Best in Class Finance Functions For Police Forces

Background

Police funding has risen by £4.8 billion and 77 per cent (39 per cent in real terms) since 1997. However the days where forces have enjoyed such levels of funding are over.

Chief Constables and senior management recognize that the annual cycle of looking for efficiencies year-on-year is not sustainable, and will not address the cash shortfall in years to come.
Facing slower funding growth and real cash deficits in their budgets, the Police Service must adopt innovative strategies which generate the productivity and efficiency gains needed to deliver high quality policing to the public.

The step-change in performance required to meet this challenge will only be achieved if the police service fully embraces effective resource management and makes efficient and productive use of its technology, partnerships and people.

The finance function has an essential role to play in addressing these challenges and supporting Forces’ objectives economically and efficiently.

Challenge

Police Forces tend to nurture a divisional and departmental culture rather than a corporate one, with individual procurement activities that do not exploit economies of scale. This is in part the result of over a decade of devolving functions from the center to the.divisions.

In order to reduce costs, improve efficiency and mitigate against the threat of “top down” mandatory, centrally-driven initiatives, Police Forces need to set up a corporate back office and induce behavioral change. This change must involve compliance with a corporate culture rather than a series of silos running through the organization.

Developing a Best in Class Finance Function

Traditionally finance functions within Police Forces have focused on transactional processing with only limited support for management information and business decision support. With a renewed focus on efficiencies, there is now a pressing need for finance departments to transform in order to add greater value to the force but with minimal costs.

1) Aligning to Force Strategy

As Police Forces need finance to function, it is imperative that finance and operations are closely aligned. This collaboration can be very powerful and help deliver significant improvements to a Force, but in order to achieve this model, there are many barriers to overcome. Finance Directors must look at whether their Force is ready for this collaboration, but more importantly, they must consider whether the Force itself can survive without it.

Finance requires a clear vision that centers around its role as a balanced business partner. However to achieve this vision a huge effort is required from the bottom up to understand the significant complexity in underlying systems and processes and to devise a way forward that can work for that particular organization.

The success of any change management program is dependent on its execution. Change is difficult and costly to execute correctly, and often, Police Forces lack the relevant experience to achieve such change. Although finance directors are required to hold appropriate professional qualifications (as opposed to being former police officers as was the case a few years ago) many have progressed within the Public Sector with limited opportunities for learning from and interaction with best in class methodologies. In addition cultural issues around self-preservation can present barriers to change.

Whilst it is relatively easy to get the message of finance transformation across, securing commitment to embark on bold change can be tough. Business cases often lack the quality required to drive through change and even where they are of exceptional quality senior police officers often lack the commercial awareness to trust them.

2) Supporting Force Decisions

Many Finance Directors are keen to develop their finance functions. The challenge they face is convincing the rest of the Force that the finance function can add value – by devoting more time and effort to financial analysis and providing senior management with the tools to understand the financial implications of major strategic decisions.

Maintaining Financial Controls and Managing Risk

Sarbanes Oxley, International Financial Reporting Standards (IFRS), Basel II and Individual Capital Assessments (ICA) have all put financial controls and reporting under the spotlight in the private sector. This in turn is increasing the spotlight on financial controls in the public sector.

A ‘Best in Class’ Police Force finance function will not just have the minimum controls to meet the regulatory requirements but will evaluate how the legislation and regulations that the finance function are required to comply with, can be leveraged to provide value to the organization. Providing strategic information that will enable the force to meet its objectives is a key task for a leading finance function.

3) Value to the Force

The drive for development over the last decade or so, has moved decision making to the Divisions and has led to an increase in costs in the finance function. Through utilizing a number of initiatives in a program of transformation, a Force can leverage up to 40% of savings on the cost of finance together with improving the responsiveness of finance teams and the quality of financial information. These initiatives include:

Centralization

By centralizing the finance function, a Police Force can create centers of excellence where industry best practice can be developed and shared. This will not only re-empower the department, creating greater independence and objectivity in assessing projects and performance, but also lead to more consistent management information and a higher degree of control. A Police Force can also develop a business partner group to act as strategic liaisons to departments and divisions. The business partners would, for example, advise on how the departmental and divisional commanders can meet the budget in future months instead of merely advising that the budget has been missed for the previous month.

