Not your regular Finance Expert

This post is written by Nicolás Salvia with the purpose of being used by Toptal as a recruitment input. In this post i talk mainly about FP&A and Pricing, the toptal Link is: https://www.toptal.com/finance/financial-planning-and-analysis

There are 4 kind of economies: Developed, Undeveloped, Japan and Argentina

-Simon Kuznets, Nobel Laureate

What is the role of an finance expert in a country that is constantly harassed by economic crisis, inflation, political instability, high tax pressure and other not very good institutions for business? It's his mission just to make the company survive? What tools does he needs to survive and go beyond?

Well, as quoted above, Argentina is not an easy country to understand and to work with, it GDP per capita went from the biggest in the world in 1895 to position 70 in 2018 (and dropping 11 positions compared to 2017), in only 13 of the last 70 years had an inflation below the double digit (the inflation in 2018 was around 47% and is expected more than 35% in 2019), it had declared default twice (the last one in 2001), it has more than 100% of tax burden as profit margin, and yet is a very respected and big country in the region (one way of measure it is that it has the 3rd position in GDP per capita, surpassed only by Chile and Uruguay).

And i say this not because i am overestimating the Argentina’s difficulty. I had the opportunity of being in touch of other latam based companies and working directly with US based companies and the constant turmoil that you have in Argentina is not anything like you could see in others mid/high income countries.

My last job was FP&A Manager at Universidad Siglo 21. This university is the biggest private university in Argentina, with more than 60k students (online and on campus) and +45 graduate and undergraduate careers. It has more than 65% of market share, and currently its competitors are not a problem because of the high investing in technological innovation that the university is constantly doing to give the high education in Argentina the state of the art that it has in the top universities around the world. This university has a revenue of about 100M USD/year and is in the top 1000 of companies in Argentina.

The main purpose of my job was to deliver results understanding internal and external raw data and transform it into information to help the CFO and Senior Management to make the best possible decisions under the usual context of uncertainty of the country (the uncertainty is the certainty in Argentina).

To make a better understanding of what i did in my position i will classify my achievements under two concepts: Survival and Growth. Why i make this classification? Well, is far from the scope of this post to try to deeply understand how are usual business in Argentina, but in this country if you want to have a growing business, your usual tools for growing are used just to survive, and you have to go deeper to grow. Sometimes your biggest competitor is not another company but just the context (recession, inflation) or the government (in the sense of taxes or lack of policy certainty).

Survival Achievements: Here you can put everything that a regular FP&A Manager does, as for example, Yearly Budget and Quarterly Forecast (despite the context, every year i could accomplish the objective of revenue +/- 5% vs Budget and +/- 2% vs Forecast), reporting monthly to the C level about revenue, expenses, and raising all the flags needed to assure the expected result (being in Argentina this is crucial, because from one month to another the context can change significantly), having a rolling forecast which helps to anticipate all possible deviations and understanding better the context, making different contributions that helped reducing costs (for example, I helped the In Company business unit to make change their contracting methodology saving around USD 100k/year), create new and different KPIs to measure in a better way the expected results, automatize and improve processes (for example, a report that took several days to make it, I automated it, taking only 15 minutes to complete it), financial analysis of new products and because of our deep analytical understanding, we did several analysis beyond our specific finance scope, related with, marketing, retention, academic, etc.

Growth Achievements: Here i want to focus in one particular thing, Pricing. In Argentina is usual that prices are set up with the regular costs+mark up formula, without asking any more questions about the market, the customers or the value added by our products, even more, the inflationary context makes sometimes hard to understand if you are really "cheap" or "expensive". Is it true that in the long run that's a question that it answer by itself, but in the short term is easy to confuse when the competitors makes increases based on inflation or is having another strategy as brand positioning, for example. This was tackled down in 2016 when we started a new Pricing process, it was based not in cost, but in a set of others variables as value perceived by customers of our own products and of the competitors, prices of the competitor's products, price elasticity of the demand and most likely reaction of competitors to a price change. Only after analyzing all these data, we compared the price suggested with the cost, if the first one was smaller than the second one, we had three options (1) we have to try to reduce costs (2) we have to close the program (3) we don't touch it because it has strategic implications. All this was made under a new team that i had to build from scratch and i have to say that the results were pretty good, in the first year that it was applied, it helped to improve the profitability of the programs in an average of 7%, and in the second year by 5%. If you translate this to numbers, it implied an increase on EBITDA of more than USD1M per year, we have to remember that the EBITDA is around USD12M, this is an improve of around 10%. This project was so successful that the university is using this method right now to price their products.

I left the university in the last day of May of 2018 because i wanted to make a three month bicycle trip with two friends around europe (I gave a 5 month notice before leaving), and right now, i am making some freelance work for the university (mainly financial planning and helping with pricing), the local government and other local companies.

I love what i do, and everything i do, i do it with passion and humility about what is ahead and proud of what is left behind.