Master of the Records

When Mikael Leijonberg became Chief Financial Officer at GAC in 2016, he took charge of a suite of financial systems and procedures that were slow and cumbersome, involved a lot of Excel worksheets, and required a load of manual handling. Much has changed since then.

Back in 2016, international companies were entering a stricter age of financial verification, compliance, and transparency where everyone wanted to know everything sooner, preferably in digital formats. GAC’s ageing systems and approaches were no longer fit for purpose and had to be retired and replaced. For Mikael, that meant initiating a suite of concurrent projects covering every aspect of financial management – things like Group accounts, internal audit, treasury, taxation, and the legal structure of Group companies. All this while maintaining the existing set-up so day-to-day work could still be done.

Chief disruptor
The net effect of the projects that started six years ago is that Mikael has changed the way work is done in the back offices of GAC’s 100+ companies. He has disrupted the comfortable old ways of doing things and, in so doing, he has disturbed the comfort zones of Board members, Senior Managers, Company Managers and all the frontline staff involved in finance and operations.

“We were entering a new world of finance and business control and the old systems were starting to hold us back,” he says. “We couldn’t afford to rush things, but we had to make steady, consistent moves towards a more efficient and transparent way of working.”

Mikael and his team reduced all the heat and pressure down to three core tasks: improve the quality of insights gained from financial data; improve financial reporting efficiency; and improve cash generation and management.

“So simple so say but a major challenge to achieve,” says Mikael.

Stakeholder demands
Banks, local tax authorities, and international organisations like the OECD (Organisation for Economic Co-operation and Development) have set new standards for financial reporting. Much of the push for change was driven by the aftershocks of the 2009 global financial crisis and the recognition that it was too easy for international companies to transfer income from high earning locations to low taxing ones.

Compliance became a whip to lash the laggards who were slow to change, both inside and outside GAC. Internally, more detailed and systematic audits were needed to ensure GAC companies were aware of the higher reporting standards now required. Externally, every bank and tax authority was demanding more and better reporting, with stricter deadlines.

“We had to get these transformative projects up and running and there was plenty of resistance,” he says.

BEPS and the end of the free lunch
The OECD’s actions on Base Erosion and Price Shifting (BEPS) were a huge challenge for GAC’s independent companies, where managers were not used to having an enforcer in GAC HQ telling them what to do. Any service provided to them from HQ, whether sales support, IT services, HSSE systems, or legal advice, now came with a cost. If a company used a Group service, it now had to pay for it. There were no more free lunches.

“You can imagine the arguments back and forwards from companies that didn’t want to pay for services, maybe didn’t like the services, or felt they were being unfairly treated under the new rules,” says Mikael. “This project was a challenge to roll out and it was just one of half a dozen projects we had running at the time.”

The full suite
Along with tax, Mikael was pushing major changes to Group and local accounts reporting, internal control, legal structures, and treasury. In the early days, he also pushed a top-down Cost Optimisation programme through the ranks and revamped a Group-wide management scorecard for easier use in local companies. GAC’s Group Treasury Centre had its own projects to improve how the Group’s cash holdings were managed and how local companies managed their cashflows.

“We were busy on a wide front and we still are,” he says.

The getting of wisdom
The lessons Mikael has taken from the ongoing transformation of GAC’s finances are many. The big lesson is that ‘everything takes longer’. Another lesson is that first efforts often fail. Group Finance teams have initiated, tested and rejected several software suites during the journey to a smarter, swifter, more compliant way of working.

“It was hard at first to see that a plan you’ve made with your team to achieve an outcome wasn’t going to deliver on its promise,” says Mikael. “Now we are not so naïve about our expectations. Our optimism has been tempered with a strong dose of scepticism. We are not so quick to commit to a solution simply because of the promises made on the packet. And we are much smarter at knowing our needs and assessing a provider’s ability to meet them.”

Status report
So where is GAC now? What’s different? Short answer: a lot.

The Group has clipped and trimmed its legal holdings and consolidated them substantially. It has a reporting system sequentially integrating across all its operating companies – stripping away the outliers and the need for old Excel methods.

Companies are accepting the demands of BEPS (slowly). They are recognising the value of strong internal audit and control mechanisms. They are managing their money and their spare cash better and smarter. They are getting used to the control that Group Finance and the CFO now exert on their working days. In short, they are becoming fit to meet the challenges and opportunities of the 21^st century. It’s been a long and winding road for all involved and it doesn’t have an end.

“We will continue to improve our practices and upgrade our software, probably forever,” says Mikael. “But it is good to look and see a new, more professional approach and attitude emerging among our companies and among our Senior managers too. I wouldn’t say it has been a fun journey so far. It’s been exciting at times, stressful always and occasionally brilliant. But what matters is that we are accustomed now to making steady progress towards our outcomes. We are not put off by glitches or failures. We now see them as part of any major change.