Striking a Balance Between Leadership & Compliance

[0:12] Cortney Herington:

Yeah, so I’m Cortney Herington. I work for Coca Cola bottlers in sales and services, as she said it’s an organization. We provide specialized financial services and Procurement Services to the entire coke system for North America. So, I’ve been to the coke system. It’s a complex system. I have been in the system for about 12 years now, so I started out kind of manufacturing as a plan accountant and then have slowly progressed into a controller role. That’s more like a corporate operations type controller. So, when I was asked to do this presentation, they kind of brainstormed like five or 10 different topics and as I took that list and tried to come up with something that I was interested in talking about for 20 minutes. One of the things that we had talked about was the compliance and strategic leadership of a controller position, and as I researched and read articles. I was really disappointed because it felt like every article was like a controller is just the accountant or the historian of the company and I was like, “But I’m so much more than that.” And so, that’s when I decided to choose this topic. So, first of all, I just wanted to talk about the difference in what a CFO and a controller does. And then we’ll kind of go from there.

[1:52] Cortney Herington:

So typically like our typical definition of a CFO is somebody who’s responsible for the overall financial performance so the organization. They’re really focused on the planning and future goals of the company. They have a huge heavy focus on investment and banking and relationships and employees. They’re typically long term vision, and usually working simultaneously with the CEO, so that they are supporting the vision of the CEO, and then they’re taking historical information that is typically provided by a controller person to help develop that strategy. And then the controller is really truly been considered the person who’s responsible for the record-keeping and the compliance and audit and IT and all of that stuff that is probably the reason there are not that many people in this room because it’s like he wants to talk about that stuff.

[3:01] Cortney Herington:

And again, that historian of the company is important, but through all of the technology that we’ve gathered over the last 8 to 10 years, like my role as a controller has really evolved and has become a lot more strategic because now I can have better real-time information, I’m able to close my books and three or four days instead of two or three weeks and so we’ll just kind of go through some of that evolution. But typically, what I hope that you leave here knowing today is that we’re not really just the historians of a company. We really have evolved into being that strategic business partner within the organization, kind of like how I think of it is like the wingman to the CFO, like the CFO is the wingman to the CEO, and now controllers kind of the wingman for the CFO.

[4:05] Cortney Herington:

So, a lot of accounting type roles have always been looking back and reconciling and making sure that everything’s compliant but it was always historical and just that, like hardcore number crunching, and we have typically been the right-hand person for the CFO but really it was just kind of making sure that everything was compliant and tied up in a nice neat bow so that the CFO didn’t have to worry about it. And that they could trust that the information that we were providing was accurate and they could rely on it.

Accounting typically has always been the overhead of the company so we didn’t have a lot of resources there wasn’t ever money to spend on IT and new technology. And so we typically mean, accountants love spreadsheets, and we’re really good at making spreadsheets, but in my career, I started out with a simple analysis that was done on spreadsheets and now we have these, like 45 tab models linked to other spreadsheets that, if one thing breaks or one file moves to a different location like you’re really in a bind and so through over the last few years like there’s really become some really efficient tools that have helped us to get rid of those spreadsheets and have better information that links together and so that’s another way that my role has been able to evolve, out of the traditional number cruncher.

[6:09] Cortney Herington:

And then just understanding, taking the CEO and the CFO they have this long term vision for the company and then just kind of breaking it down and helping operations. Partnering with operations to really understand bite-sized pieces. It’s great to hear this vision, but it’s hard sometimes for operations, the day to day people to understand like, what does that mean for me. And I think that controllers really do a good job and kind of bridge that gap between long term vision and, what are some of the steps that we need to take in the next three months, six months, one year to get to that five-year plan. And so that’s why I think that I’m a lot more strategic and that’s where I think this strategic piece of my overall role in the company now comes from is being able to take that vision and break it into smaller pieces and then working with the operations managers or the service managers of the company and say, here’s some information that we have available for you guys and giving them a platform where it’s easy for them to understand. And then, helping them translate like if my cost goes up 5% or $5 or five cents, what does that truly mean to the overall business and helping them understand, like how they fit into the big picture of the company.

