April 2001

Industry Profile

Q: What are your primary functions and responsibilities at Mediconsult.com?

A: My primary responsibilities are three-fold. First, I am responsible for the controller’s department, which, among other things, handles closing the books, collecting the receivables, and paying the bills. Second, I have responsibility for the monthly reporting and analyses of our businesses. And finally, I have the responsibility to develop and refine the annual operating plan for our business units and for all of the corporate departments, monitoring performance against those plans throughout the course of the year. While all three are important, that third responsibility is definitely the most challenging and probably the most critical in terms of enabling the company to be successful. Developing the plans, monitoring the progress, and then alerting senior management to potential issues is where the finance department adds plenty of value to the overall company mission.

Q: How long have you worked there?

A: I have only been here for seven months, but it has been the experience of a lifetime!

Q: Why is that?

A: During the past seven months, I have been involved in activities I had never seen before in the past 20-plus years of my career. Having spent almost 20 years at large companies like General Foods (Philip Morris) and Pepsi-Cola, I never needed to get involved in watching our cash balance on a daily basis. I never needed to call vendors and ask them to give us a break. That just never happens at the larger, well financed, well organized companies. But at Mediconsult I found a completely different situation. I found a very challenging and, in hindsight, very rewarding situation.

Q: Can you elaborate?

A: When I joined Mediconsult, we had almost 300 employees scattered in five offices between Toronto and Philadelphia. The summer was almost over, and yet we had only issued internal monthly P&L’s (profit & loss statements) three times to date. Obviously then, no one had yet had a chance to put together a reforecast of our “balance of year” performance. And that was necessary in order to begin planning for the following year.

Q: What did you do?

A: Well, we had to immediately get the three business unit heads and the five or so corporate department heads to understand what we needed, why we needed it, and the urgency of it. After I presented this to the senior management team and obtained their buy-in, we went to work. Each department manager was asked to provide great detail (by product, client, person, spending category, and month) of what he or she saw taking place over the upcoming four months. The finance department needed to understand all of the data submitted, and any assumptions behind the data, to be sure we were not double counting at all and to be sure nothing slipped through the cracks.

Q: Can you give an example?

A: At the time of this reforecast, we were closing two of our five offices—we soon had to close a third one also—and we were downsizing to less than 150 employees. Therefore, some of our employees were expected to be performing work for a couple of our business units at the same time. But all of the details had not been 100 percent finalized yet. So, I needed to be sure that Jason, as an example, was not being included in both our website business unit’s assumptions and also our medical education business unit’s assumptions. And, conversely, I had to be certain that 100 percent of Jason was covered somewhere. Another example would be the lease closeouts or severed employees. While the business unit heads would logically think that they have no responsibility for the closed down leases or the severance liabilities, there were some ongoing financial commitments that needed to be considered.

Q: Where did this lead you?

A: After completing and then tightening up the reforecast, we went to work right away on putting together the detailed plan or budget for the following year. And this brought us good news and bad news. The plan made it clear that, if all of the assumptions proved out, we were going to begin generating positive cash flow around the middle of 2001. Remember, this is an Internet company. That was very big!

Q: What was the bad news?

A: Well, one of the tools which should have been in place when I joined, but wasn’t, was a cash requirements analysis and projection. We were at a point where a weekly cash projection should have been a priority. So, when we finally started projecting cash flows and comparing them to our P&L projections, we learned that we did not have enough cash to get us to daybreak. We could potentially go under before we could potentially save ourselves. We had to take drastic steps quickly.

Q: This environment sounds very different from your earlier Pepsi days. Which do you prefer?

A: There is no doubt that I enjoyed my Pepsi days and learned a lot while there. I was heavily involved in international acquisitions, system implementations, and very challenging technical accounting aspects of unusual transactions. And I certainly appreciated the support structure that existed there and made the job a bit easier. But I love this entrepreneurial atmosphere where everything you do—all day long—is so important to the future of the company.

Q: Such as?

A: Such as putting in place a purchase order process that requires that all expenditures get preapproved by myself, my boss, or the president. Such as getting on the phone and asking vendors to consider offering a discount for services already rendered. Or, calling clients and encouraging them to pay a little bit earlier than they had planned. I probably spent a full month (during my first two or three months on the job) involved in negotiations with our largest client—we were debating the amount they owed us and also discussing the level of their ongoing commitment with us. Talk about walking a tightrope!

Q: How did things end up?

A: We could not obtain financing, unfortunately, to carry us from end of 2000 to middle of 2001. But we were able to find a well financed, similarly focused Internet company with whom we plan to merge. The two companies complement each other well. We have revenues but little cash, whereas they have relatively little revenues and adequate funding. So, the great news is that the company will survive, our business units will be given an opportunity to develop their products and grow their businesses, and shareholders will now have another chance to see their investments grow.

Q: With respect to the entire profession, what is the advantage of working in your industry?

A: I think the advantage to working at an Internet (or similar start-up) company is the feeling you get every night when you drive home. You actually feel like you accomplished something—something meaningful—each and every day. That’s because each and every day is so important to the success of these start-ups. Conversely, what is the disadvantage? The risk is that, perhaps in many cases, all the work in the world is not going to save some companies. The risk is that some day you might have to bite the bullet and walk away.

Q: Overall, have you enjoyed working for an industry?

A: While I appreciate the purpose of public accountants, value their contribution, and realize that their jobs are not easy, I would never trade the private experience. There are so many diverse, challenging, and rewarding experiences to be obtained outside of public accounting. Without hesitation, I would recommend that all accounting graduates plan to follow the public accounting route for as long as they desire—and then experience the private side.