Tag Archives | cfo

The CFO Guide to Your CEO

Wouldn’t it be great if we had a guide for everything we do? A guide for marriage? A parenting guide? A guide to dealing with difficult times?  Or maybe a CFO guide to understanding your CEO?

cfo guideTypically, Chief Executive Officers (CEOs) come from an operational or sales background. Naturally, Chief Financial Officers (CFO) do not always see eye to eye with their CEO. But over the past 25 years, The Strategic CFO has been working with CFOs to not elevate their status within companies, but also to make them more useful to the CEO… And therefore, more valuable to the entire company.

What The CEO Wants to Know

Just like every person in a company looks at their own focus areas (finance, marketing, operations, etc.), the CEO needs to know specific things and can go without knowing other things. To improve the way the CEO sees and respects the CFO’s role and guidance, it is critical to know what they want, why they want it, and how to communicate with them effectively.

CFO Guide to Your CEO

The first step in our CFO guide is to understand how your CEO thinks.

1. Future, Not Past

The typical CEO is future oriented. What’s the next move? What are the company’s goals for this next quarter? The CEO acts as the visionary for the company – a pilot, a ship captain, a general. They look forward at the horizon, protecting the people behind them as they march forward. Therefore, instead of focusing on past records or past performance, make the future path clearer for the CEO. The future is more important than the past in the CEO’s role. But don’t neglect past performance’s value to the CEO. Past performance can help predict the future. Although the past is the past and nothing can be changed in the past, you can change the future and that’s what your CEO wants to know.

As the financial leader of your company, you may struggle with focusing on the future, as you have been trained for so long to justify and rationalize the past. One thing you should impress in your mind is that your CEO and other executives are laser-focused on the future. Use what you have recorded to display your vision of what lays ahead.

2. Know Your Numbers

One of the top things taught in business school is to know your numbers. What does “know your numbers” mean? Think about your unit economics. Go back to the basics. If your company sells 10,000 widgets at $1 in a month but your company is wanting to increase costs to $11,000, you should be able to immediately indicate that decision would not be wise as you will then be unprofitable.

Everyone in your company, especially the financial leader, needs to know the numbers of the company. Have the facts and data to support every claim, prediction, or forecast. If the CEO is relying on your financial expertise, you better be able to lead them forward financially. Know your numbers and how they impact your company in the short-term or long-term.

cfo guide3. Cash, Cash, Cash

Cash is king. To operate the company successfully, cash is absolutely critical. Whether you are paying down debt, keeping up with growth, or allowing for flexibility, you as the financial leader need to know exactly where you are with cash always.

What happens when you need more cash or when you want to improve cash flow in your company? It’s difficult to know where to start. But you don’t have to guess anymore… Download the 25 Ways to Improve Cash Flow to start increasing the amount of cash in your business today!

4. Impact, Not Progress

You are painting a picture… The CEO doesn’t need to know the type of paint, the kind of paint brush, or the size of the canvas. But they do need to know the big picture and how it’s going to look after it’s finished. They don’t have enough time in the day to know all the details about progress; however, they do want the big picture updates on the impact of what is happening.

Remember, progress is still important. The managerial level needs to know the progress of projects. When you meet your CEO, have the project’s progress in the back of your mind in the case the CEO wants to know anything more specific.

Try to summarize all outcomes and updates on milestones concisely. Their high-level thinking does not need to be clouded by minute details and the nitty gritty of day-to-day operations. Sometimes details are necessary for the CEO to know when deciding the future of the company; so in that case, don’t hesitate to expand on the details.

What does impact mean?

Impact is defined as the “measure of the tangible and intangible effects (consequences) of one thing’s or entity’s action or influence upon another” (Business Dictionary). Think about it this way… Whether you are the CEO, COO, CFO, Controller, manager, community leader, a parent etc., you are responsible for people. Your worry should not be focused on the past but on how your decisions will impact people in the future. The CEO is responsible for everyone underneath him or her so a decision that will change the future for their employees, partners, stockholders, family, etc. is a big deal. Adjust your mindset from past performance to future impact.

5. Understand the Big Picture

Unfortunately, your CEO does not have all day to listen to you. The quicker you understand why your CEO acts the way they do and what they need to run the company successfully, the better you will be able to perform in your role as a financial leader. Align your goals/decisions/recommendations with the visions and priorities of the company.

For example, cash is tight but you want to get a software program that will report more timely and accurately the things you need to do your job. If you approached the conversation by trying to convince the decision maker (i.e. CEO) by sharing all the features, you will most likely get a “no”. But if you understand the big picture, communicate how this investment will serve you better long term versus the current software. Hint: Show some numbers of how this solution will improve cash flow, profitability, productivity, time, and money.

Conclusion

You should be your CEO’s partner, wingman, guide, confidant. Know what your CEO wants, thinks, and needs. To get started on improving your relationship with your CEO and to improve cash flow, download the 25 Ways To Improve Cash Flow whitepaper for free. Find other ways to improve your cash flow within 24 hours.

cfo guide

Strategic CFO Lab Member Extra

Access your Cash Flow Tuneup Execution Plan in SCFO Lab. This tool enables you to quantify the cash unlocked in your company.

