Tag Archives: CFO

Do You Have Control of the Numbers? Four Points

Situation: A company has a good accounting system, but the CEO is concerned that they are not making the best use of metrics to drive the business. He senses a lack of shared understanding of key metrics and goals. He senses the appearance of financial disarray, despite his clear grasp of the business. Do you have control of the numbers?

Advice from the CEOs:

  • A good accounting system may be in place, but if it is not being used to drive the business and monitor the achievement of milestones then the company is not gaining the best advantage from it.
  • If there is a sense of financial disarray, this suggests that the company lacks financial metrics. Employees and managers may be doing their jobs, but without financial metrics it is difficult to tell how well they are doing their jobs.
  • Start with basic metrics:
    • Where are sales coming from?
    • What is the profitability of sales by customer segment and product line?
    • What is the company’s profitability?
    • What are the profitability trends of the company and key segments of the business?
  • Once a company is tracking these metrics, it is easier to focus managers and employees on products, product development, operations, sales and marketing issues that are most essential to the company’s success.
  • The company needs the equivalent of a CFO. This means a financial person, not an accountant. An individual who knows how to look at the numbers. A CFO will help the company to
    • See the strategic trends in the business,
    • Uncover the best opportunities for growth, and
    • Understand the greatest potential threats to growth of the business.

On-boarding a New CFO – Four Imperatives or Considerations

Situation: The Company is hiring their first CFO. How do they integrate this key person into the company?

Advice from the CEOs:

  • The company should reflect the values, needs and desires of the CEO.
    • Have a clear discussion and agreement with the CFO candidate on values, role, and organizational structure before hiring or announcing anything to the company.
    • The talents of the CEO and CFO should complement each other.
  • The CEO may put the CFO in charge of areas that they want to delegate – accounting, administration, finance and contracts.
    • The CEO should remain involved in banking relationships.
  • Recommended announcements and timeline:
    • When the new CFO is announced, simultaneously present the new organization chart (broad responsibilities, not detailed position descriptions).
    • Set a timeline for realignment of roles. It is not necessary to specify exact roles at the time of the announcement – let everyone know that this is a work in progress and give a time frame within which all will be resolved.
  • Once the CFO is in place, the CEO and CFO should meet at least weekly, to assure that the CFO has the support and resources needed to accomplish their responsibilities.
    • All decisions within the CFO’s group, personnel responsibilities and any shifts in roles should come from the CFO, with the support of the CEO.
    • This will help the new CFO to more rapidly assimilate into the company and will give them the authority needed to manage their organization.

Key Words: CFO, On-Boarding, Values, Roles, Responsibilities, Authority, Personnel, Delegation