With the mundane number crunching being performed in a shared service center, finance professionals will find they now have time to act as business partners to divisions and departments and focus on the strategic issues.

The cultural impact on the departments and divisional commanders should not be underestimated. Commanders will be concerned that:

o Their budgets will be centralized
o Workloads would increase
o There will be limited access to finance individuals
o There will not be on site support

However, if the centralized shared service center is designed appropriately none of the above should apply. In fact from centralization under a best practice model, leaders should accrue the following benefits:

o Strategic advice provided by business partners
o Increased flexibility
o Improved management information
o Faster transactions
o Reduced number of unresolved queries
o Greater clarity on service and cost of provision
o Forum for finance to be strategically aligned to the needs of the Force

A Force that moves from a de-centralized to a centralized system should try and ensure that the finance function does not lose touch with the Chief Constable and Divisional Commanders. Forces need to have a robust business case for finance transformation combined with a governance structure that spans operational, tactical and strategic requirements. There is a risk that potential benefits of implementing such a change may not be realized if the program is not carefully managed. Investment is needed to create a successful centralized finance function. Typically the future potential benefits of greater visibility and control, consistent processes, standardized management information, economies of scale, long-term cost savings and an empowered group of proud finance professionals, should outweigh those initial costs.

To reduce the commercial, operational and capability risks, the finance functions can be completely outsourced or partially outsourced to third parties. This will provide guaranteed cost benefits and may provide the opportunity to leverage relationships with vendors that provide best practice processes.

Process Efficiencies

Typically for Police Forces the focus on development has developed a silo based culture with disparate processes. As a result significant opportunities exist for standardization and simplification of processes which provide scalability, reduce manual effort and deliver business benefit. From simply rationalizing processes, a force can typically accrue a 40% reduction in the number of processes. An example of this is the use of electronic bank statements instead of using the manual bank statement for bank reconciliation and accounts receivable processes. This would save considerable effort that is involved in analyzing the data, moving the data onto different spreadsheet and inputting the data into the financial systems.

Organizations that possess a silo operating model tend to have significant inefficiencies and duplication in their processes, for example in HR and Payroll. This is largely due to the teams involved meeting their own goals but not aligning to the corporate objectives of an organization. Police Forces have a number of independent teams that are reliant on one another for data with finance in departments, divisions and headquarters sending and receiving information from each other as well as from the rest of the Force. The silo model leads to ineffective data being received by the teams that then have to carry out additional work to obtain the information required.

Whilst the argument for development has been well made in the context of moving decision making closer to operational service delivery, the added cost in terms of resources, duplication and misaligned processes has rarely featured in the debate. In the current financial climate these costs need to be recognized.

Culture

Within transactional processes, a leading finance function will set up targets for staff members on a daily basis. This target setting is an element of the metric based culture that leading finance functions develop. If the appropriate metrics of productivity and quality are applied and when these targets are challenging but not impossible, this is proven to result in improvements to productivity and quality.

A ‘Best in Class’ finance function in Police Forces will have a service focused culture, with the primary objectives of providing a high level of satisfaction for its customers (departments, divisions, employees & suppliers). A ‘Best in Class’ finance function will measure customer satisfaction on a timely basis through a metric based approach. This will be combined with a team wide focus on process improvement, with process owners, that will not necessarily be the team leads, owning force-wide improvement to each of the finance processes.

Organizational Improvements

Organizational structures within Police Forces are typically made up of supervisors leading teams of one to four team members. Through centralizing and consolidating the finance function, an opportunity exists to increase the span of control to best practice levels of 6 to 8 team members to one team lead / supervisor. By adjusting the organizational structure and increasing the span of control, Police Forces can accrue significant cashable benefit from a reduction in the number of team leads and team leads can accrue better management experience from managing larger teams.

Technology Enabled Improvements

There are a significant number of technology improvements that a Police Force could implement to help develop a ‘Best in Class’ finance function.

