Objectives and Strategies Required For A Leader For Achieving Effective Management Within A Clinical Section of A State Hospital-Combined

ISSN 2537 – 4222 The Journal Contemporary Economy 194
ISSN-L 2537 – 4222 Revista Economia Contemporană
OBJECTIVES AND STRATEGIES REQUIRED FOR A LEADER FOR

ACHIEVING EFFECTIVE MANAGEMENT WITHIN A CLINICAL
SECTION OF A STATE HOSPITAL UNIT. SPECIFIC FEATURES OF
THE ROLE
Ph.D. Student Ioana Antoaneta PONEA (RADU)
Valahia University of Târgovişte, Romania
E-mail: radoo_oana@yahoo.com
Ph.D. Student Bogdan ŞTEFĂNESCU
E-mail: bogdanstefanescu@yahoo.com
Ph.D. Student Elena Loredana COMĂNESCU
E-mail: lory_ela@yahoo.com
Ph.D. Student Maria Georgiana PONEA
E-mail: georgia_ponea@yahoo.com
Abstract: The management of a hospital section from a health system subject to upper-level reforms
and changes requires a coherent administration with internal solutions adapted locally to the existing
resources and needs demanded by the beneficiaries. At the level of each section, their managers should set
goals designed to optimize the activity of each section in such way that the medical service offered is of high
quality, meets the requirements of the population segment served by the qualified hospital unit, and should
find alternatives, depending on the specific, to provide on-demand medical services that supplement the
revenues which the section determines. We will discuss the case of a psychiatric section of chronic patients,
where the main sources of funding are the settlement of the medical services provided within the framework
contract with the Healthcare Organization and the paid hospitalizations consisting in the payment of the
period of hospitalization with a minimum of 14 days between two periods of admission under the regime with
the Healthcare Organization. These paid admissions are ways to increase own incomes by providing on-
demand medical services. The methodological course will imply the mix of qualitative with quantitative
research and finalize with the validation of hypotheses established on the basis of the criteria for internal
and external validation.
Keywords: Effective Management, Objectives, Strategies, Leadership, State hospital unit, Health
system.
JEL Classification:D91 Role and Effects of Psychological, Emotional, Social, and Cognitive
Factors on Decision Making.
1. Introduction
It is necessary to outline a strategy by which to increase the incomes from on-
demand medical services, adapted to each section with its specific. A strategy that remains
under the responsibility of the chief doctor of the section to implement it, which aims at a
multitude of aspects that need to be thoroughly analyzed and applied: the management of
the human resource with maximum efficiency of performance, of admission cases in the
clinic, of the resources necessary for the optimal functioning of the sections.
For effectively meeting the needs of healthcare service customers, it is necessary to
acquire marketing skills and understanding patients, identifying their desires and needs and
to build the trust which will determine the acceptance of solutions proposed via an
European perspective (aiming at improving healthcare security of the citizens, generating
and disseminating knowledge of the health domain, promoting health to improve
prosperity and solidarity), in the effort to provide: an effective response to health threats,
concrete and sustainable measures for disease control and prevention, an increase of
Volume 4, Issue 4/2019 Vol. 4, Nr. 4/2019

cooperation between healthcare systems for adaptation to key health aspects, as well as
those that may arise unexpectedly and require urgent attention.
Change in the medical world really requires maintaining a sense of direction, acting
at the right time, and now - in the context of the high quality of healthcare services
responding to the expectations of healthcare customers, is a recognized priority for the
European citizens - the time of recourse to marketing has come as a new method for
identifying innovation opportunities in the delivery of healthcare services. In fact, we are
in the full process of implementing the new European Health Strategy, which aims at safe,
high quality and efficient healthcare services.
2. Content
The main strategic concern will be that all unit employees will adequately meet
patients’ requirements, the medical services provided to meet their needs and be designed
to improve their health condition. For this, proactive approaches must be created to know
on a permanent basis people's needs and to approach the quality from the healthcare
consumer point of view, according to patients’ expectations and each individual’s needs.
Each and every patient has to be analysed separately, considering their specific
requirements as a bio-psycho-social assembly which makes them fit into different
typologies. Therefore, taking into account these aspects, it would become necessary to treat
the patient, to adapt the medical act to the patient and not to treat the disease in fact.
This approach is even more necessary in the case of the psychiatric patient, who
develops in parallel a significant social side and with serious components that interfere
with the medical act itself. In the case of the psychiatric patient it is necessary to work in a
multidisciplinary team, including the psychiatrist, the psychologist, the social assistant
included in the section, the social assistant within the territorial administrative unit within
the are of which the patient has his domicile, the family doctor, etc.
The psychiatric patient is most of the times characterized by the lack of socio-
familial support, is often marginalized in the socio-professional environments to which
they belong, this fact deriving on the basis of misinformation at the population level
regarding the aspects that involve a mental illness: how it manifests itself, the special needs
involved, the need for therapeutic intervention, the need to maintain treatment and the
importance that family, social support can bring in the evolution that the disease can take.
In order for a hospital unit to provide high quality services, it is absolutely
necessary that the internal processes that are developed and followed to comply with
certain clear and defined standards, despite the fact that there are accusations of
authoritarianism: ”Money is still spent without anyone being counted” (Cojocaru, 2005):
- Professional competency; whole team to be fully trained;
- The knowledge/skills/ performance of the medical team, managers and support
team to be competitive;
- Accessibility - the provision of healthcare services is not restricted by
geographical, social, cultural, organizational or economic barriers;
- Effectiveness - the applied procedures and treatment lead to obtaining the desired
results;
- Efficiency - Providing necessary, proper care at the lowest cost; - interpersonal
relationships - the interaction between suppliers, between suppliers and patients
(customers), among managers, suppliers, payers, as well as between the healthcare team
and the community; Practitioners feel painfully these facts "it is very difficult to do your
job, one month you have half and one month not at all and the patients come in abundance,
the suffering is not scheduled" (Cinteza 2004), "doctors are missing what their colleagues
from neighboring countries have on a regular basis” (Sinescu 2005).
- Continuity - the patient benefits from a complete set of healthcare services that he
or she needs, in a well-defined order, without interruption, or procedure repeats of
diagnosis and treatment;
- Safety - minimal risk for the patient from complications or adverse effects from
the treatment or other healthcare services related hazards;
- Infrastructure and comfort - cleanliness, comfort, privacy and other important
aspects for patients;
- Choice - as much as possible, the customer chooses the supplier, the insurance
type or the treatment.
The problems identified in the institutional history create the premises of strategic
interventions that lead to a quality of the perfect medical act by solving them.
Given that improving the quality of medical and healthcare services provided is a
wish and a basic principle in the health domain, I believe that it should also be the goal of a
management project.
Total Quality Management extends the concept of quality management,
encompassing both the participation and motivation of all members of the organization.
Total Quality Management is an organizational model that involves overall participation
with a view to planning and implementing a continuous quality improvement process that
exceeds customers’ expectations.
This model assumes that 90% of the problems are process-related rather than
personnel-related. Three principles govern the concept of total quality:
- focus on customer
- continuous improvement of quality
- teamwork.
Also, this fully addressed quality management model is sensitive to external
aspects, such as the admission method, social status, patients’ genotypes, etc.
The indicators which measure its efficiency are the most difficult to accept by
health professionals given that patients’ experience can be quantified only as a result of
questioning or direct observation. Often the results depend on the geographical region,
cultural aspects, etc. The implementation of total quality management within this unit is
useful to the management team for more efficient management of available resources and
helps to achieve short and long term goals.
Quality management principles determine the orientation of the activity towards
patients, develop a process-based operational approach, build up relationships with
healthcare partners, NGOs, and public institutions, increase patients’ satisfaction, and help
guide the results of the entire team.
Periodic assessments of all activities in the institution will be done quarterly by the
management team according to ROF (Organization and Functioning Regulation).
In conclusion, implementing a continuous Quality Management System:
- Will determine the objectives of the short, medium and long term quality and
their achievement,
- Will help to comply with the rules of health security and to identify risks,
prevent and eliminate deviations;
- Also involves a reduction of the costs;
- Increases the clarity of the decision-making process and helps to standardize the
medical act by implementing procedures at the level of the whole staff. The
complex and accelerated changes produced in the organizational institutions'
action environment demand an adaptive response.
The pace with which an institution learns, in order to anticipate and adapt to the
evolution of the ambient environment, is a source of competitive advantage.
The manager needs to know how to develop the fundamental "adaptive skills" of
the respective unit. Furthermore, Oprescu (2005) mentions that ”the attempt to blame the
hospital directors for the current situation of the healthcare system was totally wrong ”.
These are manifested by:
- initiating organizational programs;
- improving competitiveness by implementing quality management;
- incorporating information systems into the general strategy of the hospital;
- creating an attitude and mentality centered on ensuring quality services;
- dimensioning the workforce according to internal and external requirements;
- developing a flexible and adaptable human resources strategy to individual
needs.
3. Conclusions
For the medical act improvement, an eficient communication between Section
Chiefs and the rest of employees is mandatory, the daily work to be carried out in a
functional, united team, which will allow the implementation of the projects customized to
the needs and requirements of the beneficiaries of health care services.The human
resources are part of the overall integrated system and in order for the system to respond
correctly to the requirements, it is critical that the medical personnel, in other words the
provider of the medical services to ensure the compliance of this process by utilizing their
full knowledge and professional skills. In order to reach this goal, the medical personnel
has to be motivated, somehow the fulfillment of this objective to intersect the individual
employee’s objective.
From a psychological standpoint, the human being si distinguished by features of
different personalities that outline a particular individuality. One of the key responsibilities
of the Manager or Section Chief is to get to know all these aspects, discover each member
of the team that he or she is leading so as to be able to create a motivational framework for
everyone. A happy employee becomes a better worker.
If the communication between the manager and employees is continuous through
teamwork, projects can be realized that permit adapting to the new, but for this to happen,
people need to be motivated and trained continuously.
Acknowledgement: This work is supported by project POCU 125040, entitled
"Development of the tertiary university education to support the economic growth -
PROGRESSIO", co-financed by the European Social Fund under the Human Capital
Operational Program 2014-2020.
References
1. Cinteza, 2004. Is the attitude towards doctors psychosis induced? Medical Life, 46,
pp.1-10.
2. Ciurea, V.A., Ciubotaru, V.G. and Avram, E., 2010. Hospital Section Management.
Bucharest: Universitara Publishing House.
3. Cojocaru, M., 2005. Patients have a new ally in front of the authorities. Cotidianul.
4. Sinescu, I., 2005. If Fundeni hospital was privatized, it would disappear from the
medical map of Romania. Medical Life, 20, pp.1-2.

