The CFO'S Perspective

During the course of normal business, it is sometimes necessary to cut ties with established business partners in favor of other organizations that are better able to meet your company’s needs. Any number of reasons might lead to this transition, including, but not limited to:

• Growth of your firm that exceeds what your business partner can offer.
• Growth of the business partner that takes their service offerings in a different direction.
• Poor service or reliability.
• Increasing costs.
• A change in business circumstances that no longer makes you a good match.

A change in service providers can apply to bankers, CPAs, outsourced payroll providers, HR, outsourced accounting, IT, accounting platforms, and any number of other business services. The challenge when making a switch is managing the transition so that it goes smoothly for all parties involved to minimize business disruption.

In this article I’ll share some lessons learned from a recent outsourced payroll provider transition that has caused considerable pain for my client, their employees, and owners. My hope is that the real-world example I provide will serve as a cautionary tale, so you understand why it’s so important to be strategic when changing business service providers.

The collapse of Silicon Valley Bank (SVB) was a sudden jolt to the banking system. SVB was a leading financial institution founded in 1983 that catered to the tech industry. This unexpected development has had far-reaching consequences, particularly regarding risk evaluation for Chief Financial Officers (CFOs) tasked with assessing and mitigating potential risks within their organizations.

I am pleased to note that First Citizens Bank (Nasdaq: FCNCA) announced on March 27, 2023, that it entered into an agreement with the Federal Deposit Insurance Corporation (FDIC) to purchase all of the assets and liabilities of Silicon Valley Bridge Bank, N.A. The transaction is structured as a whole bank purchase and assumption agreement with loss share coverage. Silicon Valley Bank is now a division of First Citizens Bank.

While the acquisition of SVB by First Citizens is a successful one, there are lessons to be learned from the original event. In this article, I will explore the fallout, identify the emerging risks, and discuss what I think it means for CFOs as they navigate an increasingly complex risk landscape.

A prospective consultant told me that he loved what he did during a recent interview. He had been working up the ranks for a long time, continually added skills and experience, and was in a place of high trust and value to his organization. He shared with me that he loved his profession had excellent skills but was not interested in working 70 hours a week at this point in his life and career. He asked, "Were there other options?"

Government-mandated closures. Supply chain disruptions. Customer nervousness. Public-safety protocols. Employee fear. PPP forgiveness. Union pressures. A national coin shortage. Enough already!

It’s all most businesses can do to survive these days, rather than thrive. In the midst of all of these challenges, there are relationships critical to our clients' businesses' short-term and long-term health.

One that keeps coming up, but isn’t addressed very often, is the relationship between business owners and their bankers. But how do you collaborate with your bankers during times of crisis and stress? How do you make this critical relationship work to your benefit over the long term?

CEOs and business owners often experience a disconnect between themselves and their finance departments. CFOs, controllers, and accountants often experience the same disconnect with the CEOs and business owners they support. Gaining understanding and building ongoing rapport are keys to the success of the business.

What senior manager hasn't looked into the future to plan the growth of their business? The forces that drive the market acceptance and commercial success of your organization are going to vary depending on the nature of your products and services.

Whether you're in a traditional industry or a new one, business moves faster than ever today. Every millisecond a new app is download from Apple's online store. Walgreens now offers a walk-in one-minute flu shot, and customers can drop off their Fed Ex packages in the process. Any organization that wants to ensure its future must first figure out how to measure its past performance and then leverage that information to inform current decisions that impact their ongoing success.