[7:58] Cortney Herington:

And so, yeah, just helping them again under control costs, I mean ultimately that’s what drives bottom line and that’s why we’re all in business is because of our profits, helping them understand challenges and knowing where to go to find out, financially, how this impacts how those challenges impact them directly. And again, just helping them understand where they fit into the big picture. So just to talk about some best practices, so first is just to automate as much as we can. And my role currently, and maybe even the role that I had before. I actually am extremely efficient like I said, I started out as a plan accountant so I spent a lot of time in manufacturing and it was in the early 2000s, where there was just a lot of, like, really lean manufacturing and all types of technology and books and theories were coming out about how to be, low cost, high quality, and so I kind of just learned all of that inherently by spending time and operations and implants. And, so a few things like to me, automation just makes complete sense and looking at our process and saying what is available to us, and how can we, because again, we’re considered overhead, as accountants, so how can we invest in that technology and repurpose the resources that we do have. And so just some of the things that we have automated within my organization and one prior.

[10:05] Cortney Herington:

Our allocations, things that just are repetitive, intercompany was a huge thing that I dealt with at my previous company. Because we were worldwide and so we purchased machines that my division was responsible for in the US. We actually bought from Europe in like three different countries in Europe and so there was this whole intercompany reconciliation that had to go on and then add the complexity of currency exchange and it was actually really complicated and we used a solution called black line to work through all of those. And we also, in that same company, had multiple ERP systems. So there was a parent company and then I think like 30 divisions and within those 30 divisions, we utilized about 18 different ERP systems. And so it was really complicated to roll that up and the company didn’t necessarily have the money to roll out to sap company-wide or Oracle company-wide. So again, using a modified or a consolidated reconciliation tool called the black line. Everybody could import their stuff into the central tool and then it was easily consolidated up to a corporate level.

[11:43] Cortney Herington:

So those are just some of the things that we’ve done to automate in that process. It minimized a lot of the manual work, minimized a lot of human error that happens when there are humans, working on it. And so, coming into CCBSS about two years ago, I immediately meant everything that we did was very manual, we had very few people, because we’re a service organization to the coca-cola bottlers for North America like we’re set up just a breakeven. And so, it’s a very lean organization. But there was a lot of waste and a lot of inefficiencies and so we were able to take our financial clothes from basically two or actually almost three weeks down to probably three to four days, just from like standing at a 30,000-foot level and looking at all the moving pieces and where could we potentially move some of these things up so that it’s done throughout the month instead of waiting until month-end.

[13:04] Cortney Herington:

And then just most recently in December we actually signed our contract to automate our cash application through HighRadius, we’re just starting blueprinting next week so we’re not there yet but hopefully, we will come back next year and talk about our customer and user success with HighRadius, but just, I mean the technology is there and, it pays for itself after we’ve looked at like, what are the how much time are we spending applying cash and how many errors are we having and how many things just get put on the account because we have bad information, or we didn’t have the information when the money came in. There are so many reasons why HighRadius really is gonna help our process and our overall process. I don’t know why I said to stop the paper trail but really just like stop the paper, like let’s make it electronic so that it’s available to anyone who needs to use it, and anyone who has a question and we don’t all work traditional work hours anymore so some people may still be working at seven or eight o’clock, especially in our average operations career.

[14:25] Cortney Herington:

So then having the information available to them to help them make good business decisions is all. It’s just a sign of the times like having the information readily available. And then just streamlining again as I said just trying to find efficiencies within the organization. We all have these tasks that consolidate and like every aspect of what we’re doing to provide better information to the frontline people who are making business decisions. And then just the reduction of audit risk because there’s so much information and we have to be so careful about protecting our data. And, we have SOC audits and we have the coca-cola company audits and we have financial audits, and I mean we have so many audits that having everything as centralized as possible is really important.

[15:45] Cortney Herington:

I was actually, this again just a mention of how we were able to streamline our process but I was actually in a really interesting meeting about three weeks ago, between one of our services which are called brought to market and our company, coca-cola bottle of sales, and services. And we were talking about how Coca Cola transact with Amazon and Walmart and some of these e-commerce solutions and when I walked into the meeting I’m like this is not going to be that big a deal because who buys Coca Cola on Amazon, like, I just don’t, it’s just not something I do I just get it at the grocery store. But, it was a really interesting conversation because they’re this group that is actually really forward-thinking because they can see that there’s really good potential with all of the different types of services that are offered by; I can’t even think of any of the like Walmart you order your stuff online you pick it up or Kroger where you pick it up, or you can order through. Yeah. And so all of those things. Yeah, they impact how Coca Cola is doing business and so this group is actually thinking forward about what that looks like, and there. One of the complexities of working for the coke system is there are so many like pieces and layers within the processes. And so I think, in this particular conversation we were talking about starts out at a Coca Cola bottler, and there’s 63 of them in the US, and there was one in Canada, and from there it goes to an Amazon warehouse which sits there as our inventory in their location. And then when it gets sold.