HOW CAN ENTREPRENEURS USE LATEST TECHNOLOGY IN

ORDER TO ACCELERATE HUMAN ACHIEVEMENT AT WORK
AND DRIVE BUSINESS PROCESS IMPROVEMENTS?
Ph.D. Student Lucian Gheorghe NĂSTASE
E-mail: nastase@gmail.com
Abstract: In today’s highly competitive environment, entrepreneurs must consider their productivity
levels, in other words they will need to refer to how well their company converts the input (such as capital,
materials, machines and labor) into output or goods and services. Improving productivity remains an
ongoing activity. Analyzing their space and resources, improving their plant layout and eliminating
processes that add no value are critical factors to success. An effective management will always count on the
utilization of the latest technology, that will consequently help improve the operations. Having the end goal
of fulfilling the objectives of the organization, the entrepreneurial spirit means more than wanting to start
your own business, it means holding values like innovation, creativity and passion on a higher level than
predictability, profit and stability. In the present article, we are going to have a look at the latest
technologies trends for 2020, such as Artificial Intelligence (AI), Machine Learning (MI), Robotic Process
Automation or RPA, Cybersecurity or Blockchain. Web-based technologies enable the entrepreneur to
dramatically improve the way he or she runs the business, keeping an increased focus on expanding the
market share, pursue the cost reduction aggressively, especially under crisis or greater efficiency, as well as
preventing customer-service problems.
Keywords: Entrepreneur, Effective Management, Objectives, Strategies, Automation, Process
Improvement, Operational processes.
JEL Classification: M10.
1. Introduction
Organizations are constantly looking into those areas where they can improve
accuracy, effectiveness and/or efficiency and then redesign those business processes with
the end goal to realize the required improvements. There is a permanent need to adapt and
bring customer satisfaction as quickly as possible, as well as align these with the overall
business strategy, due to the fact that expectations change, new technologies emerge and
competition grows. A business process can often be broken down into smaller processes
and one of options could be the split between Operational, Management and Support
functions. Looking at the operational side, this will include core business and create the
value stream, such as for example the orders placed by customers, manufacturing tasks or
opening bank accounts. Management business process will include corporate governance,
forecast, budget, key performance indicators tracking and employee oversight and under
supporting type, processes could be such as human resources, accounting and finance or
technical.
Given the highly dynamic environment, where the change becomes the rule, not the
exception anymore, businesses will survive, operate and progress only if they will adapt to
the changes in technology to enhance human capabilities. Rather than waiting for the
changes to come, a successful entrepreneur will need to anticipate them and have enough
courage to assess their implication to the business.
Technology is helping us resolve issues that human power alone cannot resolve all
the time. Different types of firms require different technologies; however, it has been
demonstrated that it is impossible to resolve with a single technology all integration needs.
Technology is only a part of the original solution and the entrepreneur’s background is
really important in different sectors. Technology is good for bringing the change not
forcing it. It cannot make employees more efficient. The robots can help us to be more
productive, freeing us from most of the time-consuming and repetitive tasks. Computer-
aided manufacturing is one of the most important areas of application of automation
techniques. Financial institutions and banking have embraced automation technology in
their financial transactions. But just because technology is advancing it does not mean it
will replace human resources. Technology can perform an adequate job, but we still need
the human piece of the puzzle. It is certain that people to people communication remains
fundamental where the entrepreneur’s contact in the various stages is required.
In this article, we will be discussing about the benefits of using Artificial
Intelligence (AI), Machine Learning (ML), Blockchain technology, Robotic Process
Automation or RPA, techniques which today are helping entrepreneurs to grow their
businesses. An important aspect is that technology alone cannot build a company culture.
In the end, it is people who are assigned to work on this technology and to inspire the
entrepreneurs to keep their spirit alive. By creating an engaging working environment,
interactive dialogues among employees, motivation to the employees, support among them
and a fair rewarding system, reflects the culture shape of the company. An entrepreneur
should understand what the needs of the company are, by creating a connection with all the
stages of management that brings the desired output. Therefore, entrepreneurial spirit and
technology should always go hand in hand. Hence, we need an evolving technology as well
as intelligent humans.
2. Content
Processes are one of the most important resources in organizations. Improving
processes can lead to enhance the organizational performance. Several methodologies
are presented for process improvement. There are many processes in organizations that
lead to increase the complex interactions between processes and high dimensionality
problem (Jeong et al., 2008). In addition, there is a single view to processes in the
improvement actions (Houy et al., 2011). Huang et al. (2012) stated that there is a
low attention to the internal aspects of the processes. Technology is now evolving at
such an increased pace that annual forecast of trends can appear out-of-date before they
even go live as a published article or blog post.
Conducting a regular business process improvement activity represents an effective
way to establish a systematic approach towards reaching the company’s objectives,
involving the business practice of identifying, analyzing and improving to optimize
performance, meet best practice standards or simply improve quality and the user
experience for customers and end-users. Over the time, several different names were given
to process improvement such as business process improvement (BPI), business process re-
engineering, business process management (BPM) or continual improvement process
(CIP), to name just a few. They all pursue the same goal, regardless of the nomenclature:
improve productivity, minimize errors, streamline efficiency and reduce waste.
There are mainly two types of business processes, such as formal or formal and
they cover a series of company’s functions. Irrespective of the process that we are trying to
improve, the enhancement approach follows the same path described by the following four
steps:
 Identifying the opportunities for change - this is usually the very first step
that should help identify the reason behind the change required in the process. Current
challenges and potential associated risks will be part of a process audit.The outcme of this
phase will highlight the areas for business improvement and how each one of these areas
impacts the overall organization, different stakeholders (suppliers, customers, employees,
goverment, etc) and resources.
 Analyzing teh existing process - An „as-is” process analysis is usually
conducted, once the first step above mentioned is completed. In order to be able to set up
realistic objectives, the team will need to fully understand the procedures.There are
different tools available at this phase such as surveys, cause/effect analysis or process
mapping, to be used with the end goal of identifying any roadblocks, delays, waste,
product / service quality issues.
 The next step involves obtaining commitment and support from senior
management, in other words getting their „buy-in”. No matter what is the project type or
size, the success of its implementation depends entirely on the senior manager support.The
need for change will have to be clearly stated and presented, as well as the way that
particular project will impact the organization on the short, medium or long term.
 The fourth step refers to creating the strategy for improvement – Following
the process analysis phase, we will need to have a strategy in place that will include at least
the reason why and how certain broken steps in the process should be improved, any
financial or other resource type implication. A key aspect here would be related to the fact
that SMART („specfic”, „measurable”, „attainable”, „relevant” and „time-bound”)
objectives will need to be set up and they should align the overall strategic goals.
Looking at the several methodologies that are designed to help the organization
identify the bottlenecks in the process, fix those issues and analyze / monitor the success of
those changes implemented, we could name some below, considering that each
methodology suits a different need. Some methodologies will help mapping out the process
flows, some other will focus in particular on the techniques of lean process improvement
and another category may be more concerned with changing the company culture, which is
the secret sauce in each successful transformation project.
Kaizen methodology is mainly focused on increasing the productivity, efficiency
and service / products quality by applying lean and agile practices. 5S model is part of
Lean and Kaizen methodologies and refers to the following steps: sort, strengthen, shine,
standardize and sustain. PDCA is also part of the Kaizen methodology and stands for plan,
do, check and act. Once the process that needs improvement is identified, this technique
helps the organizations be more efficient.
Six Sigma is a popular process improvement methodology, which provides a
rigorous and structured approach to both help manage and improve performance and to
support the transformation of an organization. It helps us use the right tools, in the right
place and in the right way, not only in improvement, but also in our day-to-day
management of activities (Burghall et al., 2014). Six Sigma involves two ways to break
down process improvement through specific steps. These steps include on one side define,
measure, analyze, improve and control (DMAIC) and define, measure, analyze, design and
verify (DMADV).
Establishing a continuous improvement organizational structure remains key to
business success and above all the methodologies available, process automation plays a
significant role. Eliminating the manual tasks, reducing human error, enhancing the control
are just few benefits to be considered.
Top New Technology Trends
 Artificial Intelligence (AI) - AI refers to computer systems built to mimic
human intelligence and perform different tasks such as decision making, speech or
patterns, recognition of images. AI can do these tasks a lot faster and more accurately than
humans.AI services are used on a daily basis in different forms, including navigation
applications, smartphone assistants or any other smart home devices, in partical in the
United States of America.
 Machine Learning (ML) is a subset of AI, powers web search results, real-
time ads, and network intrusion detection, to name only a few of the many tasks it can do.
With Machine Learning, computers are programmed to learn to do something they are not
programmed to do: they learn by discovering patterns and insights from data.
 Robotic Process Automation or RPA - The role of RPA is to automate
repetitive tasks that have previously been managed by humans. The software is
programmed to perform repetitive tasks in applications and systems. Software is actually a
multi-step workflow and interactions with various applications.The journey through RPA
implementation has mainly the following steps:
o Deciding the strategy – whether do it yourself (DIY) or contract from the
outside.
o Select and train a group of people – not only Information Technology (IT)
department. Representatives from several fields will want to be part of RPA
implementation planning, from business to IT.
o Identifying the structure of processes in the organization - Process discovery
- The goal of projects is, of course, automation - allowing software robots to handle at least
some of the work done by humans. This is a noble goal, and for that to happen we will
initially have to do a careful study of what those people do on their computers. This type of
study will help us to find out which of the many desktop processes are best suited for
automation.
o Select candidates for RPA - To benefit from fast Return on Investment
(ROI), we may need to chose processes that have undergone a transformation initiative
using the Lean Six Sigma methodology. Very Repetitive Manual Processes, Processes with
Standard Inputs that can be read, high volume and frequency processes are most
recomended.
o Map the processes from “As Is” (current) to “To Be” (future). Blockages,
inefficiencies and productivity gaps are clear. So are best practices. You can more easily
and objectively identify who are the top performers who need help to increase your work
speed.
o Implementation of robots
o Assess the financial impact of RPA solution implementation
 Cybersecurity - might not seem like emerging technology, given the fact
that it has been around for a while, but it is evolving just as other technologies are. It will
permanently evolve, as long as hackers are illegally trying to break even the toughest
security measures.It has been proved that the numbers of the jobs for cybersecurity
professionals is increasing three times quicker than other jobs in technical domain.
 Blockchain – In this fast growing industry, blockchain offers security as it

