The CFO'S Perspective

If the past couple of pandemic-influenced years has taught us anything, it's that what we thought we had control over is as laughable as trying to predict what's next! I've had the opportunity to navigate some interesting economic periods in my career as a financial executive. The "Great Recession" was once a period I hoped never to have to revisit, given the far-reaching impact it had and the catastrophic financial toll it took on the life savings of so many. The uncertainty that period exhibited was challenging to say the least.

However, if I learned anything from that experience, it is that we would invariably be faced with something equally as challenging, and we would likely be as unprepared for it as many were for the Recession.

Most business owners I speak to look at finance and accounting personnel as an overhead cost. While they are most certainly a cost, the benefits that a CFO brings can alter that “cost” narrative into one of “investment.” Today I will help you define a CFO's role as one who is viewing your organization in a forward-looking manner and how they can be a good investment.

This is an uncertain time for business owners.

Difficult questions like deciding whether to pause operations, continue a lease, apply for a loan, or lay off employees, are on the minds of business owners across the country. Many are confused about their tax obligations in the face of new legislation. Most are worried about maintaining proper security and managing communications effectively with a larger percentage of their employees working remotely. Some are concerned about how they will repair the brand damage that is occurring as a result of not being able to fulfill their brand promise to their customers.

Frequently shifting state and local regulations have left the waters murky for many businesses, especially in highly seasonal industries. Some business owners may be wrestling with the question of whether their businesses will be able to reopen at all after the shelter in place orders and social distancing recommendations have been lifted.

Being prepared for an economic downturn is fundamentally good advice. The economy is cyclical and eventually there will be a downturn of some sort. Preparation ultimately boils down to two basic business disciplines.

Trust is like the air we breathe — when it’s present, nobody really notices. When it’s absent, everyone notices.”  — Warren Buffett

Integrity in business is an essential ingredient for sustainable, long-term, business growth and success. It can be hard to define and difficult to measure, but you know it when you see it, and it’s clear when it’s not there.

Becoming a Chief Financial Officer (CFO) is often the ultimate executive goal for those who have made finance their career. The position offers challenges, variety, and opportunities for growth. A good income is frosting on the cake.

Don't ever let your business get ahead of the financial side of your business. Accounting, accounting, accounting. Know your numbers.” - Tilman J. Fertitta

When it comes to financial statements, one size definitely doesn't fit all. In fact, as your business grows and evolves, your financial statements should too. Their primary purpose shouldn't change, which is to provide business owners with actionable information. However, as a business matures, and potentially becomes more complex, with an increasing number of opportunities to pursue (or not) the statements need to be able to keep up.

There isn't a hard and fast rule about what you should look at, and at what stage those needs will vary. What should be true, however, is the owner's commitment and rigor around the process of what is reviewed and when. For businesses that lack the full-time need of a CFO, a part-time or project CFO will provide the expertise necessary to produce financial statements that are appropriate and relevant to generate information (not just data) that helps solve real business problems.

I happen to lead an organization made up of those financial executives and can offer that I face the same challenges you do when evaluating what I need to run the firm. Primarily, how do I make sure I have what I need to make good business decisions?

Running out of cash is not only a sign of poor planning, but it's also one of the biggest reasons that businesses fail. Forecasting your company's cash flow can be tricky because of the many variables that determine how much cash you will need for operations versus the amount available.