For my friends that I tend to spend time with out of the office, they know I have two main areas of interest - my cycling and my appreciation for all things culinary…wine included. Necessary for these interests, and in relation to my career, there’s a correlation between both. All involve having a multitude of tools at your discretion, as well as a multitude of ingredients.  It’s the experience that you accumulate through your career and your knowledge of the ingredients that will dictate whether or not you can create a bit of a masterpiece, or if you’re left fumbling in the kitchen. It’s knowing when you have a quality collection of ingredients that support the ultimate mission or if your left with mediocre quality, or incomplete, ingredients that will result in a less than stellar result.

     Take the analogy of CFO meets Iron Chef. Imagine showing up on the set not knowing what ingredient is going to be served up, but you have a strong enough knowledge to quickly assess and utilize the resources to produce something fantastic.  That’s exactly what the CFO needs to do when moving into a new company. It’s one thing to have an understanding of an Income Statement, Balance Sheet, and Cash Flows, and all the other elements that will be combined to produce superior financial results. However, the key is to understand all the “ingredients” that contribute and make up the results reflected in the key financial statements. Just like a Chef can taste or smell a certain dish and cite the individual ingredients, the CFO needs to have the ability to disect each one of the financial statements to the individual elements and know how much of each ingredient is needed to achieve the results. Or Conversely, quickly determine which of the ingredients is ruining the dish. Just like cooking, it’s about putting in “just enough” of the ingredients. You don’t want to overpower the result, nor do you want it bland and uninspiring.

     In the case of the CFO;

§  How much additional inventory investment will you commit to support revenues?

§  How much additional debt will you incur to drive strategic growth initiatives?

§  What additional staff do you need to support your Budget initiatives?

§  How much risk will you tolerate in your A/R portfolio to support & drive growth?

§  How deep a commitment do you make to vendors before putting your supply chain at risk? 

§  How much will you cut operating expenses or investment before inflicting damage on the Company?

§  Are their modifications that you can make in A/P management to increase discounts or provide additional production funding?

     These are only a handful of the ingredients available to the CFO. No matter your ”understanding” of each one of these elements, it’s the experience that you have in deploying these resources, and in the appropriate amounts, that will dictate the success of your “entree”, which in the case of the CFO, is the profitability of the Company you represent and the working capital that is your responsibility.  For myself, the worthwhile question about your kitchen is whether your an Executive Chef or just conducting Line Prep. Which are you?

 

Thanks for Reading. . . .

Jeffrey Ishmael