could be described in simple terms as data you can only add to, not take away from or even
change. Not being able to change the previous block of data is actually what makes it so
secure and an important benefit is that we do not need any third party to validate business
transactions.
3. Conclusions
The primary contributing factor for a successful transformation will be the
capability of the entrepreneur to simultaneously deal with customers, suppliers, product
development and technology (van Gelderen et al., 2008).

The main advantage of integrating Lean Six Sigma and Robotic Process
Automation – is that we will get to have automated or non-automated processes, but
optimized, under the control of our team.
Automation is definitely a wave and the companies would better catch it. The
financial impact can be impressive if a Robotic Solution is being developed. There are
multiple advantages that a company may obtain through the utilization of an RPA project,
among which: the cost of errors will decrease, Business practices will change, and
Customers will notice and want more.
Some process improvements that are automated with RPA includes online order
processing, categorizing help desk tickets, automated email responses, payroll management
and transferring data between systems. This not only helps create more efficiency around
business process, but it also helps free up workers to focus on more complex tasks that
automation cannot handle. Digital transformation is an option at hand for all firms and this
would definitely Reduce the complexity of personnel management.
Acknowledgement: This paper was co-financed from the Human Capital

Operational Program 2014-2020, project number POCU / 380/6/13/125245 no. 36482 /
23.05.2019 "Excellence in interdisciplinary PhD and post-PhD research, career alternatives
through entrepreneurial initiative (EXCIA)", coordinator The Bucharest University of
Economic Studies”.
References
1. Houy, C., Fettke, P., Loos, P., van der Aalst, W.M.P., Krogstie, J. ,2011.
Business Process Management in the Large. Business and Information Systems
Engineering.
2. Huang, Z., Lu, X., Duan, H. , 2012. Resource behavior measure
and application in business process management. Expert Systems with Applications.
3. Jeong, H., Song, S., Shin, S., Rae Cho, B., 2008. Integrating data mining to
a process design using the robust bayesian approach. International Journal of Reliability,
Quality and Safety Engineering.
4. Van Gelderen, M., Brand, M., Van Praag, M., Bodewes, W., Poutsma, E.,
Van Gils, A., 2008. Explaining entrepreneurial intentions by means of the theory of
planned behaviour. Career Development International, Vol 13, No. 6.
5. Burghall, R., Grant, V., Morgan, J., , 2014. Lean Six Sigma Business
Transformation for Dummies, John Wiley & Sons, Ltd.

“Ovidius” University Annals, Economic Sciences Series
Volume XX, Issue 1 /2020
How Can the Companies Make Their Processes More Efficient

by Transforming the Way of Using Their Data
in Today’s Competitive Environment?
Maria Georgiana Ponea

