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10 Keys to Success as a CFO

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By Allan Tepper, Co-founder and Senior Managing Partner, CFO Consulting Partners LLC

CFO Consulting Partners provides C-level financial management services to small and midsized public and private companies. Clients often ask what critical elements are needed for CFO success. Being a CFO is one of the most important, yet short-lived jobs in corporate America. Many publications list the average tenure for a CFO at just 3 to 5 years. This turnover is due to many reasons, but at least some relate to how the CFO is perceived by the CEO and peers of the CFO.

To help the CFO evaluate his or her chances of long-term success, I have developed the following ten questions. While there are no guarantees, a good number of YES answers may be an indication of longevity and success. And keep in mind that you may not have direct control over some of the elements listed in the below questions.

  1. Are you an active and respected member of your Senior Management Team?
  2. Can you/do you talk frequently and fluently to the senior management team about the key drivers of your business (i.e., volumes, ratios, pricing, etc.), and about the external variables affecting the business (i.e., about the economy, the industry trends, the competitors, the risks, etc.)?
  3. Is your department staffed with high quality people, and is the staff viewed as efficient and internally client driven?
  4. When you report bad news, is it well accepted? Have you put practices in place to identify and mitigate risks, so that when bad news happens, you report it as one of the identified risks that went south?”
  5. Is your day-to-day department well managed? Do you provide your services quickly and in a quality manner? Is your own office neat and well organized? Do you consistently work less than 10-hour days?
  6. Do you feel more like a guiding light to growth and profitability than a police officer in your company?
  7. Do you or your Senior Management Team believe that internal and external customer satisfaction is Job Number 1?
  8. Would your boss say you think like a businessperson – growth, profitability, ROE, empowerment, motivation, a prudent amount of risk taking, etc.? Would they say you strike the right balance between the big picture and the details?
  9. Have you implemented a sound planning, budgeting and forecasting process? If so, do you have monthly or quarterly meetings with the profit center leaders to review results and identify risks?
  10. Is your audit completed within three months after the end of your fiscal year?

Now You See Cash, Now You Don’t

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By: Allan Tepper

A dilemma takes place within a company; the CEO notices that the company’s cash supply has run dry. “How is this possible?”, the CEO wonders. “My company remains profitable, but according to our bank statement, much of our cash has disappeared,” he mused.

There are a variety of reasons why a firm’s cash supply will run dry. Some would be lower profitability, capital improvements, pay down of debt and/or accounts payable, and slow cash receipts. It’s possible the CEO may have failed to receive a missing key component of the company’s accounting records, the cash flow statement.

The cash flow statement holds an extremely important role in the financial management of any company. This statement incorporates elements of the income and balance sheet statements to create a “map” that shows the changes in cash flow. In effect, companies can make more informed decisions regarding investments and spending. With the cash flow statement, companies gain a more accurate and detailed perspective of their finances. Without it, companies are operating more or less in the blind.

In order to maximize and retain financial transparency, companies should have a constantly updated cash flow statement. However, an accurate cash flow statement begins with careful preparation of a company’s income statement and balance sheets. By directing more attention to these three financial statements, especially the cash flow statement, companies will have a fuller understanding of their business.

Celebrating 15 Years in Business

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15 YEARS IN THE MAKING…

We are happy to share with you that CFO Consulting Partners has been in business 15 years. Over the course of time, we have carefully honed in on three principles that help our clients profit from our experience.

SOLUTIONS: We solve your most complex financial management and accounting issues on time and correctly.
DELIVERY: We deliver the benefits of all C-level people all the time, but with the flexibility and pricing of a boutique firm.
SECURITY: You have the security of a firm – not just a single consultant – supporting your accounting and finance needs.

CFO Consulting Partners is a financial management consulting firm serving the needs of boards, CEOs and CFOs. We provide senior-level financial management and accounting services to small and mid-sized public and private companies.

Where Did My Cash Go?

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By: Allan Tepper

Ever ask yourself, “Where did my cash go? I am profitable and yet my bank account is scraping bottom.
The answer may be because non-income items are draining your cash. These can come from capital improvements, sluggish cash receipts from sales, too quickly paying accounts payable, and many other reasons.
On the other hand, perhaps you are unprofitable and cash has not declined or even increased. Could get confusing and even lead an executive to make bad decisions. This phenomenon could happen should a line of credit offset declining cash from profits, a large receivable was just settled, a building was sold, a government grant was received, and many other types of situations.
So the question is, how would you find out what is happening? The answer is the cash flow statement. This statement brings together the income and balance sheet statements to show you what happened to your cash.
Of course, a given is that the busines generates a balance sheet. Too often, our firm sees small businesses that do not produce balance sheets, which makes preparing the cash flow statement exceedingly difficult.
Knowing what happened to your cash is critical in order to make proper decisions. I had a nonprofit client awhile back that received grant money that masked sustained losses. The organization did not use the cash flow statement, and hence blindly acted as if everything was in good shape. This eventually lead to a significant financial crisis and an erosion of trust in several senior executives by the board.
In summary, carefully prepare all three main financial (income, balance sheet and cash flow) statements. And spend the time to understand where the cash is coming from and going. I believe you will make more informed decisions and have a more profitable company as a result.

