We often talk about how #AtoZfellows are highly skilled technical experts in their respective fields. But our customers have also highlighted something else: in addition to technology, #AtoZfellows understand business.
That doesn’t happen entirely by itself. At AtoZ, we start building that knowledge from day one. Working at AtoZ also gives you the opportunity to develop your business know-how!
We believe it’s easier to understand the significance of your own work when you understand how the company’s business works. That’s why, on their very first day, every new #AtoZfellow is introduced not only to AtoZ’s ways of working and practices, but also to the fundamentals of our business and finances.
Our financial onboarding starts with a fairly fundamental question: how does money actually flow at AtoZ? Here’s a quick overview.
At first glance, the equation in a professional services business may seem simple. We do work for a customer, invoice them for that work, and the customer pays the invoice. In reality, things are a little more complicated.
Salaries and other costs usually need to be paid before the customer’s payment has reached our bank account. The number of working days varies from month to month, which means the number of billable hours varies as well. Holidays, sick leave and gaps between projects all affect billing. Utilisation rates, hourly rates, salary costs and other expenses all play a part in the bigger picture.
That’s why our financial onboarding uses concrete examples to explain topics such as revenue, cost structure, profitability, cash flow and utilisation rates. One of the key lessons is that in an hourly billed business, gaps in billing can have a surprisingly significant impact, and the utilisation rate can matter even more than a difference of a few euros in the hourly rate.
In addition, salaries and related employment costs account for as much as 80–90% of all costs in our business. This means that, in the bigger picture, saving or spending on other costs ultimately has a much smaller impact. But that doesn’t mean we go around throwing money away either. ;)
The goal isn’t to turn everyone into an accountant or financial expert. However, everyone at AtoZ can see their own billing rate and the revenue generated through their work when creating customer invoices. After the financial onboarding, hopefully everyone also understands why the entire invoiced revenue doesn’t simply appear in their own pay packet. ;)
At AtoZ, financial matters aren’t kept within a small inner circle. We regularly review our financial figures together, and everyone has the opportunity to explore them in more detail. Financial onboarding gives everyone the foundations for understanding those numbers right from the start. And you can always return for a refresher every now and then.
This is an essential part of the way we operate.
When people have access to information about the company’s situation and understand what the numbers actually mean, the conversation changes too. Decisions shouldn’t be viewed only from the perspective of what do I want?, but also from the perspective of what does this mean for our business as a whole?
For example, when considering a new purchase, employee benefit, recruitment or investment, it’s important to understand that the money first needs to be earned. Just because an expense is tax-deductible doesn’t mean the purchase is free for the company. This is another very practical lesson from our financial onboarding.
On the other hand, information without an understanding of the bigger picture can sometimes create unnecessary concern. At AtoZ, you can see very clearly how periods without customer billing affect individual profitability. But billing isn’t the only thing that matters to a successful business, and even we sometimes lose sight of that.
As someone working in administration, I like to point out that I’m a decidedly “red” cost line in an Excel sheet, with no customer billing of my own. ;) But sales, recruitment, marketing, strategic planning and the competence development that follows from them create the foundation for growth and new, interesting projects. And at AtoZ, everyone can get involved in these activities and create value!
It’s important to us that #AtoZfellows can influence how the company develops. Everyone has the opportunity to participate in discussions, bring forward ideas and take part in decision-making.
That freedom also comes with responsibility.
The more openly decisions are made, and the more opportunities people have to influence them, the more important it becomes to understand the impact of those decisions, both in terms of euros and the business as a whole.
For us, financial literacy doesn’t mean that everyone needs to be able to interpret a balance sheet like a CFO. It’s much more important to understand the cause-and-effect relationships:
Where does revenue come from?
What are our costs made up of?
Why is cash flow different from profit?
How does your own work affect the bigger picture?
At its best, financial and business understanding reaches far beyond our own company’s numbers.
When an #AtoZfellow understands the realities of business, they can also look at a customer’s needs from a broader perspective. A technical solution isn’t valuable simply for the sake of technology. It needs to solve the right problem, deliver real value and make sense in relation to the time and money invested in it.
#AtoZfellows are able to take this thinking right down to the task level, recognising which features are genuinely necessary and should be prioritised, and which ones are simply “nice to have”.
Perhaps that’s exactly why we’re especially pleased that our customers have also praised #AtoZfellows for their business understanding.
Technical expertise is, of course, the foundation of what we do. But in today’s market, we differentiate ourselves by also understanding why something is being done, what it is intended to achieve, and what it costs.
And when you start learning how your own company’s financial logic works from your very first day, you also learn to look at the customer’s business through slightly different eyes.
For us, transparency therefore doesn’t simply mean making information available to everyone. At its best, it means that everyone also has the opportunity to understand that information, build their own knowledge, take part in the discussion and influence the decisions we make together.