Ioana Antoaneta Ponea (Radu)
„Valahia” University of Târgovişte, Romania
georgia_ponea@yahoo.com
radoo_oana@yahoo.com
Abstract
Every day there are millions of opportunities to improve people’s lives by making better use of
data. In the digital era, harnessing data can be the difference between staying ahead or falling behind.
Most organizations are investing millions of dollars into digital transformation efforts, and yet, the
majority of these initiatives are failing. Why? Because organizations are failing to create a Data
Culture — the behaviors and mindsets that empower people to innovate and drive change with data. A
growing number of enterprises are recognizing that turning data into information, knowledge, and
insights requires a data culture. Data culture encompasses values, behaviors, and attitudes of
executives and employees that promote and enable use of relevant data as the driving force of decision
making.
Tableau Software products are transforming the way people use data to solve problems. They make
analyzing data fast and easy, beautiful and useful.
Key words: tableau, effective management, process improvement, data culture, entrepreneurship
J.E.L. classification: M10
1. Introduction
In the existing competitive environment, most of the companies are becoming of great significance
as corporations rely more and more on the financial and strategic approaches of their leaders.
Nowadays, the financial professionals are challenging a series of different responsibilities and risks.
Their role starts with reporting the data on the past year’s activity, handling the present issues, and not
least important taking decisions for the foreseeable future.
The aim of this paper can be translated into identifying the way of how the entrepreneurs or
management of an organization can make use of data to really make a difference and increase the
efficiency in their overall business processes. In the actual environment, keeping up the pace with the
new technology is key to finance professionals. Having the end goal of increasing the agility and
efficiency levels within their organization, the finance leaders must be using various up-to-date tools
that will provide real time data access and help the business to grow. It is now the most appropriate
moment to demonstrate their entrepreneurial spirit by taking a journey of transforming their business
and driving success into the near future. Better workplaces mean happier employees empowered to
express their fullest ingenuity and creativity.
There is always a need for change and data management makes no exception. Whether we are in
the role of an entrepreneur or a manager, it is absolutely critical to be always informed of any up-to-
date solution and ready to have it integrated into daily activity.
There is a true fact that most of the businesses focus on obtaining a competitive advantage. They
are always trying to find something new in order to be able to keep their market share. Therefore, we
must improve the internal operations of our entire organization.
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2. Theoretical background
The paper focuses on the essence of an effective data approach as an economical category through
the perspective of implementing managerial activities in the current and long-term periods of
organizations. A special attention is paid to the methods and tools of both entrepreneurial and
managerial influences that ensure the effective functioning and development of organizations.
All the organizations will need to have a data strategy in place, which is basically a plan for
leveraging our company’s data to create business value. The cultural framework of using data has
always been a priority within the companies, as informed decisions are based on that. Belissent &
Leganza (2015) and Xu (2013), report firms that appoint a top executive responsible for data
management have superior performance compared to peers.
A modern solution like Tableau may be the key to unlocking big data’s potential through
discovering insights but it is still just one of the critical components of a complete big data platform
architecture. Putting together an entire big data analytics pipeline can seem like a challenge. The good
news is that you do not need to build out the whole ecosystem before you get started, nor do you need
to integrate every single component for an entire strategy to get off the ground. Tableau is a perfect
match to the ability of moving data across different platforms, adjusting infrastructure according to
customized demands.
3. Research methodology
In the preparation of this article, we have approached to collecting, analyzing and interpreting
different types of information from different sources with the end goal of answering to our question on
How Can the Companies Make their Processes More Efficient by Transforming the Way of Using their
Data In Today’s Competitive Environment? From the viewpoint of objectives, our research can be
classified as descriptive, as we attempted to describe different ways to learn about data, how should
leaders manage it and what organizations need to do to survive and thrive in a competitive global
market. Some things will never change, and enterprises, as well as other business leaders have learned
that data analytics is the best way to answer business questions. In short, the organizations need to
have a strategy for how they want to invest their most valuable asset, which is data. We have also
combined the descriptive research to the correlational research, as we were interested in understanding
the interdependence between a good data analytical approach and the organizational performance.
Observation was one of our qualitative research methods and another method suited for our
research goal was the interview with top managers within an organization and they have re-enhanced
the importance of efficiently utilizing data, especially when they must take informed decisions.
4. Findings
Companies need regular, predictable, standardized data and formats, a data literate workforce and
defined, documented and repeatable business processes to be truly effective, efficient and sustainable.
The way organizations move to a more desirable data condition is through deliberate and focus use of
a data strategy. As also mentioned in their book (Aiken et al, 2017) developing data strategies is the
first step towards organizations becoming data-centric and managing their data as a strategic asset.
Today, many organizations do not think of their data in this way, and they consequently develop one
information technology solution after another, thinking each system will be the solution they have
been missing. There are many cases in which the information technology department will produce
automated solutions without proper guidance from the business subject matter experts as to how the
problems should be resolved. Instead, leadership needs to realize the best practice, in other words that
the ultimate solution is a human and system engineering combination that should be augmented by
automation where it makes sense. When businesses begin to focus their work, process and
technologies on data, they can more tightly integrate their work and better leverage their data to the
benefit of the organization and its strategic intent.
1075
It has been demonstrated that on average, nine out of ten organizations are facing significant legacy
data challenges (Aiken & Gillensen, 2011) and when they face this problem, it is highly important to
have a strategy behind. However, these organizations are quick to get involved with data warehousing,
business intelligence, customer relationship management, master data management and other new
business and technology initiatives without having any notion on how the organization needs to
leverage those data assets towards a desired business outcome.
Before the organization start making rules regarding data and its use, it is very important to
establish an understanding of the value of that data. Integrating information into a balance sheet is not
a trivial decision and the process behind doing so should be transparent, objective and repeatable.
Instituting a process for accounting for the value of data has also other benefits, such as having a better
control over organizational data (Van Rijmenam, 2014) and eventually people begin to make better
use of it, treating it as a valuable asset.
Among other solutions that exist on the market at the moment, “Tableau helps Finance departments
make their organization’s most important decisions on how they spend their time and resources. And
they use Tableau to make finance analysis and reporting more efficient, get more insights and value
out of their financial data, and increase their organization’s focus on its strategy and objectives. That
means lower costs, more revenue, and a better bottom line for the business. Please see below seven
ways leading Finance departments are driving return on investment by using Tableau”. (Crook, 2019)
• Efficiency Reporting – There is a great business value that an organization can get out of the
automation and standardization we find in Tableau implementation.
• Cost Avoidance – Tableau will make the business be more successful, bringing insight to the
management group in real time, a proposal that will definitely improve operations.
• Discovering Risk areas - Tableau helps the users connect to different sources of data and
identify predictable risks.
• Growth and Profitability Synthesis - A Chief Financial Officer (CFO) irrespective of the
industry in which activates, will need to be able to easily analyze profit and loss data that serves in the
strategic planning and decision-making and will also need to be able to identify which sections are
most profitable, as well as what division has the highest growth rate. Tableau will help identify great
performers or areas of opportunity by putting on all segments in dynamic quadrants.
• Expense Reduction - Having Tableau implemented, a company’s finance team will be able to
discover which are the key metrics for each cost center within the organization.
• Revenue Forecasting – As we all know that not only pas data is important for our finance
leaders, but also expected results help in the process of decision-making, Tableau allows the
companies to combine different sources of data and reach the single source of truth. Tableau helps
develop dashboards showing opportunities and challenges, based on the available data in less than a
minute.
• Cash Flow Management – Finance leaders are always interested in tracking the movement of
funds in and out of the business either daily, weekly, monthly or quarterly. There are many useful
questions that may arise, such as the following: Tableau is extremely useful for local or global cash
management functions, by developing dashboards that will provide full visibility, easy access and
control, so as the management will see the big picture, but also can drill down into the details.
In the last couple of years, we have seen the positive impact of the Artificial Intelligence (AI) – a
rapidly advancing technology and how users interact with the digital world and with each other.
Machine Learning (ML) which is a particular approach to AI is more often used in products or
services, however, there are some challenges to be considered when speaking about the users’
confidence in the Internet. There were developed different applications based on AI technology in
several domains such as: education, transportation, healthcare, entertainment, public safety and service
robots.AI together with the internet will extend the application in other fields and may become the
new engine for global economic growth in the coming years.
Tableau represents an innovator of Business Intelligence (BI) and was a leader on the market in the
last couple of years, but market progressed as per Constellation Research (Henschen, 2019), we live
“the era of Smart Analytics”.
1076
Constellation (Henschen, 2019) “designate these ML- and AI-powered advances not as extensions
of self-service analytics but as early signs of a new era of computer-assisted analytics. Smart
capabilities complement human interpretive skills with computer processing power that can be
harnessed to automate repetitive tasks and tackle complex calculations. Furthermore, ML and NL
understanding augments the analytical skills of employees and customers.”
Constellation Research (Henschen, 2019) “analyzes Tableau’s strengths and weakness on the
background of four key categories: Smart Data Prep, Smart Discovery and Analysis, Smart Prediction,
Natural Language Query.”
Figure no. 1. Self-Service Analytics Era moves over to the ML- and AI Era
Source: Constellation Research, June 2018, Updated March 2019
Although there will be a change from the utilization of self -service to smart era, when it comes to
the deployment of any of these technologies such as artificial intelligence (AI) or machine learning
(ML), the following best practices will always occur:
• Executive sponsorship – For the successful implementation of any project the support of
someone who has influence and credibility in both the business sphere and IT has to be obtained.
• Another key aspect is building a cross-functional team. Critical drivers in an effective
deployment are business stakeholders, IT data science experts and software development team
members.
• Choose the most appropriate project. The best approach would be to start with small projects
that will payoff notably soon. Then move up to greater projects, more time-consuming and riskier.
• Move quickly. Nowadays, everything happens with the highest speed, therefore management is
waiting to deliver fast results and it is non-negotiable their expectation.
5. Conclusions
Beyond data analysis, Chief Financial Officers (CFOs) are more and more preoccupied of data
management challenges. In this category we may include the monitoring, storage and quality of data,
important functions which will allow all processes operate more efficiently. “The Four V’s of Big
Data.19 The four V’s include volume (scale of data), velocity (analysis of streaming data), variety
(different forms of data), and veracity (uncertainty of data)”. (IBM, 2013).
Tableau represent the tool that can convert simple data into a viable insight, by creating dashboards
and different ad hoc analyses in just a few clicks. It helps share the work with anyone and make an
impact on the business. From the individual analyst looking at specific sales performance to the sales
executives looking at overall performance in the pipeline and ability to hit targets that meet company
goals, people everywhere use Tableau to see and understand their data.
1077
To find more time and make a bigger impact in the financial analysis, we do not have to
disseminate lots of spreadsheets and existing processes all together. Integrating all our data sources
with visual analytics is easier than ever before. Tableau helps people see and understand their financial
data, no matter how big it is or where it is stored. We can quickly connect, blend, clean, visualize and
analyze our data the way we want– no programming skills required (Crook & Gleason, 2019).
6. Acknowledgement
This paper was co-financed from the Human Capital Operational Program 2014-2020, project
number POCU / 380/6/13/125245 no. 36482 / 23.05.2019 "Excellence in interdisciplinary PhD and
post-PhD research, career alternatives through entrepreneurial initiative (EXCIA)", coordinator The
Bucharest University of Economic Studies”.
7. References
• Aiken, P. and Harbour, T., 2017. Data Strategy and the Enterprise Data Executive: Ensuring That
Business and IT Are in Synch in the Post-Big Data Era, Paperback. New York: Technics Publications.
• Aiken, P., Gillensen, M., Zhang, X. and Rafner, D., 2011. Data Management and Data Administration:
Assessing 25 Years of Practice. Journal of Database Management (JDM), 22 (3), pp. 22-25.
• Belissent, J. and Leganza, G., 2015. Top Performers Appoint Chief Data Officers: CIOs must Partner
With Their CDOs To Bridge The Data Maturity Gap, with Kisker, H., Owens, L., Carlton, D., Lever, S.,
Shey, H., Kramer, A. and McPherson, I., Forrester Research 2015.
• Crook, M., Gleason, T., 2019. Four Ways Finance Creates Value with Visual Analytics, Transforming
Data with Intelligence, [online]. Available at: https://tdwi.org/whitepapers/2019/06/bi-all-tableau-four-
ways-finance-creates-value-with-visual-analytics.aspx [Accessed June 2020].
• Crook, M., 2019. 7 Ways Finance Teams are Driving ROI with Tableau, Government Technology,
[online]. Available at: https://www.govtech.com/library/papers/7-Ways-Finance-Teams-are-Driving-ROI-
with-Tableau-112650.html?promo_code=gt_paper_web_article [Accessed June 2020].
• Henschen, D., 2018. Updated 2019, Tableau Advances the Era of Smart Analytics, Constellation
Research, [online]. Available at: https://capitalizeconsulting.com/wp-content/uploads/2018/12/smart-
analytics-constellation-research-report-2018.pdf [Accessed June 2020].
• IBM, 2013. The Four Vs’s of Big Data.
• Van Rijmenam, M., 2014. Think Bigger: Developing a Successful Big Data Strategy for Your Business.
Saranac Lake, US: AMACOM.
• Xu, F., Zhang, H. H., Wei, L. & Xin, R. & Xu, D., 2013. The Value of Chief Data Officer Presence on
Firm Performance. Asian Conference on the Social Sciences (ACSS 2013).
1078
LEADERSHIP VS. MANAGEMENT. MAXIMIZING MANAGEMENT

