How Apex Group took the pain out of cost optimisation

Challenging economic times call for difficult decisions.

In today’s more adverse economic climate, characterised by inflation, higher wage costs and higher interest rates, which impact both existing and new borrowing, nothing is further from the truth for CFOs globally.

They are now walking a very tight tightrope between cost-cutting and investing in opportunities which will generate future growth.

Global financial services provider Apex Group is no exception.  The company, which employs more than 12,000 people in 94 offices worldwide has grown its business dramatically in recent years – largely through mergers and acquisitions, which have transformed it into a leading provider of services to corporates, asset managers, the capital markets and family offices.

It now offers capital raising and advisory services, fund services, super ManCo services, digital banking, depositary, custody, corporate services and an ESG ratings and advisory solution.

But can this company’s ambitious fast growth trajectory be continued at a time of economic uncertainty and the still ominous threat of economic recession – at a time, which is also now also characterised by increased geopolitical tension?

CFO David Carrick points out that today’s more challenging macroeconomic conditions have created an inflexion point for all finance leaders – but that the challenges they face can be overcome.

Apex Group has achieved much of this by being committed to policies and procedures for corporate spending that ensure a consistent approach during all periods.

“We must embrace uncertainty and seek out the opportunities for innovation to support clients and employees in times of market dislocation,” says Carrick.

“Managing corporate spending should be consistent throughout all economic cycles and done through the implementation of clear policies and procedures, regardless of the macro environment. This will ensure that the policies and procedures governing corporate spending are embedded into the culture and operations of the organisation and this avoids periods of fluctuation and inconsistency which can cause confusions and create more challenges.”

Carrick notes that as Apex Group operates across multiple jurisdictions, these very same policies and procedures are implemented right across the organisation. “These clearly set out spending limits and travel policy, but they have to remain flexible in order to accommodate specific legal requirements where necessary,” he says.

Tough decisions on spending

As is the case for most CFOs, Carrick explains that at Apex Group the more adverse economic climate has called for greater scrutiny of spending; increased monitoring of, and decision-making on, certain types of spending; and the deployment of tools to support this activity.

“Spending must be consistently reviewed across the organisation during periods of economic turmoil and there should be renewed focus on the budgets that are set. Budgets should reflect the short-term goals of the organisation and spending levels should be monitored against these guardrails,” he says.

“Discretionary spend will always be closely monitored first as this type of spending is seen as most variable in nature and less likely to impact the long-term, strategic direction of the business.”

At Apex Group, one area that calls for effective policies is employee expenses, which need to be tracked to ensure people are not overspending unnecessarily.

“Managing employee expenses is conducted through clear policy guidelines and an authority matrix outlining spending levels and limits. Spending can then be monitored via manager approvals and challenges. Travel expenses are controlled through a central booking platform and there are clear polices around class of travel and spending limits,” says Carrick.

Retrenching is not an option

Carrick believes that as business and operational costs rise, many CFOs often instinctively look to retrench and introduce cutbacks – but this is, by no means, the most appropriate solution.

“This can prove counterproductive in the longer term,” he says. “While finance leaders are currently working on their forecasts for the year ahead, strategic CFOs always keep a close eye on the medium term – the three-to-five-year horizon.

The decisions they make going into 2024 will determine their competitive positioning and advantage, not just in the coming year but for 2025 and beyond.

“CFOs should continue to focus on the sustainable acceleration of operational efficiencies including those achieved through technology investment in areas such as Artificial Intelligence (AI), robotics and blockchain.”

He explains that technology plays a vital role in the finance function – enabling key but routine processes to be automated, and insightful data to be captured in a consistent format.

“This allows the finance function to focus more on value creation, through insightful analysis of business trends, profitability and decision support analysis,” he says, pointing out that the finance function consistently looks for, and invests in, ways to adopt new technologies such as AI and machine learning to help improve manual processes and look to automate as much as possible.

“Linking systems to create an automated end to end process allows finance staff more time to focus on value adding tasks.”

Using data to aid decision-making

Carrick concludes that finance has many levers it can use to adapt to a more difficult operating environment, and these include increasing prices, recalibrating capital spending plans and modifying hedging strategies.

Having ready access to the right data is vital when making decisions around corporate spending and where money should and should not be allocated.

He points out that the allocation of capital is always driven by the return it is expected to generate, and therefore ready access to the right data is vital to evaluate the expected benefit.

“Historical performance is one indication which can be used, but this then needs to be overlaid with current market trends, availability of resources, cost of capital and expected payback period,” he says.

“Technology will play a vital role in future finance structures as more and more tasks can be automated and links between data created so that exception reporting together with control adoption and reliance becomes the focus of finance teams,” he concludes.

“Technology will drive finance towards real time data and will mean that instead of waiting for month end to review performance, this will become instant and speed up the decision-making process.”

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