In this new blog series, Hokodo’s VP of Finance Aman Mehra interviews the Finance Leaders from some of Europe’s leading B2B commerce businesses to learn about their experiences of using technology to improve processes, drive growth and ensure their team keeps up with the pace of digital transformation. In this instalment, Aman sits down with Jorge Nasta Segón, Head of Finance at SolarMente.
Aman: Hi, Jorge. I’m really excited to be speaking with you today. Could you kick things off with a little bit of background about yourself?
Jorge: Thank you for the invitation! I am Jorge, Head of Finance of Solarmente. I have eight years of experience, particularly in the solar industry, specialised in project finance, analytics and strategic decision making, particularly for high-growth business or startups. My main focus has always been in securing funding, optimising operational efficiencies and trying to lead financial transformation.
Funding is one of the key things that we probably all think about in our finance roles along with controls and growth. How has that experience been for you at SolarMente? One of the challenges that we have is that our businesses want to grow but, as a finance person, I need to manage the risk and put controls in place. Do you have similar challenges?
Yeah, well there are a lot of challenges, right? I think the first one is figuring out which buyers you can give some payment terms to in a way that fits your business model. And it's not always as simple as a binary decision, right? It's not just a yes or no. There's a lot of grey area. For instance, if you want to give a loan to a startup, you cannot only look for their bid, right? Because there are some scenarios in which they may be losing money. That doesn't represent the reality of their business or their growth trajectory that they could have. So, you have to create some underwriting processes and some analysis to be able to give these same chances to each and every company.
"You don't have to sell to everyone, right? That is an important message to pass across the entire organisation to all the sales representatives and the commercial team because not every deal is a good deal. There are some times where actually approving something or lending some money actually represents a loss to the company, rather than a positive income."
And secondly, you don't have to sell to everyone, right? That is an important message to pass across the entire organisation to all the sales representatives and the commercial team because not every deal is a good deal. There are some times where actually approving something or lending some money actually represents a loss to the company, rather than a positive income. And that's why this process and this underwriting is so important to have.
How did the team at SolarMente mature from working in Excel to more sophisticated tools and AI-powered decision-making?
Well, it has been an interesting journey. It has taken 12-15 months across all the processes from everything being in Excel and doing everything manually to where we are at now. Fortunately enough, as it's an innovation project, we've been able to also gather either grants or loan facilities that here in Europe are, I won't say quite common, but there are a lot of opportunities for innovation and technology investments and projects.
We were fortunate enough to get some funding from a Spanish entity that implements innovation and gives credit or the facility for companies to innovate. So, because of that, we were able to focus entirely on how to make tech work for us and not us work for the technology.
Revenue is an accounting metric, but cash flow is what I typically think about as a Finance Leader. Once the decision is made to offer credit to a SolarMente, what happens next in the process?
That’s an interesting question because obviously our investment is quite heavy at the very beginning, right? Because we need to buy all the materials for our installation.
"Fortunately enough, we have created great relationships with our suppliers that give us credit facilities as well. We have a 30-day, sometimes a 60-day, window to make the payments, which allows us to do the same with our customers."
So, before our technical visit that we carry out to see the viability of the project, we give 30 days for them to make an initial payment and then we do another 30 days, sometimes 60 days, for the following part. This gives us some balance between the cash inflows and the cash outflows.
Because of that and because of the capital being a heavy investment at the very beginning done by us, we need to be extremely careful on actually getting the money, right? Because when you get the contract signed, it's not real until you get the actual money in the bank.
On the collections piece then, do you have teams in place to handle that when customers do not pay on time? How is that handled by the SolarMente team?
We have a team specialised and focused only on delinquent customers: they follow up with them, creating payment schedules for them to be able to complete their payments. Because sometimes people want to pay, but because of the cash flow and productivity issue that we were discussing on Hokodo’s webinar, it's a unique problem for each and every business. Even if you want to pay, you sometimes don't have the cash flow to do so. Therefore it’s important to try to align with the needs of the other business. Because at the end of the day, we want to collect the money. Getting it late is way better than losing the entirety of it. So, it's always a negotiation. The ideal scenario is always to collect 100% of the payment on time, obviously, but you have to take into account the needs and what people can do at the moment.
