A company in the alternative energy field ran a production under engineering, procurement, and construction (EPC) contracts in Russia. The company’s financial management was centralized at the headquarters, while in Russia only operational staff was present. The lack of developed financial controlling functions in Russia created obstacles for the headquarters concerning the receipt of operational financial data and reliable projections on its activities in Russia.
The company worked with significant budgets and fixed revenues, while processes were to be performed dynamically and therefore required flexibility and quick responses. Accordingly, budgets required continuous monitoring and were to be periodically adjusted during the duration of the project. Revenues from business operations in Russia were in a foreign currency but paid in rubles, as were most supplier contracts. Due to this, potentially high differences in foreign exchange (FX) rates could have had an impact on profits. Significant turnover and balances on bank accounts during the projects required effective cash management. In short, the company required well-arranged financial management and project controlling, including a reduction of potential losses caused by FX.
SCHNEIDER GROUP proposed a complex solution for financial management, including project controlling, cash management (weekly cash flow), natural hedging of currency risks, and current accounting outsourcing.
Our financial team gathered all project-related information into the project’s Profit and Losses budget, prepared the cash flow budget, planned for certain periods, and generated tax forecasts (VAT, profit tax, and others). Everything was adjusted according to projects’ construction dynamics. As part of the accounting functions, we also prepared a monthly profit and loss management report by project and by legal entity (organization), providing operational data on the financial results of projects. Our specialists covered the function of cash management with planning of payments, deposits planning, relevant distribution of cash and weekly cash flow reports, and the submission of plans and actual analysis for operational monitoring.
SCHNEIDER GROUP suggested natural hedging via conversion for decreasing and controlling currency risks, aiming to maintain the planned financial results of the projects. We also managed accounts receivable and accounts payable for timely payment and collected documentation in time for effective tax results. Moreover, we covered the function of supply contracts monitoring for the systematization of project information.
SCHNEIDER GROUP performed local financial management on a regular basis with necessary financial analysis, cash management, and monitoring of the current position, including relevant advice for further decisions.
SCHNEIDER GROUP’s solutions for ongoing support in finance controlling had a positive impact on the client’s business and its local projects, enabling the client to fully concentrate on operational construction processes. The required financial information and regular status updates on financial projects, including operational reports that were available when needed, provided a good basis for further decision making and enabled the client to take effective measures and respond accordingly. Careful and professional planning, financial advice, and forecasts for VAT, profit tax and other obligatory payments allowed all business processes and financial results to be planned. Effective cash management and hedging made sure that financial goals were reached.