. This can run into millions of Rupees. If not proactively recovered this is money left on the table. Likewise, if one does win the tender, as a part of the bi process the winner is supposed to provide a Bank Guarantee (BG) which is generally 5-10% of the TCV, valid for the period of the contract (which can range from 3-7 years). With people changing during the course of the project and no one with a clear responsibility to recover this amount, it is quite common that the money lies with the customer for months even after the project is closed. A $10-100K of float lost!

A system-led tracking can proactively alert the CFO organization to action such opportunities before it’s too late. Discount expiry, entitlements, customer obligations – are all opportunities that can add serious amount to the kitty if tracked and actioned in-time. This Sirius Decisions pic depicts it well. Read their blog here.

Monitor Business Controls – From a sales perspective, the CFO office’s involvement starts almost at the beginning of the bid management process. Most organisations involve the CFO office or its representative during the Bid : No-bid decision to determine the commercial feasibility. Once it has been decided to pursue the opportunity, the next major step is pricing. While not tactically, the CFO office is involved in setting price baselines, discount/margin cut-offs and approval chain workflows for the bid process. Once the deal is submitted for review, ensuring that it meets operational yard sticks, reviewing, and highlighting exceptions again involves the CFO office. Next up are Approvals. Ensuring that all the necessary approvals are in place, making sure that the risks highlighted by Legal/Quality/PMO are factored-in, are some of the tasks the CFO office has to oversee. Lastly, in case the deal is lost, participating in loss-review to check if any of the cost metrices need tweaking.

Some of these aspects of the bid management process are probably going to be fast tracked by Sales in the zest of submissions. But may have a serious implication later. A system led approach would yield far higher adherence to such controls, compared to the traditional semi-automated, person-dependant processes and tools.

Guide Pricing Decisions – While top-line is not necessarily the CFO responsibility, they have a very direct impact on the bottom-line. What floors to set for discounts/margins? Developing creative pricing mechanisms/scenarios? Highlighting the risks of agreeing to non-standard business terms or higher discounts and/or lower margins. Constantly providing inputs to improve price realizations. A bid management solution that maps the entire bid management process and stores all bid related information centrally can become a treasure trove for the CFO office to analyse and calibrate its policies and approaches.

Ensure Compliances – Arm’s length transactions, related-party transactions, and revenue recognition regulations all are no longer isolated from sales and bids. Company specific compliances such as no side letters or commitments, gifting policies, etc. also need to be adhered to. For Finance, it means ensuring that every bid meets the criterion, and exceptions are flagged off early.

Embedding compliances in the bid review/approval process is an effective way in ensuring adherence instead of relying solely on manual processes.

Needless to say, Finance has a pivotal role throughout the bid management process. The bid management team and the CFO office, in particular, have an interdependent relationship with a common objective of organizational growth. A Bid Management system can be a true arsenal towards meeting it. CFO office – do we have your ears?

Comments and observations welcome at hello@pricebid.co.