How do you deal with the trade-off between “I'm going to hire more people to do the collections” versus “I’m going to build a digital tool or outsource”? What's your mental framework for that?
That's an excellent question because there's always that discussion, right? What can I automate and when is the human touch needed? And for me, human relationships are key. Even though we are representing business, we're still humans, right? And human relationships are super important for developing a strong relationship between businesses. So for me, this is something that cannot be done by tech – or, more accurately, even though it can help you, tech cannot substitute you. You need people there that speak your same language and understand you and empathise with you.
"Even though we are representing business, we're still humans, right? And human relationships are super important for developing a strong relationship between businesses."
And obviously that's where we think a team is needed. This team does not only focus on collections but more generally on customer experience and support. They have their different tasks, but they are focused on helping the customer experience to be the best one possible. And one part of this is that we need buyers to pay so that we can continue to provide the service. And that is key. So I think what we need to do is provide the right tools and the right technology for people to connect with people and to be able to have these relationships for the business to provide and thrive.
If we think about the finance field, not everyone is as fluent in technology. But over time people are getting better, they're learning more about data and analytics and that's a journey for us as professionals. How did you manage that relationship between, for example, the finance team and the tech team? Are there any tips that you have for people that are going through digital transformation?
To be honest, I've been really lucky because I've seen finance people to be a little bit more verbal or understand more technology, but sometimes the software team doesn't understand that much of finance.
That relationship can be tough but in my professional experience, I've always had the opportunity to work with software individuals that have this business acumen and this business understanding that helps them understand what is important and why it's important. So they can see, “If I do x, y and z, I can save €100 per customer for the company. Now I have a tangible thing to do and I can understand what impact I am having on the business.”
In software, it's really nice because everything is related to the time you are saving for people or the money you are saving for the company. And they are sometimes connected, but it's always nice for a software engineer to understand, “Okay, this is what I'm doing. This is why I'm building this and how I'm helping the company provide and grow.”
To be honest, I've been lucky enough to work with people that already knew this. But if not, I think our job as finance people is to facilitate the educational development towards “This is why”, right? It's not just an instruction because I said so. It's an instruction because it will have this impact afterwards.
I agree with you, communication is critical and being able to understand other people's language, whether that be a tech team or whether that be sales or marketing, is always helpful as a business partner. So, one last question. If you look forward to the next two years – I'm not going to say five because in startups things change very quickly – but in the next two years, how do you see technology impacting your business and specifically your team and your role?
Even two years is difficult to predict, because in just one year I've seen so many changes. But I think our job on a daily basis will become more on the analysis and strategic decision-making. So, not getting into the numbers and mechanising them, all the balance sheet movements – all of that will be more automated, so we will have more time for analysing and understanding it. We’ll be able to say “The balance sheet shows me this, what am I doing with it?“ That is where the finance team will evolve to.
In terms of SolareMente, there's still a lot of technology to be created and we're working on it, but with AI, you can do a lot of things. And obviously, also with blockchain, it's not as trendy as it was a couple of years ago, but it has a lot of impact. We have a lot of projects going on, on both sides, that will continue to develop.
And I think we will create the future of energy because we won't depend on a centralised organisation, but you can actually produce your own energy, use it, but also sell it. That is something that you have always depended on some centralised organisation to do, but I would say in the future, you will be able to do that. Market prices will also be fairer because there's a lot of arbitrage at the moment in which independent organisations decide what's the price today and you cannot negotiate that, that's the price. But when you are able to set some prices the market will regulate itself and the price of energy will reduce across the board.
I think that's an interesting approach because you have to incentivise businesses to invest in efficient, sustainable energy. And the only way to do that is to either generate money or save money. Otherwise, there's no incentive as a company to do so. You need to understand that there's a return on investment. And that's what technology will be helping us towards and that through the help of AI and blockchain we will be able to provide.
You’ve given me loads to think about today, Jorge. Thanks so much for taking the time and for your detailed insights!
If you would like to learn more about the ways in which Finance Leaders are overcoming the challenges of digital transformation in B2B, download Hokodo’s investigative report below.
