The CFO'S Perspective

8 Critical Steps to Take when Your CFO is Leaving


steps-to-take-when-your-cfo-is-leaving“My finance leader is leaving! Now what do I do?!”

In some sense, it’s tempting to offer the platitude, “a debit is a debit everywhere we go!” (which is a colloquial way to suggest that all accounting is created equal). However, while there’s some truth to that fact that every organization replacing a leader will need to take some core actions, you don’t need to drill down very far to realize that each business has unique elements to consider as well. Those unique facets will add complexity to how you respond to the reality of a financial leader leaving your organization.

The following guide will help your organization evaluate how ready it is for turnover in a finance leadership role, offer suggestions for how you can be better prepared in case your executive finance leader leaves, and provide key insights into what to do next if the loss of your financial leader happens suddenly.

First Steps (The Obvious Stuff!)

Regardless of your organization, there are a few items common that you’ll want to address in short order:

  1. Get their Keys to the Building. Yep – it had to be on the list. And yes, this applies to every employee who leaves your organization, but it’s quite common financial leaders have a broad portfolio of responsibilities that may be further reaching than a key to the front door and their office. Be thoughtful about all the things they have access to and remove that access physically or virtually once they leave.

  2. Notify your Banker of the change. This will lead to the bank addressing signature cards on accounts, as well as remote access to bank accounts, the ability to transfer funds, initiate wires… and on and on. You want to make sure you’ve got your arms around your money, and not necessarily because you suspect any foul play but because you need to ensure continuity of business operations in this area.

  3. Get their Logins and Passwords. I get that in today’s world this is a no-brainer, but folks would be quick to tell me that I left it out if it weren’t here! Going a step further, you’re going to want to change all those passwords as well. I know that’s a gigantic hassle, but it’s an important control point and it protects you, your business, and your departing financial leader. Make it happen!

Key Next Steps

  1. Payroll and AP – This is the first step where you may need some help. The issue here is about ensuring that financial functions can still occur once your financial leader transitions out of the role. It’s rare that a CEO or business owner is up for processing payroll, so you may need to find an external resource to provide payroll help. Ultimately, this is about ensuring confidence with your staff and vendors that they’ve got nothing to worry about… because I’m sure you’ll agree, screwing up payroll gets folks’ attention faster than almost anything else!

Use ASP for trusted outsourced accounting solutions!

  1. Reporting and Compliance – Now we’re getting into steps related to running your business. It’s likely that you’ll need some time to get your finance leader replaced. In the meantime, you need to navigate the day-to-day. Depending on how tactical your finance leader is, you may also need help producing timely financial information, ensuring taxes are filed and paid timely, and third-party compliance is met (e.g. bank reporting, audits, insurance renewals… both healthcare and C&I). This is where an outsourced CFO, Controller, or Director of Finance may be a great deal of help! And the good news is that it’s quite common in small-to-mid-market organizations that what may be a full-time role in an on-going sense can be staffed at something less than full-time to “keep the trains on time” while you search for a permanent solution.

Find out more about interim financial leadership!

  1. Financial Staff Oversight – Focus on ensuring you have available resources in place to assist your tactical staff as they fill the void of your departing executive. This can be a challenging step to get your arms around because it may not be clear to your staff how much help they’ll need to manage your ongoing financial activities. It’s certainly possible you will already have staff in place that can do this work. For example, organizations that are losing a CFO often have a Controller and additional staff, so it’s quite reasonable that you could operate for a period without a CFO and have your Controller attend to day-to-day needs of the organization (particularly if your CFO is in a primarily strategic, forward-looking position).

  2. Records and Data – While the forum and format has changed over time, data and information are the accounting and finance teams’ stock in trade. Understanding where information is stored, how it’s accessed, and who has access to it are all critical elements in ensuring continuity of operations. Whether you’re still employing hard copy records for facets of your business, or processing and storing everything electronically, you’ll need a clear understanding of where historical information is held.

Steps for Moving Forward

  1. How do I find my next Financial Leader? – We tend to want to jump to this early in the process, but I’ve waited to address it until now for a reason. You really do want to make sure the current business environment is stable before jumping to the question of replacement. However, once you have your day-to-day needs addressed there are a few questions you’ll need to answer as you consider bringing in a new leader:
  • What kind of resources do I have to run a search for a financial professional?

The scale of your organization can be a factor here. Do you have an HR group that does most of your hiring or will it fall on you as the CEO? It’s certainly an option to run the process internally, and you may be successful, but it will take time.

Depending on when you last ran a process, the market could be very different for finding talent. Today the talent pool for Controller and lower professional staff positions is very competitive (and has been for a few years!). There simply aren’t enough accounting professionals to meet demand right now and this tight labor market across accounting and finance is expected to continue for years to come. You’ll need to be ready for the process to take some time to find your perfect match.

  • What do you really know about hiring an accountant?

Assess your own financial acumen. Some leaders are very comfortable assessing their skill set and their organization’s needs, but others are not! If you need help, consider a search and recruiting firm that specializes in hiring accounting and finance talent. Yes, you’ll pay a fee, but using a recruiter will significantly reduce the time you spend on the process, which means it will likely significantly reduce the time it takes to source someone as well. What’s that worth to your organization? Perhaps more importantly, you’ll have a team well versed in accounting skills to help evaluate your next leader.

Let the pros hire your next CFO or Controller!

  • What are you hiring for?

Again, depending on how long ago you hired the current leader, the role may have changed considerably. This could be a great opportunity for you to step back and consider what your organizations needs are today and how they may have changed during the tenure of your departing leader. Taking a bit to evaluate what you truly need at this stage can be time well spent!

BONUS:

  1. Planning for it before it happens – This step is for you overachievers who are really accountants at heart! You may want to plan for this event. First and foremost, recognize there is a point of diminishing return if your current leader is not planning to leave. However, nearly everything noted in the first two sections above can be documented and pre-planned so it’s ready for the moment when a transition seems imminent. It’s a great internal control mechanism, and it will most certainly offer you the peace of mind of knowing that you’re prepared should a transition ever come to pass.

Finance leadership turnover happens every day. When your finance leader leaves, our team of experienced consulting CFOs can help! Whether you need technical accounting support, interim reporting and compliance help, lower-level staff oversight, or financial executive recruiting, we’re happy to dive in to keep your organization moving forward. Contact us today to find out more!

About the Author

Kevin-Briscoe-Seattle-team-leaderKevin Briscoe is the Managing Partner of CFO Selections®. He stewards the culture and core values of the organization, including supporting the firm's philanthropic work through the CFOS Foundation.

Throughout his career, Kevin has held ownership and management positions, providing effective leadership in increasing profitable growth. His professional career includes over 30 years in finance, accounting, and operations from Fortune 100, publicly traded corporations to small, closely held settings. Before joining CFO Selections® in 2007, Kevin was part owner of a successful lighting representative business, helping drive their growth from $30 to $70 million. He has also served as a financial member of South End Equities, where he was responsible for the purchase and management of a commercial real estate portfolio. His extensive experience in business strategy, management, and operations assists him in leading the firm.

Kevin earned a Bachelor of Business Administration degree in accounting from Gonzaga University.

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Topics: CFO, CFO Responsibilities, Change Management, Transition


Topics: CFO CFO Responsibilities Change Management Transition