PERFORMANCE BY DEVELOPING LEADER’S SKILLS

Abstract: The organization is represented by human resources. The responsibility of leading the
organization rests with the role of the manager. The efficiency of the leadership role translates into the
organization's ability to achieve its goals. How does the manager succeed to determine a favorable
framework for achieving the goals, how can he or she determine the human resource to put their shoulder, to
concentrate all the available resources in achieving the objectives set by the institution he or she manages?
These are goals to which any leader of the organization tends, since an evaluation of the managerial
performances is strictly related to the fulfillment of the objectives that the organization has set itself. We can
metaphorically look at the organization made up of a certain number of employees, without counting this
number, as well as a gear made up of a certain number of wheels equivalent to the employees. Each wheel
being a separate component, as psychologically individualistic as each employee, but in perfect harmony
with the other wheels. Each person psychologically becomes a separate entity.
Keywords: Management, Leadership, Objectives, Strategies.
JEL Classification: D91.
1. Introduction
The approach of the specialized literature towards the concepts of "management"
and "leadership" causes them to be treated as distinct terms, but the practice shows the
difficulty of their delimitation. In the definition of management, leadership represents one
of the five functions of management. Manfred F.R. Kets de Vries (2001), points out the
necessity of the leaders’ presence in the different fields through the following rhetoric:
”Why, after all, do people need leaders - leaders in politics, leaders in business, leaders in
culture?” …”because we live in a changing world”.
The leadership requires to be a visionary, inspirational, motivational and dedicated
person to keep up with the permanent changes of the environment that also entails many
competitive forces. Filley, House and Kerr (1976) formulate the differences between
management and leadership: “Management can be defined as an intellectual and physical
process that results in subordinates fulfilling certain conditions, establishing official tasks
and solving certain problems. The leadership, on the contrary, is the process by which a
person exerts influence over group members”.
The leader is the one who motivates behaviorally the group members so that all the
actions exercised by him/her converge in the direction of achieving the objectives of the
organization. The leadership is in a perpetual movement, to impose the necessary changes,
to keep up with the changes that are constantly happening in the market.
2. Content
The management and the leadership appear as two necessary instruments for the
development in optimal conditions of the activities within the organization. According to
Parry (2011), ”the management and the leadership are not comparable entities; the
management and the leadership are two managerial styles that work together to achieve the
success of the organization”. The management, in the exercise of its attributions, is based
on the attribute of the power that the function confers, at the opposite pole being the
leadership used in exercising the activity on human interactions within the institutions,
Volume 5, Issue 1/2020 Vol. 5, Nr.1/2020
targeting a process centered on social influence. For these reasons, although most of the
times no clear distinction is made and these terms are used as synonyms, we consider the
creation of a separation in consensus and with the idea launched by Zaleznik (2004) that
leaders are not managers. The manager's attributions are structured in 3 functions:
 a clear vision that foresees the objectives in the future and their definition,
fixing the stages of accomplishment and clearly establishing the necessary
resources;
 establishing the tasks and distributing them to authorized persons;
 the activity within the institutional framework and the problems that this
imposes in the dynamics aiming to reach the objectives.
The managers and the leaders also differ in the relationships they establish with the
members of the institutions. The legitimacy of the manager comes from outside, following
an appointment from the board of directors, while in the case of the leader, the support
comes from the group, thus being able to rely more on the development of decisions and
the course of actions on the members of the institution. A manager from this point of view
cannot resort to these mechanisms, which will be a situation characterized by a much lower
efficiency. A defining profile of the leader, of the manager, cannot be achieved insofar as
the characteristics of a leader derive from the interaction between the individual profile and
the situational diversity of the context. And what can be better than an employee who
works motivated, who launches all the emotional and professional resources to achieve the
goals of the organization.
The leaders are able to bring about changes in the culture of the organization, they
have the opportunity to transform, to influence individual potentials in favor of the
collective interests.
The leader is the one who builds a social architecture within the institutional
framework, lays the foundation of a system of relationships that works coherently, while
the manager's role is limited to an execution function without a real adaptation, he/she
continues to the group characteristics and the challenges imposed by the organizational
framework.
Anyone, from the lower levels to the top of the organization, can be a leader. Not a
few times, an informal leader had an important contribution in carrying out the actions
within the organization.
Within the organization, it is necessary to have harmony between the formal and
the social structure, which will serve the collective goals and values. Institutional tasks, as
a goal often difficult to achieve, must not be carried out mechanically, without a soul.
Bennes (2009), president of California’s Leadership Institute, states in his paper, "On
Becoming a leader", that "Leaders are made, not born''.
An efficient management style is the one that inspires people to participate with
all the skills, to commit them with all the resources they must achieve the targeted
objectives. Results are diminished by unhealthy cultures, and there is also a human price
that is paid as a result of the ineffective implementation of change within an organization.
This takes the form of:
 Disenfranchised employees;
 Loss of loyalty, trust and commitment;
 High levels of stress and burnout;
 Poor balance in life and neglected families;
The answer to superior competitive performance and more fulfillment for people
can be found in the quality of a healthy culture and an enlightened 21 st century style of
leadership.