[17:57] Cortney Herington:

The payment actually gets triggered back to us, which is an intermediary company, between all of these bottlers. So then Amazon’s only having to deal with one customer– Coca Cola company. And then we figure out who delivered that original product to the Amazon warehouse but there are two different processors, between the original delivery and between the payment to us. So we have a group, and they’re working on it and they’re thinking forward like how do we eliminate these two pieces and use our company who’s already the intermediary, who has always been the intermediary for the route to market transactions so that it’s more efficient for the overall system? And then our bottlers get paid sooner. So anyway, it was a really interesting conversation and it was a great example of how to streamline the process, but it’s a lot.

[19:11] Cortney Herington:

And then just being able to turn all of this data into something that’s usable by the business, I think that traditionally controllers and the accounting department were just producing reports to produce reports, and didn’t see whether anybody used them or not. They probably were frustrated if you didn’t use them because they spent the time working on them but they never actually went and sat across from you and said, like what report do you use? And if you could ask me for anything like what would you ask for? And so just like utilizing technology to have dashboards available to spread out your month and not to wait till the month-end to do all of your entries like integrating our payroll into our ERP system so that it gets recorded as soon as it gets paid and that information is available to services.

[20:08] Cortney Herington:

And all of these things like becoming more real-time, data that is available as trends, start to happen or as an event happens like being able to see that event, before a month-end and before three or four days close and then that rolls into a weekend and then before you know it, it’s like three or four weeks since the event happened. And we’re not able to react to that. And then really just spending the time like taking, the time that we normally would have used for a month-end close and actually going and learning our business and learning how these people who typically do not finance people can learn to use financial data to make their decisions. And also giving them the opportunity to pull their own reports and design their own reports and have the dashboards available and becoming less reliant on IT. I think that’s a big opportunity for us. We have a decent size IT department but most people know their answers when we ask for help. So it also is just another complexity, another delay of how long it’s going to take to get the information or get the technology implemented.

[21:54] Cortney Herington:

So a couple of examples that I had– we actually use adaptive insights and when I came to CCBSS said that the ERP system was integrated. They were using pretty powerful tools like budgeting and forecasting tools. But basically, the only reason they even had it was to prepare pretty financial statements. So instead of buying crystal reports, they bought adaptive insights and nobody had ever looked at actually building out the capability of what it was truly designed for — which was forecasting and so, immediately I spent some time kind of getting to know the tool and basically built it out so that we not only use it to make pretty financial statements, but we also use it as a forecasting and budgeting tool, and it’s very user-friendly and we were able to give access to all of our organization leads, so that they can manage their open headcount and they can manage the rest of their year forecast so that we in finance know kind of what’s going on in the business, but then they also feel like they have some buy into to the year, into how things are going.

[23:18] Cortney Herington:

Part of our job is just helping make sure that all of this data makes sense, and it’s presented in a way to people who do not work with finance such that they can use the data and not just see a whole bunch of information and kind of shut down and close it because they think what do I do with all of this? And then, just like us, basically just to somehow bring it all back together. We always have our book of record which is our ERP system but being able to take the data out of that ERP system and do something with it and have one place to go and I just think about like, if I were to close my eyes and think about the ideal situation for me or possibly my CFO, maybe even our CEO — it is when you log into your computer every morning and it tells you, what are the hot topics for accounts receivable and what is our open A/P that needs to be paid and maybe if you’re manufacturing like inventory levels just keep points that are just key indicators that help you identify what is truly a potential issue coming up. I guess having quick numbers when I was in manufacturing, I knew that for every thousand I made plastic bottles so for every thousand plastic bottles it cost $20 to make a certain size and it was just an overall high-level point of reference.

[25:32] Cortney Herington:

$1 per pound or a dollar per thousand pounds — it impacted my overall cost by this much and it was just those numbers that you kind of have in the back of your pocket so when an executive walks up to you in a panic like, Oh my gosh, resin just went up and what does that do to our cogs for the month of the year, I can kind of do that quick math, all of that is just where I see us getting to eventually, is being able to just have that one place, that one dashboard. And it’s something that’s available to everyone. And then, again, just like I said building relationships and rapport with operations, and not just being an accounting department, not just being a finance department but being someone who can be that business partner to operations who typically aren’t finance people and that’s why we’re here, we’re not just here to be the historians of the company.