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

Click here to learn more about SCFO Labs

cfo guide

3

The Role of the CFO (Chief Financial Officer)

See Also:
How Does a CFO Bring Value to a Company?

The Role of the CFO (Chief Financial Officer)

The role of the CFO (Chief Financial Officer) has been changing over the past twenty years. Originally, the role of the CFO revolved around producing and analyzing the financial statements. However, because of the computerization of the accounting function the need for accounting skills in performing the roles and responsibilities of a CFO diminished. Though the job description of a CFO (Chief Financial Officer) remains broad the tasks comprising that function fall into four distinct roles.

The Strategist CFO

The first role of the CFO is to be a strategist to the CEO. The traditional definition of success for a chief financial officer was reporting the numbers, managing the financial function, and being reactive to events as they unfold. But in today’s fast paced business environment, producing financial reports and information is no longer enough.

CFO’s in the twenty-first century must be able to “peak around corners”. Therefore, they must be able to apply critical thinking skills, along with financial acumen, to the long term goals of the organization.

The CFO as a Leader

The second role of the CFO hand in hand with the first one. That is one of a leader implementing the strategies of the company. As a result, it is no longer sufficient for a CFO to sit back and analyze the effort of others. The chief financial officer (CFO) of today must take ownership of the financial results of both the organization and senior management team.

The chief financial officer of today must be responsible for providing leadership to other senior management team members, including the CEO. The CFO’s role can sometimes force them to make the tough calls that others in the organization don’t or can’t make. Occasionally, this can mean the difference between success and failure.

The CFO as a Team Leader

The third role of the CFO is that of a team leader to other employees – both inside and outside of the financial function. Not only will a coach call plays for a team, but they are also responsible for getting the highest results out of the talent on their team.

An aspiring and successful coach will produce superior results by finding the strengths of their team members and obtaining a higher level of performance than the individuals might achieve on their own. The role of the CFO (Chief Financial Officer) is to bring together a diverse group of talented individuals to achieve superior financial performance.

The CFO with Third Parties

Last, but not least, the role of the CFO is that of a diplomat to third parties. People outside of the company look to senior management team for inspiration and confidence in the company’s ability to perform. In almost every case the financial viability of the company is vouched for by the CFO.

The CFO’s role becomes that of the “face” of the company’s sustainability to customers, vendors and bankers. Often these third parties look to the CFO for the unvarnished truth regarding the financial viability of the company to deliver on it’s brand promise.

Today’s Role of the CFO

In today’s fast paced environment the role of the CFO is extremely fluid. One day the CFO might be developing a compensation plan for employees. Then the next day taking their bankers on a tour of the facilities. Consequently, to be a successful CFO in the future you must be a more multi-functional executive with financial skills.

To learn other ways to be a add value to your company, download the free 7 Habits of Highly Effective CFOs to find out how you can become a more valuable financial leader.

The role of the CFO

Strategic CFO Lab Member Extra

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

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

Click here to learn more about SCFO Labs

The role of the CFO

4

Quiz: Are You CFO Material?

Are you CFO material? Take the quiz above to find out.

To learn more financial leadership skills, download the free 7 Habits of Highly Effective CFOs.

are you cfo material

Strategic CFO Lab Member Extra

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

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

Click here to learn more about SCFO Labs

are you cfo material

0

CFOs – The Architect of Business Value

business valueA while back, I read a study published by Accenture about how the role of the CFO is moving towards driving business growth and managing complexity.  Encouragingly, of the 600+ senior finance executives and 30 CFOs and other senior finance professionals surveyed, 75% say that the CFO’s role in supporting strategic decision making is on the rise. 70% think that the CFO’s influence over executing business transformation initiatives has grown.

CFOs – The Architect of Business Value

Here is a summary of the key findings of the study:

Finance functions have made significant progress over the past three years in managing some of the external factors impacting performance, including the challenge of permanent volatility. Overall, senior finance executives are more satisfied with the performance of their finance function than they were in 2011 across every dimension surveyed.

Complexity, in its various forms, is the biggest challenge finance organizations face today. But it is also an opportunity. Companies can help manage business complexities by standardizing and optimizing processes to streamline and simplify the organization.

Cost control is no longer the primary emphasis in most organizations today. Instead, CFOs increasingly focus on investment in growth. In doing so, many are also finding an opportunity to drive broader organizational business transformation, building value for the enterprise.

Digital technology is having a deep impact on the finance function’s performance. It provides a clear opportunity for CFOs to accept and exploit the digital revolution. Especially, given their unique position at the intersection of finance, technology and strategy.

Finance leaders at high-performance businesses are more likely to have seen their influence grow in key strategic activities. They report high levels of satisfaction with the performance of their finance function. They also closely involve themselves in assessing technology investments.

Cost Control Is Not A Primary Emphasis

I found a couple of the study findings particularly interesting.  Firstly, the study found that cost control is no longer the primary emphasis of today’s CFO.  Rather, investment in growth and building organizational value have become the focus.