Figure 1. Senn-Delaney Leadership Consulting Group, LLC.

Source: Senn, L. and Hart, J., 2016. Winning Teams - Winning cultures. Chicago: Senn-
Delaney Leadership Consulting Group, LLC.
Every one of us can influence the culture around, in the organization, department or
work team. Each of us will cast a shadow by our own behaviors and each of us has a
choice in terms of our own personal and professional development.
All that we do or attempt to do within our organization will be impacted by our
culture, therefore it is important to consider how we can better contribute to a healthy
culture and better business results. Please see the chart below, which shows some of the
transitions Senn Delaney believes individuals need to make:

Transitions Toward Leadership in Healthy, High – Performance Cultures

FROM TO
Being a manager Being a leader
Being a boss Being a coach
Controlling people Empowering People
Holding on to Authority Delegating Authority
Micro-managing Leading with vision and values
Directing with rules and regulation Guiding with winning shared values
Relying on position power and hierarchy Building relationship power and
networked teams
Demanding compliance Gaining commitment
Focusing only on tasks Focusing on relationship and the culture
Confronting and combating Collaborating and unifying
Going it alone Utilizing the team
Judging others Respecting, honoring and leveraging
diversity and differences
Changing by necessity and crisis Committing to continuous learning
Being internally competitive; win/lose Being internally collaborative; win/win
Having a narrow focus; “me and my area” Having a broader focus; “my team,
organization”
Figure 2. Senn-Delaney Leadership Consulting Group, LLC.
Source: Senn, L. and Hart, J., 2016. Winning Teams - Winning cultures. Chicago: Senn-
3. Conclusions
The leadership qualities are acquired requiring time and occupying certain
positions within the organization to allow the acquisition of such skills. The leader must
create for his followers the feeling and motivation of heading towards a certain scope.
Attracting support from the members of the organization, a “welded” team is created,
aimed at achieving goals, taking place in a framework in which each member is valued and
feels that his/her work is appreciated.
The organization members must acquire the feeling of a firm conviction that they
are players within the organization, with the freedom of their own choices within the
organization. Effective employees need to experience the sense of competence, based on
the belief of the importance of the activity carried out by each one within the
organizational framework. Everyone's creativity, in order to flower, needs to find a channel
of expression. It is not so important that the activities are performed, as the way they are
performed, and for the realization of this design, it is important that each employee feels
valued, to sense the feeling of the activity’s importance that they carry out for the
organization.
The leader manages to identify himself/herself within the group, obtaining
legitimacy from it and at the same time offering to each member a framework that meets
his/her needs. In the actions of a leader it is mandatory to find:
 a vision that takes into account the interests of all those who are part of the
organization;

 a strategy to fulfill this vision ensuring a concordance between the

environment and internal factors that can influence the objectives of the
organization;
 resource allocation to apply the identified strategy;
 a group of people, to put soul, whose objectives are identified with the
objectives of the organization and which contribute to the realization of the
vision.
The influence of a leader is directly proportional to the degree of acceptance by the
followers. The managers are the ones doing things the right way, the leaders are the ones
doing the right things.
The leader sees a vision for the future and finds strategies to apply these visions,
mobilizing subordinates so that they adhere to that vision and engage all the resources for
its accomplishment, thus managing each employee to adhere to the organization's
objectives motivated by his / her own goals.
The management represents a series of measures taken by the person at the top of
the organization, a man - a manager, who leads people, people who form the organization.
Only a leader can do this.
Acknowledgement: This paper was co-financed from the Human Capital

Operational Program 2014-2020, project number POCU / 380/6/13/125245 no. 36482 /
23.05.2019 "Excellence in interdisciplinary PhD and post-PhD research, career alternatives
through entrepreneurial initiative (EXCIA)", coordinator The Bucharest University of
Economic Studies”.
References
1. Bennes, W.G., 2009. On Becoming a leader. The Leadership Classic. New York:
Basic Books.
2. Filley, A.C., House, R.J. and Kerr, S., 1976. Managerial process and
organizational behavior. Columbus (EUA): Ohio State University.
3. Kets de Vries, M.F.R., 2001. The Leadership Mystique: Leading behavior in the
human enterprise. London: Financial Times / Prentice Hall.
4. Parry, K., 2011. Human Resources Management. 6th edition. Oxford: Oxford
University Press.
5. Senn, L. and Hart, J., 2016. Winning Teams - Winning cultures. Chicago: Senn-
6. Zaleznik, A., 2004. Managers and Leaders. Are they different? Harvard Business
Review, 199, pp.77-81.

Annals of the Academy of Romanian Scientists
New Series on Economy, Law and Sociology Sciences
Online ISSN 2068-200X Volume 5, Number 2/2019 43
PROCESS FLOW ACCELERATION MECHANISM

WITH A DIRECT IMPACT IN THE COMPANY’S
WORKING CAPITAL
Maria Georgiana PONEA1, Marilena ENE2,
Ioana Antoaneta PONEA (DINU)3, Ionel DINU4
Abstract. In a rapidly changing business environment, one of the challenges that a

multinational company faces is the investment decision in working capital, as it does not
directly earn profits. Therefore, one of the areas that the Finance Manager is concerned with
is reviewing the accounting strategy designed to monitor and utilize the two components of
working capital, current assets and current liabilities, to ensure the most efficient operation of
the company. Looking at the current assets structure, it is important to analyze the way in
which the company manages the “best level” of accounts receivables, as the higher they are,
the more cost is incurred, both in terms of the interest cost and in terms of the greater risk of
losses through bad debts. A strategic process flow to help the cash collections by using the
right acceleration mechanisms will have a critical impact in the company’s working capital.
Successful completion of each business process step depends on the successful completion of
the previous steps. A common understanding and execution of accurate and critical
information being captured throughout the end-to-end process is critical in ensuring a quality
invoice being generated and on due time collection. Internalize the key drivers for success for
each major business process and think about its implications to an accurate and timely
invoice and consequently our cash collection. At each point of performing a physical activity,
critical information will need to be captured and communicated to key stakeholders in the
invoicing process. As Key Performance Indicators are the measurable values that
demonstrate how a company is achieving the key business objectives, from a billing and
collection process standpoint we are using the following two drivers: Days to Invoice (DTI)
and Days Sales Outstanding (DSO). For years, the firms have relied on basic desktop
publishing and spreadsheet programs to keep track of their data with basic spreadsheets, but
now dedicated Business Intelligence platforms are affordable and many times more powerful
than a spreadsheet for analyzing and understanding business data needed to make key
decisions. There are several reasons that business intelligence, or BI, is an indispensable asset
to a modern organization. One of them being that BI improves the visibility of core business
components and makes it easier to see each component part of a business, including those that
are often overlooked. Consequently, we can more easily identify components that need
improvement and to make changes with the goal of optimizing working capital.
1
PhD Stud, IOSUD-SDSEU, Valahia university of Targoviste, Targoviste, Romania
(georgia_ponea@yahoo.com).
2
PhD Stud, IOSUD-SDSEU, Valahia university of Targoviste, Targoviste, Romania (e-mail:
marilena.enne@gmail.com).
3
(radoo_oana@yahoo.com).
4
(ionel.dinu@unipet.ro).
44 Maria Georgiana Ponea, Marilena Ene, Ioana Antoaneta Ponea (Radu), Ionel Dinu
Keywords: Working Capital, DSO (Days Sales Outstanding), DTI (Days to Invoice), Business
Intelligence (BI).
1. Introduction
Working capital management is a critical component of corporate finance because
it directly affects the liquidity and profitability of an organization. A lot of
financial experts and researchers have clearly defined “working capital
management” as being the process of formulating and developing strategies,
policies, regulations and guidelines of the current assets and current liabilities in
order to positively reinforce the daily projects to be performed successfully. In
addition, watching over the firm’s short-lived assets and short-lived obligations to
continue performing daily activities properly is defined as management of
working capital. Working capital management is important due to many reasons.
For one thing, the current assets of a typical manufacturing firm accounts for over
half of its total assets. For a distribution company, they account for even more.
Excessive levels of current assets can easily result in a firm’s realizing a
substandard return on investment. However, firms with too few current assets may
incur shortages and difficulties in maintaining smooth operations [1]. Efficient
working capital management involves planning and controlling current assets and
current liabilities in a manner that eliminates the risk of inability to meet due short
term obligations on the one hand and avoid excessive investment in these assets
on the other hand [2]. A popular measure of Working Capital Management
(WCM) is the cash conversion cycle, in other words the time lag between the
expenditure for the purchases of raw materials and the collection of sales of
finished goods. The longer this time lag, the larger the investment in working
capital [3]. A longer cash conversion cycle might increase profitability because it
leads to higher sales. However, corporate profitability might also decrease with
the cash conversion cycle, if the costs of higher investment in working capital rise
faster than the benefits of holding more inventories and/or granting more trade
credit to customers.
Due to the high importance of cash in running a business, it is in a company's best
interest to collect on its outstanding account receivables as quickly as possible and
an element of the cash conversion cycle is Days Sales Outstanding (DSO), often
referred to as average collection period. DSO is the number of days that a
customer invoice is outstanding before it is collected. The point of the
measurement is to determine the effectiveness of a company's credit and
collection efforts in allowing credit to reputable customers, as well as its ability to
collect cash from them in a timely manner. The measurement is usually applied to
the entire set of invoices that a company has outstanding at any point in time,
rather than to a single invoice. When measured at the individual customer level,
the measurement can indicate when a customer is having cash flow troubles, since
Process flow acceleration mechanism with a direct impact
in the company’s working capital 45
it will attempt to stretch out the amount of time before it pays invoices. Days to
Invoice (DTI) is tracking internal delays in invoice generation and submission to
customers. This key performance indicator (KPI) will describe the efficiency of
the end-to-end invoicing process and all activities involved. It highlights key areas
in the process which directly or indirectly affect our cash flow and, therefore, our
profitability. Regardless of industry, technology has transformed modern
business. And for Financial Managers, business operations automation
technology, such as an order to cash solution presents a substantial opportunity.
With the right tool in place, Financial Managers can gain visibility over processes
in a way that allows them to make agile strategic decisions to drive processes
improvements, cost efficiencies and ultimately, deliver growth. Essentially, the
latest developments in financial operations solutions including Business
Intelligence platforms provide a new level of transparency, insight and analysis
over legacy processes, which have previously been either inaccessible or
incredibly complex to find.
2. Working Capital – Level, Policies, Financing and Cash Conversion Cycle

