Authorized text for Controlling Slavica Andrić, Associate in Controlling Department of the company Sunoko
The eternal question: “Is controlling a real need or just a trend-following?” In Sunoko, member of MK Group, is not questionable. The controlling team is in charge of collecting information, analyzing them and presenting them. As such, it helps the management to make the decision that at the given time is the best for the company.
The company Sunoko, the leader in sugar production in Serbia, deals with the processing of sugar beet in its three production centers (Kovačica, Pećinci and Vrbas). Sunoko is the company with large figures: processing 2.7 million tons of sugar beets, production capacities of 400,000 tons of sugar, market share of 70% in Serbia; revenues of EUR 200 million; investments so far up to 200 million EUR. Still, in terms of managing business processes, Sunoko has a relatively simple model: a digitized process of sugar beet production as a dominant raw material and a centralized sales sector.
Therefore, it is possible to monitor all production centers and sell within a small, but efficient, team of employees in the Controlling Department. The controlling department is positioned within the Finance and Accounting Department. The controlling team monitors the production, sale, procurement of necessary raw materials, investments, risks, budgeting etc. The monitored measures do not only apply to financial (balance sheet and profit and loss account) but also to all production and sales parameters.
Basic tasks of the controller in the company:
1. Sales controlling
As sales is one of the basic business processes, monitoring and reporting are carried out on a daily and monthly basis within controlling. The sales report is designed to track sales by product, type of packaging, customer, markets etc. This data is monitored in detail, because only in this way we can perform further analysis and present it to the management in order to make decisions in timely manner in the event of changes in market conditions.
2. Controlling proizvodnje
The role of controllers in this segment is to collect and present the results achieved on a daily basis. Data are collected from production centers, a consolidated production report is compiled and as such it is directed to the management of the company on the basis of which the plans for the continuation of the production process are adopted. The controlling team monitors the structure of the cost by location and type of production cost on a daily basis: consumption of raw materials, energy costs, labor costs, packaging etc. The importance of such detailed monitoring of the movement of production costs is in order to signal to the management a possible deviation from the budget and create the possibility for timely response in case of uncontrolled growth of costs, as well as possible savings.
3. Cash flow
As controlling is the sector in which all information is regularly updated, it is logical for this sector to take over and create a Cash Flow plan. Cash flow plan is a report that gives a broad picture of the company’s business and its future movements. Cash flow is prepared on a monthly basis and includes projections of inflows and outflows by type for the next year from the day of the report, with a monthly dynamics in order to foresee the potential risks in advance and react in a timely manner. In addition to its creation, the role of the controller is to contribute to the analysis of the cash flow plan as well as pointing to critical points in the business.
4. Business risks
Risk management is perceived as an important component of financial management at MK Group’s level. Therefore, detailed procedures for monitoring the biggest risks to Sunoko have been developed: price risk, credit and security risk, liquidity risk, foreign exchange and interest rate risk. Reports accompanying price risk, prepared by Sunoko’s controlling team, contain timely information on opened positions and market trends, a possible effect on the income statement in the event of changes, both the price of the final product and the input for production (Sensitivity analysis). Sunoko was the first company to have implemented IFRS 9 standard in credit risk management. This implies that we have done a thorough analysis of all exposures and calculated possible losses based on historical trends, even for business partners who are not currently in arrears. Billing strategies have been made for all business partners in arrears. The day-to-day controlling team monitors the exposure of individual business partners so as to promptly send managers to potential problems in order to ensure billing security.
5. Budget and forecast
In Sunoko, monitoring the achieved results and commenting on them is just the basis on which to make decisions for the future. The focus of the controlling team’s analysis is on what will happen and how we can we improve our business. The budget is prepared once a year and is approved by the Group. However, reality and changes in the market require constant business adjustments and therefore projections of results by the end of the year (forecasts) by key KPIs are made every month. The most attention is given to Budget and Forecast reports and they represent the basis for decision making. The forecast is a report in which the positions of the Balance Sheet, Income Statement, Risk, KPI, Production, Sales and similar are closely monitored.
In order to collect information, the controlling team works with other organizational units, it exchanges information and analyze the business model. Finally, the reports are presented to the top management, which provides significant support and encourages further development by its assessment, both of the reports and our knowledge as well. The controlling team is expected not only to analyze performance and variance in relation to the budget and previous years, but to point out the chances in business and potential risks in order to respond in a timely manner.
In order to do all these tasks, it is necessary that the controlling is based on transparency, and also great attention is paid to the use of the latest software tools and techniques, constant and open communication with colleagues, as well as the detailed knowledge of all segments business.
The tools used by Sunok’s controlling team are SAP-as ERP system, Z Repa-a special SAP module developed for Sunoko and SAP BI. However, part of the data is processed in MS Office. The next task is to introduce a new, more advanced version of SAP module, which will allow us greater flexibility and for the purpose of using SAP control module for the budgeting and planning process in full.