By Allan Tepper, 7/29/22
The clock on the CFO’s desk strikes 3:00 AM. This CFO has consumed her eighth Red Bull of the night, with another pack of the drinks in her refrigerator. Working until the sun peeks through the blinds of her office, the CFO finishes her preparations for the board meeting the next day. “I prepared for the meeting all by myself,” the CFO thinks to herself. And she further thinks, “the board will absolutely love my presentation.” When the CFO finishes her presentation to the board, each member remains silent. Blank stares. No questions.
This CFO was destined to fail. She did not develop a closing process to produce timely and accurate information, forcing her to do all the work herself at the last minute, and with no time for analysis and error checking.
As a co-founder of a CFO and controllership consulting firm, I have witnessed many hard-working CFOs fail in their duties. For example, some flopped because their accounting and finance functions were ineffective in producing timely and accurate results. Others were hurt, not because the accounting function didn’t produce timely financial results, but because of other poor accounting and finance processes. Either way, time was their enemy.
So, what simple adjustments should CFOs consider in order to improve their accounting and finance processes:
- Fully utilize your accounting system. Many people only use the bare minimums of its capabilities, instead falling back on Excel for many reports and calculations. Although this is not a truism, I like to think that each excel spreadsheet adds one extra day of work to your closing schedule.
- Make sure that you put the right people in the right chairs, and then train the team. Better yet, cross-train your team so functions can continue during periods of vacation, illness or termination.
- Eliminate Excel to the greatest extent possible for accounting-oriented work. If necessary, build automated processes in languages where formulas and references cannot be easily deleted/changed.
- Frequently take time to analyze the work processes and determine ways in which you can improve it. I like sitting down in a coffee shop with a white sheet of paper and no phone. Just let the juices flow. You will be amazed at the things you will develop.
- Develop or cause your controller to develop a detailed closing schedule that will be fully reviewed with all members of the team.
- Build in time to analyze the numbers. Do not go into meetings with “warm paper” (hot off the copier machine).
Had the aforementioned CFO performed the above six steps, the feedback would have been thumbs up, and not blank stares.