Net working capital is the term given to the difference between current assets and
current liabilities: current assets may include inventories of raw materials, work-
in-progress and finished goods, trade receivables, short-term investments and
cash, while current liabilities may include trade payables, overdrafts and short-
term loans. The level of current assets is a key factor in a company’s liquidity
position. A company must have or be able to generate enough cash to meet its
short-term needs if it is to continue in business. Therefore, working capital
management is a key factor in the company’s long-term success: without the ‘oil’
of working capital, the ‘engine’ of non-current assets will not function. The
greater the extent to which current assets exceed current liabilities, the more
solvent or liquid a company is likely to be, depending on the nature of its current
assets. Liquidity for the ongoing firm is not reliant on the liquidation value of its
assets, but rather on the operating cash flows generated by those assets [4].
Long-term investment and financing decisions give rise to future cash flows
which, when discounted by an appropriate cost of capital, determine the market
value of a company. However, such long-term decisions will only result in the
expected benefits for a company if attention is also paid to short-term decisions
regarding current assets and liabilities. Current assets and liabilities, that is, assets
and liabilities with maturities of less than one year, need to be carefully managed.
To be effective, working capital management requires a clear specification of the
objectives to be achieved. The two main objectives of working capital
management are to increase the profitability of a company and to ensure that it has
sufficient liquidity to meet short-term obligations as they fall due and so continue
in business [5]. Profitability is related to the goal of shareholder wealth

maximization, so investment in current assets should be made only if an
acceptable return is obtained. While liquidity is needed for a company to continue
in business, a company may choose to hold more cash than is needed for
operational or transaction needs, for example for precautionary or speculative
reasons. The twin goals of profitability and liquidity will often conflict since
liquid assets give the lowest returns. Cash kept in a safe will not generate a return,
for example, while a six-month bank deposit will earn interest in exchange for
loss of access for the six-month period. Shin & Soenen, (1998) highlighted that
efficient Working Capital Management (WCM) was very important for creating
value for the shareholders. Given the importance of working capital management,
a company will need to formulate clear policies concerning the various
components of working capital [6]. Key policy areas relate to the level of
investment in working capital for a given level of operations and the extent to
which working capital is financed from short-term funds such as a bank overdraft.
A company should have working capital policies on the management of inventory,
trade receivables, cash and short-term investments in order to minimize the
possibility of managers making decisions which are not in the best interests of the
company.
Working capital policies need to consider the nature of the company’s business
since different businesses will have different working capital requirements. A
manufacturing company will need to invest heavily in spare parts and components
and might be owed large amounts of money by its customers. A food retailer will
have large inventories of goods for resale but will have very few trade receivables.
The manufacturing company clearly has a need for a carefully thought out policy
on receivables management, whereas the food retailer may not grant any credit at
all. Working capital policies will also need to reflect the credit policies of a
company’s close competitors, since it would be foolish to lose business because of
an unfavorable comparison of terms of trade. Any expected fluctuations in the
supply of or demand for goods and services, for example due to seasonal
variations in business, must also be considered, as must the impact of a
company’s manufacturing period on its current assets. An aggressive policy with
regard to the level of investment in working capital means that a company
chooses to operate with lower levels of inventory, trade receivables and cash for a
given level of activity or sales. An aggressive policy will increase profitability
since less cash will be tied up in current assets, but it will also increase risk since
the possibility of cash shortages or running out of inventory is increased. A
conservative and more flexible working capital policy for a given level of
turnover would be associated with maintaining a larger cash balance, perhaps
even investing in short-term securities, offering more generous credit terms to
customers and holding higher levels of inventory. Such a policy will give rise to a
lower risk of financial problems or inventory problems, but at the expense of

reducing profitability. A moderate policy would tread a middle path between the
aggressive and conservative approaches. All three approaches are shown in Figure
2.1. It should be noted that the working capital policies of a company can be
characterized as aggressive, moderate or conservative only by comparing them
with the working capital policies of similar companies. There are no absolute
benchmarks of what may be regarded as aggressive or otherwise, but these
characterizations are useful for analyzing the ways in which individual companies
approach the operational problem of working capital management.
Fig. 2.1 Different policies regarding the level of investment in working capital
The trade-off between risk and return which occurs in policy decisions regarding
the level of investment in current assets is also significant in the policy decision
on the relative amounts of finance of different maturities in the balance sheet, for
instance on the choice between short- and long-term funds to finance working
capital. To assist in the analysis of policy decisions on the financing of working
capital, we can divide a company’s assets into three different types: non-current
assets, permanent current assets and fluctuating current assets [7, 8]. Non-current
assets are long-term assets from which a company expects to derive benefit over
several periods, for example factory buildings and production machinery.
Permanent current assets represent the core level of investment needed to sustain
normal levels of business or trading activity, such as investment in inventories and
investment in the average level of a company’s trade receivables. Fluctuating
current assets correspond to the variations in the level of current assets arising
from normal business activity.
The cash conversion cycle (also referred to as CCC or the operating cycle) is the
analytical tool of choice for determining the investment quality of two critical
assets—inventory and accounts receivable. The CCC tells us the time (number of
days) it takes to convert these two important assets into cash. A fast turnover rate
of these assets is what creates real liquidity and is a positive indication of the
quality and the efficient management of inventory and receivables. The cash
conversion cycle, which represents the interaction between the components of

working capital and the flow of cash within a company, can be used to determine
the amount of cash needed for any sales level. It is the period of time between the
outlay of cash on raw materials and the inflow of cash from the sale of finished
goods, and represents the number of days of operation for which financing is
needed. The longer the cash conversion cycle, the greater the amount of
investment required in working capital. The length of the cash conversion cycle
depends on the length of: the inventory conversion period; the trade receivables
collection period; the trade payables deferral period.
The inventory conversion period is the average time taken to use up raw materials,
plus the average time taken to convert raw materials into finished goods, plus the
average time taken to sell finished goods to customers. The inventory conversion
period might be several months for an engineering or manufacturing company, but
negligible for a service company. The trade receivables period is the average time
taken by credit customers to settle their accounts. The trade payables deferral
period is the average time taken by a company to pay its trade payables, such as:
its suppliers. If we approximate these three periods with the financial ratios of
inventory days, trade receivables days and trade payables days, the length of the
cash conversion cycle (CCC) is given by the following formula:
CCC = Inventory days + Trade receivables days − Trade payables days (1)
3. Management of Receivables Objectives achieved through monitoring two

