CFO's save millions through tax and DSO management, says Hackett Group
The effective management of tax rates and the days sales outstanding (DSO) process can save finance executives almost $6.5 million for every $1 billion of revenue, claims a recent publication by the Hackett Group, the provider of process benchmarking for corporates. Companies with world class finance operations ? classified by Hackett's empirical evaluation ? show lower effective tax rates of 29%, compared with the peer average of 32%. Similarly, the management of DSO at efficient corporates shows an average of 42.2 days against 49.2 days for their peers.
The benefits account for around 60% of costs for financial operations and, according to Hackett, can prove the difference between world class operations and their less efficient competitors.
Cody Chenault of Hackett, comments: ?Even if companies don't achieve world class levels, time and money spent improving effective tax rate and DSO can generate real returns. World-class finance executives use success in these areas as justification for spending more to improve other elements of their finance operations, even within companies focused primarily on efficiency gains.?
World class companies spend 31% less than their industry peers on finance operations and operate with nearly half the staff, and of that staff, there are 18% fewer clerical staff and 24% more qualified professionals.