These include:

A) Scanning and workflow

Through adopting a scanning and workflow solution to replace manual processes, improved visibility, transparency and efficiencies can be reaped.

B) Call logging, tracking and workflow tool

Police Forces generally have a number of individuals responding to internal and supplier queries. These queries are neither logged nor tracked. The consequence of this is dual:

o Queries consume considerable effort within a particular finance team. There is a high risk of duplicated effort from the lack of logging of queries. For example, a query could be responded to for 30 minutes by person A in the finance team. Due to this query not being logged, if the individual that raised the query called up again and spoke to a different person then just for one additional question, this could take up to 20 minutes to ensure that the background was appropriately explained.

o Queries can have numerous interfaces with the business. An unresolved query can be responded against by up to four separate teams with considerable delay in providing a clear answer for the supplier.

The implementation of a call logging, tracking and workflow tool to document, measure and close internal and supplier queries combined with the set up of a central queries team, would significantly reduce the effort involved in responding to queries within the finance departments and divisions, as well as within the actual divisions and departments, and procurement.

C) Database solution

Throughout finance departments there are a significant number of spreadsheets utilized prior to input into the financial system. There is a tendency to transfer information manually from one spreadsheet to another to meet the needs of different teams.

Replacing the spreadsheets with a database solution would rationalize the number of inputs and lead to effort savings for the front line Police Officers as well as Police Staff.

D) Customize reports

In obtaining management information from the financial systems, police staff run a series of reports, import these into excel, use lookups to match the data and implement pivots to illustrate the data as required. There is significant manual effort that is involved in carrying out this work. Through customizing reports the outputs from the financial system can be set up to provide the data in the formats required through the click of a button. This would have the benefit of reduced effort and improved motivation for team members that previously carried out these mundane tasks.

In designing, procuring and implementing new technology enabling tools, a Police Force will face a number of challenges including investment approval; IT capacity; capability; and procurement.

These challenges can be mitigated through partnering with a third party service company with whom the investment can be shared, the skills can be provided and the procurement cycle can be minimized.

Conclusion

It is clear that cultural, process and technology change is required if police forces are to deliver both sustainable efficiencies and high quality services. In an environment where for the first time forces face real cash deficits and face having to reduce police officer and support staff numbers whilst maintaining current performance levels the current finance delivery models requires new thinking.

While there a number of barriers to be overcome in achieving a best in class finance function, it won’t be long before such a decision becomes mandatory. Those who are ahead of the curve will inevitably find themselves in a stronger position.

Payday Loans – What is the True Cost?

When you need quick cash, what could be more convenient than taking out a same-day payday loan that is deposited directly into your bank account? On your next payday – a week or two later – the loan is automatically repaid because the creditor has your bank information. Sure, there is a fee, but there’s no credit check, no collateral, and no lengthy application process like there is for a personal loan. You just walk into the payday loan office or go online, fill out a few forms proving that you have a steady job and a checking account, and you get up to $2,000 the same day.It sounds easy, but it may not be such a good deal. Payday loans are defined as short-term loans with an interest rate above 36%. That sounds like a high rate, doesn’t it? After all, you see new car loans advertised for zero percent, and home mortgages for 6%. Personal loans from banks are generally between 10% and 15%. Even credit card cash advances can be cheaper. A $300 cash advance on the average credit card, repaid in one month, would incur a finance charge of $13.99 at an APR of 57%.To make it sound less expensive, payday loan providers don’t advertise their annual percentage rate (APR) the same way credit card and personal loan providers do. They state the interest in terms of a fee per $100 loaned. Here’s a typical example.How the Fee Translates to APR You walk into the payday loan office or apply online. You need to borrow $500 until your next payday, which is in seven days. The fee for your loan is $15 per $100 borrowed. You think, “That’s not so bad, it’s 15%, isn’t it”? You agree to the loan terms and you give the lender a check in the amount of $575, dated in seven days.When your loan is due to be repaid in seven days the creditor will cash the check or debit your checking account. If you have $575 in your account, then you are finished and the transaction is completed.You will have paid $75 for your loan. That translates into an annual percentage rate (APR) of 780%. It’s very high, but that’s because calculating the APR is complex and involves not only the loan amount and the fee, but the period of the loan-how long until you pay it back.The big danger is that many customers can’t pay back the loan on time. Think about it – a customer who does not have $500 in his or her bank account this week is unlikely to have $575 in their account next week. Many customers “roll over” their loans. They cannot pay on the due date, so the creditor charges the $75 fee and agrees to collect on the next payday.Are You the Average Payday Loan Customer?According to the Consumer Federation of America, from a single lender each year the average payday loan customer takes eight to thirteen payday loans or loan renewals. So if you are the average customer, let’s say you roll over or renew your $500 loan 10 times in one year. To borrow $500 for 10 weeks, you will pay a total of $750 in finance charges plus repay the amount borrowed. Your $500 payday loan will end up costing you $1,250.There are additional risks and fees. To get a payday loan you are required to give the creditor a personal check as repayment. If your check bounces, your bank will charge you a fee – often as high as $40. You can lose your bank account or have difficulty opening a new bank account if you develop a record of bouncing checks used to get payday loans.Before you take out a payday loan, carefully consider the real cost – and ask yourself if it’s worth it.

