CapLink Financial Services

Business controlling is a vital function that helps managers and executives make informed decisions based on data and analysis. Business controllers are responsible for tasks related to financial analysis, financial forecasting, financial planning, and financial monitoring. They also work closely with the business and operations to understand the market, the strategy, and the performance of the organization. In this article, we will explore what business controlling is, what are the main tasks and skills of a business controller, and how business controlling differs from financial controlling.

What is business controlling?

Business controlling is the process of producing, analyzing, and presenting relevant decision-making information for managers and executives within an organization. Business controlling aims to support the strategic and operational goals of the organization, as well as to ensure compliance and efficiency. Business controlling is usually led by a CFO, a head of business control, or a head of controlling, who oversee a team of business controllers (sometimes also referred to as operational controllers) 1.

Business controllers work within the finance department, but they are more involved in the business and operations than other controllers. They need to see the whole picture of the organization’s goals, purpose, and business model, and to link business-critical information to their analysis. They also need to communicate with internal and external stakeholders, such as managers, auditors, and customers, and to provide them with relevant and reliable information.

What are the main tasks and skills of a business controller?

A business controller’s tasks are varied and depend on the size, industry, and structure of the organization. However, some of the common tasks include 1:

Translating strategic goals into measurable key performance indicators (KPIs).
Understanding what is happening in the market and proactively acting by contributing to updated forecasts.
Analyzing business processes and reporting them to management.
Controlling and monitoring business processes, budget, and budgeting.
Initiating improvement processes in financial and operational management together with internal stakeholders and establishing control and measurement of the implementation.
Conducting commercial analysis and developing financial scenario analysis.
Reporting results to management to allow for timely changes to be made and goals to be achieved.
To perform these tasks effectively, a business controller needs to have a combination of technical and soft skills, such as 2:

A degree in economics, finance, accounting, or a related field.
Knowledge of accounting principles, financial statements, and financial modeling.
Proficiency in using software tools, such as Excel, PowerPoint, ERP systems, and business intelligence tools.
Analytical and problem-solving skills, as well as attention to detail and accuracy.
Communication and presentation skills, as well as the ability to explain complex financial data in a simple and clear way.
Business acumen and understanding of the organization’s strategy, operations, and market.
Teamwork and collaboration skills, as well as the ability to work independently and under pressure.
How does business controlling differ from financial controlling?

Business controlling and financial controlling are both part of the controlling function, but they have different focuses and scopes. Financial controlling is more concerned with the accuracy, completeness, and compliance of the financial data and reports, while business controlling is more concerned with the relevance, reliability, and usefulness of the decision-making information 2.

Financial controllers are mainly involved in the preparation and consolidation of the financial statements, the audit and review of the financial data, the compliance with the accounting standards and regulations, and the management of the internal control system. They also provide financial analysis and reporting, but mostly from a historical and retrospective perspective.

Business controllers, on the other hand, are more involved in the planning and forecasting of the financial and operational performance, the analysis and interpretation of the financial and non-financial data, the identification and evaluation of the risks and opportunities, and the recommendation and implementation of the improvement actions. They also provide financial analysis and reporting, but mostly from a forward-looking and prospective perspective.

In summary, business controlling is a crucial function that helps managers and executives make informed decisions based on data and analysis. Business controllers are responsible for tasks related to financial analysis, financial forecasting, financial planning, and financial monitoring. They also work closely with the business and operations to understand the market, the strategy, and the performance of the organization. Business controlling differs from financial controlling in terms of the focus and scope of the information and analysis. Business controlling is more relevant, reliable, and useful for decision-making, while financial controlling is more accurate, complete, and compliant with the accounting standards and regulations.

Eid Mubarak

External Commercial Borrowing (ECBs)

External commercial borrowing (ECBs) are loans in India made by non-resident lenders in foreign currency to Indian borrowers. They are used widely in India to facilitate access to foreign money by Indian corporations and PSUs (public sector undertakings). ECBs include commercial bank loans, buyers' credit, suppliers' credit, securitised instruments such as floating rate notes and fixed rate bonds etc., credit from official export credit agencies and commercial borrowings from the private sector window of multilateral financial Institutions such as International Finance Corporation (Washington), ADB, AFIC, CDC, etc. ECBs cannot be used for investment in stock market or speculation in real estate. The DEA (Department of Economic Affairs), Ministry of Finance, Government of India along with Reserve Bank of India, monitors and regulates ECB guidelines and policies.

Most of these loans are provided by foreign commercial banks and other institutions. During the 2012, contribution of ECBs was between 20 and 35 percent of the total capital flows into India. Large number of Indian corporate and PSUs have used the ECBs as sources of investment.[1]

For infrastructure and greenfield projects, funding up to 50% (through ECB) is allowed. According to a report in The Hindu in January 2013, the Reserve Bank of India raised the ECB limit "for non-banking finance companies (NBFCs) classified as infrastructure finance companies (IFCs) ... from 50 per cent to 75 per cent of owned funds, including outstanding ECBs".[2] In telecom sector too, up to 50% funding through ECBs is allowed. Recently Government of India[3] allowed borrowings in Chinese currency yuan. Earlier, corporate sectors could mobilize $750 million via automatic route, whereas service sectors and NGO's for microfinance could mobilize $200 million and $10 million respectively.[4] More recently, RBI issued a guideline stating that all eligible borrowers can raise ECB up to USD 750 million or equivalent per financial year under the automatic route.[5]

Borrowers can use 25 per cent of the ECB to repay rupee debt and the remaining 75 per cent should be used for new projects. A borrower can not refinance its entire existing rupee loan through ECB. The money raised through ECB is cheaper given near-zero interest rates in the US and Europe, Indian companies can repay part of their existing expensive loans from that.

Transactions on ECB are governed by Foreign Exchange Management Act,1999. ECB can be raised through Automatic Route or Approval Route.

Under Automatic Route, the cases are examined by the AD Category-I Banks.

Whereas under Approval Route, borrowers send their requests to the Reserve Bank of India through their AD banks for examination.

ECBs can be raised only for a specific period called Minimum Average Maturity Period (MAMP).

All ECB can be raised under the automatic route if they conform to the parameters prescribed in the below section. For Government route cases, the borrowers may approach the RBI with an application in the prescribed format i.e. Form ECB for examination through their Authorized Dealer (AD) Category I bank.