Case Study: Financial Transformation

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Today we are reflecting back on a past case study on financial transformation that is still as relevant today as it was when we posted it originally, 2 years ago. If interested, read on.
BACKGROUND
Engaged by a service provider (a boutique law firm) that had been in business for approximately 18 months. Firm was highly successful on the legal side but was immature on the operations/business process side. In 18 months, firm had had three Chief Operating Officers, all from “Big Law” and all who had not been successful. Position had been vacant for three months, placing great stress on the Managing Partner. Total staff the commencement of the engagement was approximately 50, with a ratio of 2 lawyers for each non-legal position.
WHAT WE DID
Our assignment was to perform a high-level assessment of all Firm operations: Finance, HR, IT; Billing and Payables and Administrative support; provide observations and make recommendations for improvement. Assessment also included evaluation of staff morale and related staffing issues. Expected duration of assignment; two weeks.
Assessment identified two issues requiring immediate attention; staff morale and need for full time Chief Operating Officer to relieve burden on Managing Partner. Remedial actions were taken within ten days and included the naming of our consultant as Interim Chief Operating Officer with undefined term of service.
Longer term recommendations included: steps to improve the Firm’s Information Security polices and IT infrastructure, execute a search for and implementation of new ERP system; actions to clarify and realign staff roles, hiring of a full time Finance Director; development of better reporting and creation of a capacity plan; establishment of a more formal HR function.
The firm was in the process of tripling the size of its primary offices as the engagement began. The subsequent six to eight weeks were devoted to managing the myriad of issues associated with that move while stabilizing and improving staff morale. In addition, significant planning was performed on the ERP and IT front while proposing a longer-term staff realignment plan.
Subsequent eight weeks were focused on ERP software selection, full scale IT and information security review, development of a new reporting dashboard for Partners; assessment of firm insurance coverage, development of a new 401K and profit-sharing plan and overseeing year end closing process including management of bonus recommendations.
Post year-end close focus has been on implementation of new ERP system, new 401K and profit sharing plan, complete rebuild of Firm’s IT infrastructure and creation of robust information security practices. In addition, an overall firm capacity plan and forecast was developed.
RESULT
Since our arrival, there has been no staff turnover. Key initiatives have been conceived and executed. Managing Partner is primarily practicing law. Firm is well on the way to having a back office operation that is of the same superior quality as the Firm’s legal practice.

C-Suite Fintech Advisory Workshop NYC Rebranded ! Fintech Workshop Advisory (Fin-WAVE) – Catch it !

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Join the group and prepare to attend on the 3rd Thursday monthly, next date Thursday, October 21st, 2:30PM
Please plan to join Fin-WAVE: Fintech Workshop Advisory for our regular 3rd Thursday Monthly Roundtable – Fintech Challenges & Opportunities. This month on Thursday, October 21, 2021 at 2:30 Eastern, Richard Fay, Principal in Wolf & Company’s Assurance Group, will lead a discussion on the Future of Fintech: Driving Bank Innovation!
 Register at this link https://lnkd.in/efAjYnyU

What Does an Outsourced CFO Firm Do?

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By: Allan Tepper
Before we dive into this topic, let’s define what an outsourced CFO firm is. An outsourced CFO (or Controller) will provide the same functions as a full-time CFO, but the relationship is that of a vendor as opposed to an employee. Typically, as a vendor, there are no payments for vacation, no year-end bonuses, no stock-based compensation and no severance payments.
In addition, the company will only typically be billed for the amount of time the outsourced CFO provides. For smaller companies, this could be an attractive option. Many smaller companies need the thought leadership and execution skills of a highly competent full-time CFO, but don’t need someone five days a week, thereby saving money.
For midsized companies, an outsourced CFO is generally needed to fill a gap between a departing and arriving CFO. Further, for companies looking for an exit, hiring a full-time CFO may not be a viable option as the acquirer may already have a CFO.
Finally, for companies of all sizes, an outsourced CFO firm may provide all of the above and senior-level consulting services. For instance, company management may need help with work paper preparation for an upcoming audit, may need help in exit readiness, may need to stop declining profits, may need better decision-making reports, may need a new accounting system and may need almost anything else that requires highly experienced accounting and finance skills.
Firms consisting of mostly CFOs and Controllers should have the depth of talent to address many of the above in a quality and timely manner. But there is one more factor. Experience. Some firms may have hundreds of years of collective experience. That may prove very valuable when addressing complex, time sensitive projects.