The finance function is now increasingly being assessed in terms of its effectiveness (its ability to deliver what the business needs) rather than a narrower focus on its efficiency (its cost in serving the business).

Digital Technology

The second noteworthy finding is that digital technology is having a deep impact on the finance function’s performance.  One comment in particular got my attention:

The evolution of such digital assets, software and services provides a clear opportunity for CFOs to accept and exploit the digital revolution. This is especially true, given their unique position at the intersection of finance, technology and strategy.

CFOs often forget that they are truly one of the few people in the organization that see how all the functional areas of the company intersect.  This presents an opportunity for the CFO to build relationships with other departments to facilitate their role in driving growth.

You can find a link to the survey on Accenture’s website or by clicking here.

To learn more financial leadership skills, download the free 7 Habits of Highly Effective CFOs.

business value

Strategic CFO Lab Member Extra

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

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

Click here to learn more about SCFO Labs

business value

0

3 Ways to Develop Financial Leadership

financial leadershipDo you feel like you have the talent to be the best CFO you can be, but you aren’t sure how to develop the financial leadership skills you need to get there?

If so, you’re not alone.  Many financial professionals don’t know what is really expected of a CFO. But they are also don’t know how they can develop the skills to meet those expectations.

3 Ways to Develop Financial Leadership Whitepaper

Over my 25+ years consulting with entrepreneurial companies, I’ve discovered that there are really 3 ways you can get these skills.  Click here to read a white paper we recently published outlining what they are and how to decide which one is right for you.

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

financial leadership

Strategic CFO Lab Member Extra

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

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

Click here to learn more about SCFO Labs

financial leadership

0

HBJ CFO of the Year Awards Luncheon

HBJ CFO of the Year

Michael Dummer, CFO of Wilsherco Inc., and his wife Kim Rankin

Last week, I was invited to attend the HBJ CFO of the Year awards luncheon with our friend Michael Dummer, CFO of Wilsherco Inc. (pictured here with his wife Kim), who was a finalist in the Small Private Company category. Judges narrowed down the field from over 100 nominees, to 16 finalists in the 6 following categories:

  • Small Private Company
  • Large Private Company
  • Small Public Company
  • Large Public Company
  • Private Subsidiary of a Public Company
  • Community Impact

Winners of the HBJ CFO of the Year Awards

The winners in each category include the following:

  • Small Private Company – Kevin Boyle Sr., Sigma Cubed Inc.
  • Large Private Company – Geri Pacheco, Arch-Con Corporation LLC
  • Small Public Company – Anthony Tripodo, Helix Energy Solutions Group Inc.
  • Large Public Company – Clint Freeland, Dynegy Inc.
  • Private Subsidiary of a Public Company – Andrew Sunderman, Direct Energy Inc
  • Community Impact – Geri Pacheco, Arch-Con Corporation LLC

For the second year in a row, our friend Geri Pacheco, CFO of Arch-Con Corporation, received top honors for her company size category as well as being selected as the winner in the Community Impact category.  Congratulations, Geri!

Given the caliber of their fellow nominees and winners, these two should be extremely proud of their accomplishments.  We certainly are!

If you want more information, then click here for the announcement article, pictures and video of the nominees and finalists.

0

The Evolving CFO

There’s a Houston Business Journal recently entitled “The evolving CFO: How the rise of the machines turned CFOs from number-crunchers into leaders”. In the article, the HBJ interviewed leading Houston-area CFOs about how their changing roles. Technological advances in finance and accounting are dramatically shifting and creating the evolving CFO.

The Evolving CFO

One of the biggest changes is the need for CFOs to shift their focus. They cannot merely produce financials anymore. But get involved in the operational side to improve results.

Jim Wilkinson notes that CFOs “have to get out of their seat and go work with operations and help them figure out what to they should do from a financial standpoint to improve the profits.”

Rudy Gonzalez explains he wears many different hats in his CFO role at Amphora, Inc. – legal, contracts and human resources. Gonzalez says that, “In the small-company world, we really roll up our sleeves and get our hands dirty in a lot of different fields.”

Tony Ford, CFO of PG Professional Golf notes that “Ten years ago, CFOs…had to know financial statements. [But] now, they’re required to interact with sales, operations, and logistics to drive profitability for a company.”

In addition, you need to possess strong people skills. Many often overlook strong people skills and see them as a commodity in finance. Furthermore, good CFOs can work with non-financial people and explain to them the best things to do. Therefore, people skills are much more important.

But according to Wilkinson, the difference between the role of yesterday’s and today’s CFO is pretty simple. For example, a controller reports the numbers, a CFO drives the numbers.

Read the full article here. If you want to learn more financial leadership skills, then download the free 7 Habits of Highly Effective CFOs.

evolving cfo

Strategic CFO Lab Member Extra

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

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

Click here to learn more about SCFO Labs

evolving cfo

0

 Download Free Whitepaper Today!

ACCESS NOW!