One thing is a constant for credit, treasury, and finance leaders: they operate in an environment of competing priorities. Which priority is most important depends on your company’s specific needs. Then again, those needs can rapidly change in today’s dynamic business environment.
Does This Sound Familiar?
Finance leaders have to balance maximizing cash flow, reducing risks, supporting sales and revenue growth, and cost containment. Performance rests on effectively leveraging new technologies, employee development, and minimizing team turnover. With such a basketful of priorities, where should you concentrate your focus? On top of all this, there are the problems that arrive today and demand your attention.
Without well-defined goals, teams can quickly become aimless, frustrated, and ineffective. The solution starts with setting SMART goals and ensuring that employees understand not simply what they are expected to accomplish, but why it matters.
Goals should be SMART
Specific, Measurable, Achievable, Relevant, and Time-bound.
The best goals begin with the organization’s objectives and work downward. A CFO may have a strategic objective to increase operating cash flow. Treasury might translate that into improved cash forecasting. Credit could target lower DSO, fewer seriously delinquent accounts, or faster dispute resolution. The solution is a collaborative team effort that requires clear communication between all those involved.
“Improve collections” is not an effective goal. “Reduce accounts receivable over 60 days from 12% to 8% by year-end without increasing bad-debt losses” provides a target, measurement, deadline, and guardrail.
A treasury goal of lowering banking costs is better stated as: by fiscal year-end, reduce bank fees by 10% through account consolidation, pricing negotiations, and elimination of unnecessary services.
A Chief Financial Officer may have a goal for the year to increase operating cash flow. It becomes both manageable and transparent by defining the specific goal of a 10% increase and achievement of at least 90% of the annual cash-flow plan.
Identifying root cause issues is not always easy, but it can surface which goals take precedence. Many issues are cross-functional; no one team or individual drives the issue, or the fix. Address recurring problems to eliminate costly repeated research, rework, and wasted time.
Common Goal-Setting Traps
Setting too many goals. When everything is a priority, nothing really is.
Selecting goals simply because the data are easy to measure. The number of phone calls a collector makes in a day is easy to track, but what was collected, or how many disputes were resolved?
Setting goals without employee or cross-functional input.
Failing to establish a baseline so incremental progress can be measured.
Setting goals team members have no influence over.
Waiting until the end to evaluate performance.
The pursuit of perfection prevents or delays action. Sometimes it is best to “Point, Fire, Then Aim.” Refinements can come later.
Start with three to five business priorities. Identify what the company needs most from your team and build goals around them. This requires all who impact a company’s priorities and goals to know what they are.
Establish baselines and measurable outcomes. Before setting targets, know today’s starting point. For example, the average Days Sales Outstanding, or past-due percentage, forecast accuracy, credit-review cycle time, banking costs, etc.
Involve the team. Ask employees what is preventing better results and what they believe can realistically be improved. When obstacles arise, shift the discussion from why something cannot be done to: “What is your solution?” Require team members to participate in solving the problem. That gives you valuable input into obstacles you may not be aware of and creates a sense of ownership.
Break major goals into milestones. Complex assignments become more manageable when divided into building-block tasks, scheduled into manageable time periods, and recognized as milestones are achieved.
Review, coach, and adjust. Goals should be discussed throughout the year, not filed away until the performance review.
Effective goal setting is more than creating a list of annual targets. It gives your team direction, establishes accountability, and connects everyday activities to broader objectives. Your role as a leader is to facilitate success by providing clear expectations, resources, priorities, coaching, and feedback.
For credit, treasury, and finance leaders, the test of a good goal is straightforward: Does the employee know exactly what success looks like, why it matters, how it will be measured, and what actions they can take today to move toward it? If the answer is yes, goals become more than performance measures; they become a roadmap for results.
Action Items for This Week
Select the top three priorities: Hold a 30-minute working session with your team and identify the three business outcomes that matter most now. Then rank them. The objective is to prevent competing initiatives from diluting effort and to clarify which outcomes should guide daily decisions.
Convert one priority into a SMART goal: Choose the highest-impact priority and translate it into one measurable team goal. Start by documenting the baseline; without it, progress cannot be credibly evaluated. Include the target, metric, deadline, guardrails, accountable owner, and the data source that will be used to track results.
Ask the team for root causes and milestones: Ask two focused questions:
“What is preventing us from improving this metric today?”
“What solution can we test or implement in the next 30 days?”
Use the discussion to distinguish root causes from symptoms. Break the chosen goal into near-term milestones and assign ownership. Do not wait for a perfect plan; begin with a manageable first step, review results weekly, and adjust as evidence emerges.
If you’ve enjoyed reading this post, please consider sharing it with your colleagues.
No posts
Comments
Nothing yet. Say the first thing.
Sign in to join the conversation.