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Computers Change CFO’s Role

When I started out in public accounting in the late 70’s I remember working with green bar paper, IBM 36 computers and having to foot computer reports because you couldn’t trust them to add correctly. As a new hire, you had to prove your proficiency with a 10-key adding machine before you were sent into the field. Now most people don’t know what a 10-key adding machine is!

Accounting Programs Then

Accounting programs were cumbersome at best. For example, they often require manual oversight to make sure they stayed in balance. Furthermore, accounting departments were made up of numerous clerks and accountants entering and reconciling data.

Computers Change CFO’s Role

A lot has changed in 25 years. Today if you print a report out of a computer you expect it to foot! Data entry has been simplified. In addition, you can often capture data outside the accounting department. Accounting software makes it difficult for the subsidiary ledger to be out of balance with the general ledger. (It may not be correct, but, at least it will agree!)

Computer Revolution

So what happened? Welcome to the computer revolution. Because of the increased power of computers and sophistication of accounting software you no longer need the same number of people to maintain accounting systems today. Furthermore, the role of CFOs and controllers of smaller has changed.

In the past a CFO/Controller had to manage a larger staff and be more of a technician to manage the process. Now with automation and outsourcing those functions no longer take up as much of their time.

As the amount of time devoted to accounting tasks decreased the time allotted to other administrative areas has increased. CFO/Controllers today are often responsible for human resources, information technologies, insurance and facilities management. In fact, better describe the CFO/Controller role as the chief administrative officer.

WikiCFO

Today there is a new resource!

WikiCFO was created to be a repository of best practice ideas in the various areas affecting the job of a chief financial officer or controller of middle market companies. CFO/Controllers can go there to find and share tips and tricks in cash flow, profit improvement, health benefits, information technology, banking, payroll, etc. WikiCFO enables CFO/Controllers to drive more value to the bottom line!

Technology and the evolution of computers is just one example of how external forces are changing how we operate. Download the External Analysis to gear up your business for change.

Computers Change CFO's Role

Strategic CFO Lab Member Extra

Access your Strategic Pricing Model Execution Plan in SCFO Lab. The step-by-step plan to set your prices to maximize profits.

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Computers Change CFO's Role

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Fed Lowers Rate Target – Time to Pop the Cork?

Yesterday afternoon, the Federal Open Market Committee did what nobody expected. The Fed lowers rate target. If you paid any attention to published reports, then they acknowledged what was already priced in by the futures markets and lowered its target for the federal funds rate by 50 basis points to 4.75%. While US equity markets reacted favorably to the news, with the Dow Jones Industrial Average, Nasdaq Composite, and S&P 500 indices all up on the news today, it is unclear as to whether this is a sign of good things to come, as the equity market reaction seems to suggest, or merely an attempt to forestall an inevitable slowdown of the US economy. The Fed, for its part, couched its change as a response to the current troubles. They have hit the credit markets, in particular mortgage lending:

“Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally. Today’s action [intends] to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time.”

FOMC Statement September 18, 2007

Fed Lowers Rate Target Conclusion

It certainly seems that the Fed is responding to pressure from the financial community. The financial community wants them to ease its monetary policy in the face of increasing difficulties in the credit markets. In addition, they want them to help those who recently financed their home purchase with an adjustable rate mortgage. Needless to say, this is probably not good news for the US dollar. As a result, the dollar continues to depreciate in value relative to other major currencies. After reading the FOMC statement, we realized there may be a rougher patch ahead.

Fed Lowers Rate Target

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Even Football Teams Play Defense!

What would a football game look like if each team just played offense? Not very practical is it? Unfortunately, that is how most entreprenuerers manage their business.

They often focus on increasing sales, new growth initiatives or physical plant expansion. But what happens when the game turns and the economy slows down? As the fallout from the subprime market works its way through the economy perhaps it is time to rethink your strategy.

Right now the economy could go either way; into a recession or bypass one altogether! Now is the time to shift your posture from an aggressive one to a defensive or , at the least, a neutral one.

So what actions might one take in a defensive or neutral position?

– slow down on hiring new employees (not stop, just slow down)
– pay down debt
– build up cash or liquidity
– complete existing projects
– postpone new projects (and fund out of cash flow)
– increase marketing efforts (often marketing gets cut in a recession. You should do the opposite!)

To paraphrase a quote of Warren Buffet: You never know who is swimming naked until the tide goes out!

Let’s say that you take defensive actions and the economy slows down? Your company would then be in an excellent position to resume its growth afterwards. If we do go into a recession then you are in an excellent position to weather the storm and gain market share from your competitors. Playing a defensive game is an important strategy in growing a company.

