CFOing...... in a Digital age
"A bad strategy will fail no matter how good your information is, and lame execution will stymie a good strategy. If you do enough things poorly, you will go out of business - Bill Gates
Knowing your numbers is good. Knowing a good numbers person is even better. Much has been said about the cloud and how digital finance rules the roost.Just interested in sharing a few snippets from my own observations CFOing....in a digital age.
Fair warning, this is not a typical tech-stack article. If you need that, read this article from Deloitte.
In SMEs a lot of times the lines between a CFO and a Controller is blurred. CEO's/Owner-Founders would expect you to be the big picture person but also have a handle on day-to-day.
So yes roll up your sleeves and get the cash forecasts ready, at the same time know the pulse of the industry
You should know your numbers!
No surprises there. When you are at the top of the numbers food-chain, there is no way you "can't" know your numbers. And knowing your numbers means, really knowing them. The relationships between numbers can be complex. You can't be anywhere near a CFO type role if you don't have knowledge (off the top of your head!) of the numbers that make or break your business.
On consolidating a group company, one of our companies based in the US had a balance sheet item which should have been expensed. On a consolidated level that meant I got a south-ward hit of 36K on my EBITDA.
There are many reasons why it got lost, until we were 1-hour away from our shareholder briefing for the FYE. Save yourself the time and largely embarrassment - critically question your numbers time and time again until you know "off the top of your head" that your numbers are sitting right.
The IR function
I have never come across an SME in my experience that has a dedicated IR team (Investor Relations management guys). That function would fall to the top management, presumably the CEO and CFO. The function by nature need inputs from both the CEO in terms of the vision and strategy and the CFO + accounting team in terms of financials.
For smaller companies, this could be as simple as a shareholder brief you sent out to shareholders at FYE. Here is an infograph we did a year back that captures what I mean here.
Knowing the right words
This was a key learning for me when I first started on a strategic finance role. Knowing the right commercial terms of the industry that you belong to became crucial. So terms like Corporate FP&A or churn or dividend yield should be second nature- if your role demands it.
There are resources galore on what industry level metrics are key necessities. That is great, but double-down on your basics. If you don't understand the difference between share capital and share premium, that will show when you present financials.
Be a person
You can have every technical skill under your radar, but if you are not authentic, there won't be much respect attached to your role. A CFO's role centres around the numbers - undoubtedly. But ultimately any business is about it's people.
You have to find a common footing with the CEO and the core team members. There might be times you have to take blame to save face. You have to be a facilitator. If there are things you don't know, own up, find someone who can, negotiate and move on.
Crawling when the company needs you to sprint, won't help anyone. Understand the culture in the company - try to work in tandem.
To conclude I want to leave this thought from Leeny Oberg, CFO of Marriott International. To me this embodies the right spirit in a CFO.
I mystery shop at our competitors, and our competitors are good. I let employees know how well we are doing but that there are other luxury hotel companies out there doing well, too. I come back from a competitor and talk about my experience at our Line-up meetings.
What stands out to me is how we deliver service. My favourite word in The Ritz-Carlton Credo is “genuine.” To me, when you provide service that is genuine versus service that is laissez-faire, that’s a huge differentiation. We can’t overplay the need for our service to be delivered sincerely.
Oberg's quote was featured in this article