How can a CFO squeeze more time out of the day?

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By Allan Tepper, Co-founder and Senior Managing Partner, CFO Consulting Partners LLC

Did anyone ever tell you that you had to work smarter rather than harder? But how does one do that? Is it even true?

As a co-founder of a CFO consulting firm, I have seen many CFOs who work enormous hours. There was one CFO we were consulting with that arrived before anyone in the office, was the last one to leave, worked on the train to and from the office and worked until midnight most nights and on weekends. In the end, that job ended in failure.
As a CFO, before starting my consulting firm, I too sometimes burned the midnight oil. I sympathize with those hard working CFOs and Controllers. There is a lot of work to do.
When one is working so hard, though, the little ways to improve efficiency and effectiveness just aren’t that apparent. This reminds me of a newspaper cartoon I saw many years ago. In it, the captain in a 19th century battle Is shown leading his troops. The troops are standing in a straight line armed with rifles and bayonets. The enemy is not too far away, also standing in a straight line. Behind the captain stands a water boy with the forerunner of a machine gun, the Gatling gun. The water boy taps the captain on the shoulder, at which point the captain shouts, not now! He says, Don’t you see I have a war to fight?
So, I believe it is true that one has to work smarter and not harder. That means listening to others, having the time to plan and taking the time to think.
Here are some illustrative problems I have seen over the years where one can work smarter:
  • Problem: Not fully utilizing a basic module of an accounting system. One client kept track of accounts receivable on an excel schedule, even though the accounting system was fully capable of handling.
  • Problem: Not setting up recurring entries. I call it, set it and forget it. In most accounting systems, one can set up recurring entries. In essence, you set it once and let the system book the entries automatically. This is especially helpful with prepaid expenses, but has as many applications as one’s imagination.
  • Problem: Too much use of Excel. We have all seen so many examples of this. Often, we have seen the comparison of monthly actuals to budgets all done in Excel. In most every case, this could have easily been done within the accounting system.
  • Problem: Too busy to stop and think how to tweak the process to make it more productive. Some processes you use may work, but may be overly complicated, error prone and time consuming. To fix this, it requires the time to sit back and figure how to do the same task in less time and/or with less errors. It could be as simple as automating one task that opens up a bottleneck.
  • Problem: Staff not adequate trained, and /or incorrect staff in the role and/or staff resistant to change. We have seen many cases where the existing staff just about refuses to do things differently. To fix this, I saw one manager say. The bus, figuratively speaking, will be leaving soon, and it’s your choice to board it or be left behind. Most boarded the bus. He then gave the existing staff new roles and/or tasks, trained in his way. A bit time consuming, but it resulted in significant efficiencies over time.

Ten Keys to CFO Success

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By Allan Tepper, Co-founder and Senior Managing Partner, CFO Consulting Partners LLC

I am often asked what critical elements are needed for CFO success. While there are no guarantees, here are ten questions that may help determine the answer. The more YES answers, the better.

  1. Are you an active and respected member of your Senior Management Team?
  2. Can you/do you talk frequently and fluently to the senior management team about the key drivers of your business (i.e., volumes, ratios, pricing, etc.), and about the external variables affecting the business (i.e., the economy, the industry trends, the competitors, the risks, etc.)?
  3. Is your department adequately staffed with high quality people, and is the staff viewed as efficient and internally-client driven?
  4. When you report bad news, are you criticized? Have you put practices in place to identify and mitigate risks, so that when bad news happens, it is reported as one of the identified risks that went south?
  5. Is your day-to-day department well managed? Do you provide your services quickly and in a quality manner? Is your own office neat and well organized? Do you consistently work more than 10-hour days?
  6. Do you feel more like a guiding light to growth and profitability than a policeman in your company?
  7. Do you ever lose track of the fact that both internal and external customer satisfaction is Job Number 1?
  8. Would your boss say you think like a businessperson – growth, profitability, ROE, empowerment, motivation, a prudent amount of risk taking, etc.? Would they say you strike the right balance between the big picture and the details?
  9. Have you implemented a sound planning, budgeting and forecasting process? If so, do you have monthly or quarterly meetings with the profit center leaders to review results and identify risks?
  10. Is your audit or review completed within four months after the end of your fiscal year?

Webinar: CFOCP Collaborates with Continuity

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On June 25th CFO Consulting Partners’ Director Chip Steppacher and Managing Director Eric Segal were hosted by Pam Perdue on a webinar focused on restoring Bank financial and operational performance in uncertain times. Follow this link to view a recording of the event:

https://www.continuity.net/regulatory-compliance-erm-resources/webinars-archive

Continuity ( https://www.continuity.net/ ) is a provider of regulatory technology (RegTech) solutions that automate risk and compliance management for the financial services industry.

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