Even Football Teams Play Defense

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What an Entrepreneur Wants From a CFO/Controller!

Most accountants are trained to identify problems. In fact, as a professional, they excel at identifying problems and minimizing risks. Two excellent examples of this skill is the audit and tax compliance areas of public accounting.

What an Entrepreneur Wants From a CFO/Controller

Entrepreneurs are looking for something more from their CFO/Controllers. They take risks and solve problems everyday. As a result, they often get tired carrying all of the company’s problems on their shoulders. Thus, they want team members to help them navigate the challenges of the day!

So, the next time you identify a problem in the company, develop a solution at the same time! Over time, the entrepreneur will rely on you more and more to shoulder the responsibility of managing the company.

Since we don’t have all of the answers, use outside resources for problem solving. WikiCFO is an excellent repository for CFO/Controllers of entrepreneurial companies. Use this tool to bring the solution not just the problem!

More than anything, what an entrepreneur wants from a CFO/Controller is for them to be their trusted advisor or wingman. Download our free How to be a Wingman guide by clicking the link below. Take your career to the next level and step up into the trusted advisor role.

What an Entrepreneur Wants From a CFO

Strategic CFO Lab Member Extra

Access your Projections Execution Plan in SCFO Lab. The step-by-step plan to get ahead of your cash flow.

Click here to access your Execution Plan. Not a Lab Member?

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What an Entrepreneur Wants From a CFO/controller

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Is the Tide Beginning to Fall?

Today I attended a luncheon for the Turnaround Management Association of which I have been a member for approximately 10 years. During this time I have seen good economies and bad. For the past 3 years the economy has been so good that the TMA meetings looked like a Maytag repairmen convention. Today was different! The question I want to ask is, “Is the Tide Beginning to Fall?”

Is the Tide Beginning to Fall?

The room was packed with people I had not seen in 6 months. What was more thought provoking was the speaker. Not what he had to say but his recent career change.

Trained as a bankruptcy attorney the speaker had spent the last 6 years as an investment banker. Sometime during the year his firm was sold to Merrill Lynch. He recently left Merrill Lynch to join a major law firm. Doing what? Bankruptcy law!

So when the investment bankers start becoming bankruptcy attorneys maybe we should be watching the economy more closely!

Check out the warning signs of a company in trouble.

Is the Tide Beginning to Fall?

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Chart of Accounts

An item often taken for granted and seldom reviewed is a company’s chart of accounts. Often a hodgepodge of random accounts created for one-off events, it can lead to confusion and erroneous reporting. It is a good idea to take a look at the chart of accounts model periodically and clean it up. As always, simplicity is desirable, though not always attainable.

Chart of Accounts Model

You might consider this model to use as a guideline for cleaning up or establishing your firm’s chart of accounts.

If you want to increase the value of your organization, then click here to download the Know Your Economics Worksheet.

chart of accounts model

Strategic CFO Lab Member Extra

Access your Strategic Pricing Model Execution Plan in SCFO Lab. The step-by-step plan to set your prices to maximize profits.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

chart of accounts model

See also:

Standard Chart of Accounts
Problems in Chart of Accounts Design
Chart of Accounts Example for SG&A Expenses
Chart of Accounts (COA)

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Creating a Flash Report

Creating a flash report is an essential part of being a financial leader. Managers and ownership often ask CFOs and controllers, “how are we doing?” While this seems like a simple enough question, there lie many devils in the details. The key is to be able to communicate above the details while being neck-deep in them. A way to accomplish this is by creating a simple one or two page flash report to easily communicate the myriad details of your company so that an informed user can see the true picture of the company’s performance and its position in the marketplace.


Start your Flash Report today with our Flash Report Tool – available for only $9! Learn more about how you can access it here.


Creating a Flash Report

Liquidity, productivity, and profitability are indeed what a CFO should think about on a daily basis.

Liquidity covers the basic responsibility of a company’s finance department: do we have enough cash to be open tomorrow?

Productivity ties the performance of a firm’s operations to its financial performance.

Profitability provides an indication of how much money the company has made.

To learn more financial leadership skills, download the free 7 Habits of Highly Effective CFOs. Find out how you can become a more valuable financial leader.

Creating a Flash Report

Strategic CFO Lab Member Extra

Access your Flash Report Execution Plan in SCFO Lab. The step-by-step plan to manage your company before you prepare your financial statements.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

Creating a Flash Report

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