The Magic of Oils For Skin Care

One of the key differences between conventional skin care and natural or organic skin care is not the “active” ingredients such as green tea or vitamin c, which excluding water may make up to about 5% of any product, rather it lies with the base ingredients. In natural skin care, the base ingredients are often a mix of vegetable oils and butters or waxes in contrast to the synthetic ingredients often found in conventional skin care. The use of base oils has enormous benefit for the skin. Instead of being an inert (non-active) synthetic carrier for the active ingredients, base oils contain nutrients such as vitamins, minerals and essential fatty acids that support and nourish the skin. I would go so far as to count base oils as active ingredients in skin care. So, in fact, in natural products up to 95% of any product has a supportive “active” effect on the skin. In comparison, the synthetic base ingredients in conventional skin care by enlarge, lack significant therapeutic benefit.There are many factors that affect the absorption of topical ingredients into the skin and in reality, many topical creams just sit on the surface of the skin, effectively plumping the superficial skin cells but rarely having any effect on deeper layers. The skin is designed to be selectively absorbent, being relatively permeable to fat soluble substances and relatively impermeable to water and water soluble substances. Fat soluble ingredients such as oils are absorbed more effectively and have greater effect on the cell membrane and skin matrix, supporting skin nourishment. As carriers, oils can also transport essential oils, phytonutrients, vitamins and minerals into the skin where they are most effective, rather than just having a “surface” effect. In addition, oils also help prevent skin dehydration by providing an effective water loss barrier which in turn leads to plumper, more hydrated skin.Oil absorption is influenced by the viscosity or thickness of the individual carrier oil with thicker oils tending to be absorbed more slowly through the skin. Generally fine light oils are preferable for use on the face as they absorb quickly, easily penetrating the surface layer of skin without leaving a greasy feel. Heavier oils are suitable for dry facial skin, skin on the body, as bath oils and massage oils. The degree of unsaturation will also impact on oil absorption. In general, the more polyunsaturated fat content of the oil, the better the absorption. For example Rose Hip oil is high in polyunsaturates and has quite low viscosity, making it ideal for use in face serums and creams as it absorbs quickly into the skin.It is worth noting that cold-pressed oils tend to have a greater degree of unsaturates than heat-extracted oils and for this reason are preferable. The process of cold-pressing involves the nut or seed being placed in an “expeller” which squeezes the oil out. There is some heat created by friction however, it causes little damage to the oil or its constituents. Heat-extraction uses temperatures up to 200 degrees Celsius which dramatically increases the yield of oil, making it far more cost effective but at the same time damaging the nutrient content of the oil. Unsaturated fatty acids are easily damaged by high temperatures and so heat-extracted oils will have significantly lower levels. While these oils are commonly used as cooking oils, they should be avoided for use in skin care and aromatherapy as they lack the therapeutic benefits of the cold-pressed versions.A common misconception when it comes to the use of oils is that applying them to the skin will only worsen oily skin and further create congestion. Heavier oils may sit on the surface of the skin longer before absorption, which is not ideal for already oily skin. However, the lighter, less viscous oils will be absorbed quite quickly and in many cases help to balance skin oiliness rather than contribute to it.Oils are effectively absorbed into the skin rather than sitting on the surface layer and therefore they are unlikely to cause or worsen congestion. However, many natural skin care products rely on waxes and butters as base ingredients. While enormously beneficial for the skin, they are more likely to sit on the surface and therefore have