Key Performance Indicators: DSO and DTI
Organizations have to establish a business process to efficiently manage their
resources, including cash. Company’s Business Process outlines all activities
involved in the management of its customer relationships and business
transactions. Each step within the Business Process is dependent on the
successful execution of previous steps and effective implementation of the
Business Process requires collaboration across various roles. At a high level,
Company’s Business Process begins with the customer and the agreement
entered to do business together. A sales contract is created and a credit rating
established. As we are particularly interested in service sector, orders are then
received from the customer, allowing company, the supplier, to begin fulfilling
those orders, invoicing the customer and collecting cash. Once products and
services are delivered to the customers, it is time for the company to send an
invoice requesting payment and eventually collect the corresponding money. It
is standard for the customers to take several days to process the invoice sent to
them through all the required levels of approvals and to then send back to the
company the corresponding payment. The bottom line is that while collecting
and processing payments from customers, the company must continue paying
all costs associated with running the business such as: leases, utilities,
employee salaries. The longer it takes to request and receive payment, the
more costs the company will have to absorb and will need to obtain that money
somewhere else. Therefore, the trade receivables management policy
formulated by senior managers should also take into account the administrative
costs of debt collection, the ways in which the policy could be implemented
effectively, and the costs and effects of easing credit. It should balance the
benefits to be gained from offering credit to customers against the costs of
doing so. Longer credit terms may increase turnover, but will also increase the
risk of bad debts. The cost of increased bad debts and the cost of any
additional working capital required should be less than the increased profits
generated by the higher turnover. In order to operate its trade receivables
policy, a company needs to set up a credit analysis system, a credit control
system and a trade receivables collection system.
Since the purpose of offering credit is to maximize profitability, the costs of
debt collection should not be allowed to exceed the amounts recovered. A
company should prepare regularly aged trade receivables analysis and take
steps to chase late payers. It is helpful to establish clear procedures for chasing
late payers, to set out the circumstances under which credit control staff should
send out reminders and initiate legal proceedings. Some thought could also be
given to charging interest on overdue accounts to encourage timely payment,
depending on the likely response of customers. The key performance indicator
used to track the efficiency in collecting payment for the products and services
is Days Sales Outstanding (DSO). This is the number of days of sales between
the time products/services are delivered to the customers and the time when
payment is actually received by the company. Our goal is to lower DSO. We
can do this by submitting accurate and timely invoices, preventing and quickly
resolving invoice disputes, and negotiating adequate payment terms with the
customers.
Another important KPI to be used is Days to Invoice (DTI). The goal for the
company is to invoice steadily throughout the month, so as the average number
of days from job completion date or delivery date to be the lowest possible.
Everyone responsible for gathering job information or customer signatures
should be actively pursuing this information all month long. Delaying
invoicing until the last few days of the month delays the cash collections
potentially into many later months. When billing is done in mass quantities the
last five to ten days of the month, there is a greater chance that invoices will
not be correct and disputes will occur. It may also cause overtime, which is
very costly to the company. Low invoice accuracy means that the customers
are rejecting the invoices for various reasons and are not timely paying them.
Therefore an increase in DSO is generated. It leads to the following 3 key

areas of impact:
Decreased Customer Satisfaction - One of the risks of incorrect billing
is that a customer can see its own business at risk due to shipments
being delayed or halted. The invoices might have been sent, but not to
the correct address, resulting in an order block. Or a scenario where a
customer needs to allocate resources to resolve a situation concerning
invoicing;
Increased Aging in Accounts Receivable - Customers are granted a
payment term, if for whatever reason a customer does not pay it means
the business is short of cash whilst its obligations and liabilities have
not changed.
Increased Cost-of-Rework - Invoice or Billing corrections cost money
and in most of the cases the cost is not immaterial. Additionally, people
within the Order to Cash organization have to be utilized. Cost-of-
Rework means inefficiency.
Fig. 3.1. Key Performers Indicators (KPI) in the context of a Company’s business process
4. Business Intelligence and Digitalization used by Financial Managers as

Credit Control tools to Deliver Growth
The role of the Financial Manager has become increasingly complex. In order
to see success, modern Financial Managers and their teams have a growing
array of responsibilities in managing “big data” across the business to ensure a
growing, agile and sustainable business. New regulations, tax laws, corporate
governance awareness – plus the requirement to generate reports that provide

decision makers with actionable real-time insight – all add to these
complexities and challenges. Within this complex landscape, they still need to
be able to gain clear visibility across their business and finance processes, to
enable data-based decisions that will: mitigate risk in an economically volatile
market, ensure optimum efficiency throughout the business, ensure business
continuity and data integrity, build customer satisfaction and loyalty, and drive
growth. Working capital analytics can increase liquidity and profitability by
reducing the debt and cost of capital. The challenge lies in overcoming the lack
of: Access to real-time information to evaluate working capital processes;
Cross-functional view for a unified understanding; Skilled analytical resources
to meaningfully focus on optimizing working capital. Utilizing Business
Intelligence and Digitalization Solution, with the right expertise, analytics can
draw action-based insights in collection effectiveness, slow pay, percentage
adherence to payment terms, qualitative overdue analysis and past due ratios.
Similarly, inventory analytics can uncover critical upstream issues in demand
forecasting and inefficient logistics. It can also solve problems that are not
confined to inventory issues. By breaking down cash, growth and profitability
using the overall customer and strategic supplier performance dashboards,
companies can get detailed visibility into leading and lagging key metrics
across the working capital cycle. This will, in turn, enable more effective
control and management.
Conclusions
A reliable and stable working capital management is simply required to make
it easy for a firm to maintain its daily operations without any disruption and
pay out its short-lived debts to the creditor in a timely manner. As a result, a
great number of business firms irrespective of their type and size have seen
themselves in challenging circumstances with the creditors mainly in these
modern days, simply because management of the firms do not regularly
supervise and cope with the liquidity which is usually the sum of working
capital. Working capital management (WCM) is expected to be given extra
attention when it comes to the globalization and its fast currency fluctuations if
the cost of capital is gradually rising, and source of funds is really becoming
hard to find in an easy way. Thereby, if a business is definitely ineffective in
dealing with working capital variables, then it is not going to only cut down
profitability but also lead potentially into a financial meltdown which might
possibly ruin the entire business. For that reason, both inadequate and
irrational excessive working capital is detrimental to a firm’s existence.
REFERENCES
[1] J.C. Van Horne, J.M Wachowicz, Fundamentals of Financial Management, (Prentice Hall
Inc, 2000), 11th Ed.
[2] A. Eljelly, Liquidity-Profitability Tradeoff: An empirical Investigation in an Emerging
Market, International Journal of Commerce & Management, 2004, Vol. 14 No 2 pp. 48 – 61.
[3] M. Deloof, Does Working Capital Management Affects Profitability of BelgianFirms?,
Journal of Business Finance & Accounting, 2003, Vol. 30 No 3 & 4 pp. 573 - 587
[4] L.A. Soenen, Cash conversion cycle and corporate profitability, Journal of Cash
Management, 1993, Vol. 13 No 4 pp. 53-58.
[5] C. Pass, R. Pike, An overview of working capital management and corporate financing,
Managerial Finance, 1984, Vol. 10, No. 3/4, pp. 1–11.
[6] H.H Shin, L. Soenen, Efficiency of Working Capital Management and Corporate
Profitability, Financial Practice and Education, 1998, Vol. 8, No 2, pp 37-45.
[7] C. Cheatham, Economizing on cash investment in current assets, Managerial Finance,
1989, Vol. 15, No. 6, pp. 20–25.
[8] V.D. Richard, E.J. Laughlin, A Cash Conversion Cycle Approach to Liquidity Analysis,
Financial Management, 1980, Vol. 9 No 1 pp. 32-38.

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