[26:46] Cortney Herington:

Part of my success in my career has just been being the person who was willing to take the risk, streamline what could be streamlined and then get out there and be part of the business and build that rapport with the business. And then help make a contribution to the overall success. Any questions?

[27:36]

Audience Speaker:

What was the selling point that convinced your leadership that this was the right tool for you right now?

[27:43] Cortney Herington:

There’s a couple of different things. Kind of that single source of truth so everything starts to catch up so we bring in all of the payment information, and currently in our current state, we’re 100% manual for cash application. So that sounds crazy because we process a lot of stuff. But right now you know we have a shared drive that we save remittances and remittance information for cash application that the analyst in AR reach out and get as needed, and it’s all kind of in one PDF file so they have to search, and it’s got to be painful and then there’s some stuff that comes into a shared mailbox that’s on an Excel sheet.

[28:37] Cortney Herington:

So just being able to aggregate all of that number so that now we’re going to apply cash correctly. To begin with, we’re going to be a lot more proactive on the cash upside so that when it does pass to an analyst, it’s truly like things that need to be looked at. And then for them to be able to go into a portal and have the short pay that happened. And here’s the remittance that came with it. So all of that was a big selling point for us, and then just being able to automate. I mean it’s 2019 I couldn’t believe that 16 million transactions a year or some crazy amount of a crazy number of transactions that we process that is literally touched by human multiple times like multiples of one or two times for cash apps and then, again with an analyst and then probably again because they have to follow up with the customer. I came into CCBSS in August or September, now in August of, 2017, we went to SAP and we actually had ERP systems within our company. And so we combined those into one. Going into period 11, and our auditor showed up, the second weekend to January and we struggled because cash didn’t reconcile and hadn’t been reconciled for a long time and I was like so focused on the ERP because I kind of came into it so late in the game and there was a bunch of missing pieces and then I didn’t realize that standard things that typically happen in business hadn’t been done for a long time so.

[30:49] Cortney Herington:

So we really struggled through our audit, and as a controller, I needed to know that cash is being applied at a minimum like cash received by the bank is being applied in that same ratio. So yeah I mean just from an overall accounting process to all of those things are what got us here. So our business, specifically we do consolidation and invoicing. And so, we, the Coca-Cola company, have national customers. So if you just think about Dollar General, they have 15,000 stores in the US. And then we have 60 bottlers, so they just don’t want to have 6065 vendors, they want to have one Coca Cola company because that’s who they made their deal with. And so, we collect from the 65 bottlers all the shipments every day and we invoice Dollar General once a week. And then when Dollar General pays us, we split it back out to the 65 bottles. And so we are considered a service. And so we have a service leader. And then we have our finance department that’s responsible for cash. Making sure cash reconciled and making sure that all the typical things that the business does so our accounts receivable actually doesn’t report to the CFO, so it’s kind of weird.

[32:47] Cortney Herington:

So as part of all of this process for HighRadius, we were able to pull cash applications under finance because that technically should be controlled by finance especially cash. But because of that, we split that off and so now we have an analyst who deals with collections and deductions. And then we have the cash application fees. Well, it’s still at an individual invoice level. We have one analyst that has Dollar General as their customer, and they’re working between bottles or when there’s a deduction that needs to be resolved. Our analyst is kind of a liaison between the bottler and Dollar General, knowing what the national contract is and that piece of it.

[34:15] Cortney Herington:

So, black line, I’m super excited about the black line. I don’t expect to see a whole lot of savings with that but we have some pretty complicated balance sheet reconciliations because of this consolidated invoicing. So normally when you would create an invoice your offsets revenue. But for us, it’s just we owe somebody money so it’s the offsets and the liability account. And so we have this huge clearing liability account that we’re using black line to do matching, so we can see truly what’s left in there and how it compares to what’s in A/R. And then, just from my perspective, because we do have so much on our balance sheet, just having like a standard template and then have a workflow so that I don’t have to remember to go look on the shared drive and try to find the reconciliations and somehow document that I reviewed them. I can easily just log into the tool and say, “Okay, I still have seven or 17 of whatever reconciliations that haven’t even been started,” and then see who they’re assigned to and go deal with that. Just like that, workflow, having journal entries that get created in one place and the approvals go and then we can have it, upload to SAP, and then any kind of recurring entries they just automatically post and so there’s a lot of stuff going on right now. But all of it is good stuff and then just having that audit compliance for this kind of closes the final loop.