a greater likelihood of contributing if congestion is already an issue. They are unlikely to cause congestion that wasn’t previously present and the skin response really does depend on individual skin type. The percentage of waxes to butters to oils will vary in different products for different skin types. If you are unsure about what product to use for your skin type, it is worth asking the manufacturer or supplier which of their particular products will be most beneficial for your skin type.There a quite a number of nourishing carrier oils used in both skin moisturizers and serums and the range of natural products available that using nutritional base oils is ever increasing. Different oils are suitable for different skin types so knowing some basic facts about base oils will help you find the most suitable product for your skin.Sweet Almond Oil – A common used oil in skin care, it is rich in nutrition including vitamin E, unsaturated fats and essential fatty acids. It has a softening action on the skin and is useful for lubrication in massage because while not a heavy oil, it is not absorbed rapidly.Olive Oil – A heavier oil, rich in monounsaturates including oleic acid. Extra virgin olive oil come from the first pressing of the olives and is dark green in color indicating the presence of antioxidant polyphenol. It is suitable for use with dry skin as it helps stabilize the cell membrane increasing the skins ability to hold onto moisture. Olive oil also contains squalene, a hydrating and anti-inflammatory agent, ideal for skin conditions such as psoriasis and eczema.Tamanu Oil – Tamanu oil has powerful healing properties in its unique ability to promote the formation of new skin tissue. Traditionally used by the Polynesians as first aid for the skin and mucous membranes, the oil can assist with scars, burns, skin cracks, cuts, dry skin and wounds. Used cosmetically, Tamanu has healing, mild antibiotic and anti-inflammatory activity 2. For these reasons it is used in both protective and regenerative products aimed at restoring skin appearance.Evening Primrose Oil – Evening Primrose Oil (EPO) is a valuable source of gamma linoleic acid, an essential fatty acid with potent anti-inflammatory effects. Useful for dry, damaged, sensitive skin EPO helps to maintain the skin’s normal barrier functions. It is also useful topically for eczema and psoriasis.Rosehip Oil – With up to 80% essential fatty acid content, Rosehip oil is very fine and quite easily absorbed by the skin. Rosehip encourages regeneration and repair of the skin and is renowned for its skin benefits, particularly in the treatment of scars and burns. It is also known for its rehydrating effect as well as improving dry, aged and wrinkled skin.Jojoba Oil – Actually a fine wax rather than an oil, Jojoba oil is very fine in consistency and readily absorbed by the skin. It is light and non-greasy and for this reason it is ideal in face serums and creams. Jojoba closely resembles the sebum of the skin and so is beneficial for skin and scalp problems such as psoriasis and eczema. With excellent emollient properties it is moisturizing, healing and suitable for all skin types.Coconut Oil – One of the heaviest and most stable oils, coconut is ideal for hair and body application. With moisturizing and softening properties it is ideal for dry and rough skin. Coconut oil also has cooling properties and so is useful for after sun care products 1.Avocado Oil – Strong in color and dour, avocado oil is not to everyone’s liking for skin care. However, in its unrefined form it is rich in lecithin, vitamin D, E and A which offer useful sun protection and skin nutrition. Avocado oil is beneficial to drier skins.Sea Buckthorn Oil – Bright orange in color, Sea Buckthorn oil is rich in beta carotene and second only to Rose Hip in vitamin C content. It is also very rich in essential fatty acids. This rich combination of nutrients mean it is extremely beneficial as a base oil in skin care. With moisturizing, anti-inflammatory and restorative properties, it is easily absorbed and useful for all skin types.Author: Ananda Mahony ND. Ananda is a naturopath and skin specialist. She owns Vitale Natural, an organic skin care store and beauty salon in Paddington, Brisbane. www.vitalenatural.com.au