The CFO'S Perspective

Attitudes around FP&A (financial planning and analysis) are kind of a mixed bag – everyone agrees it is important, but many people do not know what it really entails. As a result, businesspeople form their own opinions about who should handle it and what owning it should look like.

Some business leaders downplay the complexity of FP&A and mistakenly task their accounting and finance teams with this crucial function. This can be a mismatch because many accountants are not equipped to handle this level of financial responsibility and organizational oversight. Alternatively, some business leaders put FP&A on a pedestal and assume its critical role in the success of an organization necessitates a dedicated role.

Have you ever tried to find something when you could not adequately describe what you were looking for?

Imagine going to buy a pair of pants and when the salesperson asks what you are looking for all you tell them is “gray pants.” How long do you think it will take to find exactly what you are looking for? And how likely is it that you will end up getting tired and frustrated settling for something that is not really what you wanted? In this example, the best outcome is that you find the perfect pair of pants after an arduous search, and the worst outcome is that you end up with pants that fit poorly or are too formal or casual for your needs.

Now apply that same scenario to hiring and think about how difficult it is to find the right candidate for the role when you do not have a clear vision of what you are looking for and what your expectations are for the role. The difficulty is ratcheted up and the likelihood of a negative outcome is much greater.

When the role you are hiring for is a senior leadership position a bad hire can derail the company’s strategic plans. A CFO is in an especially critical role to support growth initiatives, making a hire into this role even more critical to the overall success of the organization. As a result, a job description for a CFO should be customized to fit the specific needs of the business and incorporate the nuances of the role.

A CFO’s role is one of many hats. They are expected to be a steward by protecting company assets, have operational savvy, act as a strategist, and be a catalyst for positive change. There are many projects you would expect a CFO to facilitate:

• Facilitating M&A transactions
• Raising capital
• Overseeing Controller and internal auditing functions
• Helping accounting firms prepare for an audit
• Mentoring internal leadership
• Managing the organization’s overall risk and liquidity
• Driving growth initiatives 

These are all areas where a CFO adds value to a business. But one of the biggest priorities of this role should be strategic planning. CEOs and boards increasingly want a CFO that not only gets the numbers right, but that also partners with them in strategic planning.

Business owners in the middle market are all too familiar with the task of trying to optimize cost structures – getting the most efficiency and “bang for the buck” out of facilities, equipment, customer relationships, and many other elements of a successful enterprise. People have always been vital and important to businesses, but over the last several years, we have noticed a shift in attention toward people in a different way.

Searching for ways to optimize human capital, while fighting the inefficiencies of talent markets, is an ever-present challenge for businesses in the middle market. The human capital corollary to the engineer’s triangle (fast, cheap, reliable – pick two) seems to be availability, relevant experience, and compensation expectation.

An example could be a stable, modestly growing manufacturing business in a small town outside of a major metropolitan area in the Pacific Northwest. It has just outgrown the capability set of its hardworking bookkeeper and needs some expertise in setting up more robust financial oversight and reporting capabilities, but attracting capable, senior-level finance talent to its town with a handsome compensation package seems like overkill.

Contrary to conventional wisdom, the Chief Financial Officer’s (CFO) principal role is not as a “scorekeeper” of past results. Rather, the CFO is the keeper and interpreter of company data, tasked with providing a disciplined quantitative approach to management decisions.

When a business changes ownership, the CFOs of both businesses have a particular set of duties and responsibilities. This article discusses the role of the CFO in the selling entity.

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.

The current economic climate, combined with the fact that September is National Preparedness Month, has many of us thinking about how we can prepare for possible threats and business disruptions. This kind of strategic planning allows a business to approach a worst-case scenario with a growth mindset instead of fear – increasing the likelihood that your business will come out of a crisis stronger for having gone through it.

During a worst-case scenario, leadership must decide whether the organization will make the necessary adjustments needed to continue with business as usual or change how the company will operate. And while the conversation will undoubtedly include operational and capacity considerations, it is primarily a discussion about financial capabilities.