There was a time when the corporate controller was almost solely focused on recording, processing, and reporting financial information. For example, when a company considered making an acquisition, the controller played a number-crunching supporting role, but gave little strategic input. That’s not the case today, however. In fact, a controller should offer much more to help make crucial business decisions, explains Seun Salami, executive vice president and global controller—corporate solutions with Jones Lang LaSalle, Inc. (JLL).
That’s been more than evident since Salami joined JLL in November 2015, as the global real estate investment and services firm has acquired about fifty companies. “A lot of the acquisitions have been strategic,” Salami says. Many were made to expand and enhance JLL’s breadth of services and capabilities. So, it was critical to understand the intricacies of the acquired firms’ business models, risks, and potentials. That meant not only tracking factors such as current cash flow and debt, but also gaining insight into other aspects of the business, such as how much investment was required to scale up services.
A controller is perfectly positioned to bring that level of information to the fore. Intimately involved in monitoring financial performance in near real time, controllers are well positioned to make informed strategic analysis and advise leadership, Salami says. So, a controller should be involved in every stage of a transaction, from the investigatory preacquisition phase to a review of the deal within the business case pro forma after it is closed, Salami says.
To be full contributors, today’s controllers should have a broader skill set than they had in the past. “You cannot be one-dimensional as an accountant and controller,” Salami says. To be true strategic partners, and remain relevant in an era when more powerful tools are automating financial recording and reporting functions, controllers must expand their knowledge and skills.
“You cannot be one-dimensional as an accountant and controller.”
Salami, who bolstered his accounting training with a masters in finance and economics, has been able to bring strategic insight to proposed key business deals by studying the numbers that reflect what would create a major impact on the company. For example, he recalls a UK acquisition that would expand JLL’s European footprint in the engineering services space.
While income, profit, and loss told part of the narrative, these indicators didn’t provide the complete story.
“We might have to buy or lease equipment and vehicles or install an ERP system to fully realize our goals,” Salami explains. “How would these investments impact profits? We felt that this was a good opportunity, but we didn’t want to overpay for it.” When making financial projections, a controller is better suited than most to consider financial permutations. Costs, cash flow—including forex—and debt service, for instance, could impact the long-term value of an acquisition.
Salami’s responsibilities after an acquisition include traditional activities, such as reporting profit and loss, and preparing the books for audits. But that’s not where his role ends. After a few years, it’s important for executives to evaluate the acquisition. “That’s one thing that most companies don’t get right,” he says, adding that leaders should revisit the business case. “What was the reason for buying the company? How is the plan working? Were any lessons learned?” This requires a historical review of financial results before the acquisition and a year-by-year analysis after the transaction. Ideally, a controller should provide context behind these numbers.
To some degree, this exercise requires a controller to act as a detective, ferreting out the most relevant financial data to produce a sound evaluation of the transaction’s progress. For example, Salami must ask such questions as: Was there some event or trend occurring during a period that had an outsized impact on results? If so, what does that mean regarding financial projections over the next few years? A strong accounting background is essential, but to be most effective, controllers need a deep knowledge of the business.
With advancements in data analytics and artificial intelligence, controllers are well advised to have some ease with IT, Salami says. More aspects of recording and reporting results will be automated in the future and understanding the capabilities and limitations of these tools is going to be vital.
The promise of blockchain technology to change the way transactions are processed, supported, and validated will likely free up accounting staff from some mundane tasks to focus on higher-level decision support, he says. Today, a global enterprise of JLL’s size can spend as much as forty thousand employee hours on intercompany transaction reporting. Automation will greatly reduce that burden, and that means the accounting role will transform into more of an oversight of transactions recording and reporting in a better controlled environment, coupled with interpretation of financial results for timely decision-making.
In JLL’s case, that may also mean some accountants could transition from an internal corporate services to external client services focus. The company is increasing its outsourcing services arm to offer complete property management services for clients. That includes, for example, managing client’s real estate accounting function, analyzing the client’s cost of real estate ownership and leased properties in a certain region, and how the client might be able to reduce those expenses.
Salami is enthused about how the accounting profession is changing, and he is playing a part in influencing its evolution as a member of the board of the Illinois CPA Society. “On the State Society Board, I am happy to provide corporate perspective as one of the few board members not working for an accounting firm,” Salami says.
Salami’s approach, informed by how he can impact strategic decision at JLL, makes him bullish on the profession. “The controller’s role will be super relevant for many years to come,” he says.
Photos: Mark Battrell