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Posts Tagged ‘cfo’

The CFO Is Not A Scorekeeper…

March 19th, 2013 Comments off

I was reading a recent blog post by Cindy Kraft, who is one of the leading CFO coaches out there and is very active in helping CFO’s manage their careers and improve their online profiles. One of the comments that had been posted to her blog defined the role of the CFO as that of the “corporate scorekeeper”. Cindy had not suggested this was the role of the CFO, and I know from following her over the years, that she does not share that view of the role of CFO. Personally, I can’t think of a bigger disservice to an organization than just assuming the role of a scorekeeper. This is essentially a non-value add position that leads to the role being an expense, and not an investment as I have always promoted.

So what is the role of the CFO? That’s not entirely an easy question to answer and will depend on the type of organization that you have been hired into. In general, you are assuming the role as the primary strategic partner for the CEO and essentially quantify the anticipated results of the strategies he has mapped out with the rest of the Executive team. You are responsible for the broader back office operations and ensuring that the plan to monetize those strategies becomes a reality. You are responsible for identifying, and mitigating, any of the operational risks that might potentially derail that plan. You are responsible for working closely with your Sales teams, Product teams, and other key functional areas in the execution of the plan and making sure they have the proper resources to deliver, as well as instilling the proper level of accountability. You are responsible for distributing the appropriate levels of information to the Executive team so that they can make informed decisions and fine tune their activities to deliver on the plan.

Scorekeeper? Hardly. The role of scorekeeper is to sit in the booth, or in this case an office, and regurgitate system generated reports and add some token level of commentary. The role of the scorekeeper is ensuring that the debits and credits are properly recorded so the auditors are happy in the end. There is no lever pulling, no collaboration with other departments, nor is there any type of influence on the operational aspects of the business. This couldn’t be farther from the CFO role. The scorekeeper is the necessary expense you have to have to conduct the game. The CFO is an investment that is made with the expectation of receiving a return for that investment…bottom line.

The expectation that I have always placed on myself, and promised to any company I have worked with, is that I will deliver a significant return on the investment made in me. We’re not talking about a 20% or 30% ROI, but a multiple of what my total compensation package is for a company. That return will also come in number of different manners. From a topline perspective it will mean working closely with the Sales department to improve the actual sales figures, as well as the processes that drive the revenue engine. Additional ROI is achieved through tight management of the entire costing structure. Whether labor efficiencies, raw material inputs, quality, or inventory management, these are all key elements that have to be actively managed…not just recorded and reported. Further return is achieved in the ongoing management of operating expenses. Here there is a need to determine the proper balance to support the expectations of the Executive team and executing on the strategic plan. This will involve benchmarking to internal history, peers in the industry, as well as ensuring that existing partners are still representing the best interests of the company.

So you still believe the CFO is the scorekeeper of the company? You might want to rethink that position…

Thanks for reading…

Jeffrey Ishmael

There’s No Other Lane Than The Fast Lane…

December 5th, 2012 Comments off

If you’ve ever worked for a start-up or been associated with one, then you know there is no other lane available than the fast lane. You also know that, unlike traditional corporate environments, there’s not a clear cut segregation of duties. On your first day, after you’ve signed all the requisite paperwork, you’re given a broad selection of hats to wear…all of which need to be worn on a daily basis. In my case, I eagerly picked up hats for Finance, Operations, HR, Legal, and Purchasing. While many would scoff at having to take on functions they feel didn’t apply to them, it’s a great opportunity to help shape the foundation of the company and know exactly what levers are being put into place to pull at a later time. After spending months in the fast lane and staying head down, it’s pretty satisfying to see the efforts of the team play out with some of our recent changes and announcements.

After running stealth behind a 1-page static homepage, we launched our first revision of our website. We have some great talent coordinating the effort and the finished site is a product of that. It’s exciting to be able to actually start directing folks to the site who are constantly asking what we have been about, but until now, have been silent on our efforts. www.cylance.com

We also announced our acquisition of Skout Forensics, which is our second acquisition. Skout Forensics, based in the Washington, DC Metro Area, will be integrated into Cylance’s development team to enhance its own forensics technology roadmap and merge into Cylance’s professional services team to expand its already advance forensics capabilities.

While we’re allowing a little light to shine on our accomplishments this week, there are obviously more great things to come and we’ll continue to keep a laser focus on what needs to be accomplished.

Thanks for reading…

Jeffrey Ishmael

Have You Given Your Skills An Honest Self-Assessment?

August 30th, 2012 Comments off

     One of the more constant questions I’ve been asked over the last 5-years, as well as tabled with the candidates of various positions, is evaluating their skills and where they shine, as well as where they need improvement. The easy part in the interview process is professing to the depth of your skill set and how you’re a “roll up the sleeves team player” and you can operate in the trenches with the best of them. It’s another to actually deliver on that commitment, and what I view as a promise to a perspective new employer.

     A perfect example is the company that I have recently joined. I was probably asked no less than 6x if I “had any issues with doing non-CFO work”. Some of this “non-CFO” work might be HR-related, negotiating leases, and doing other administrative type work. Funny, from my perspective, which has always been the case if it affects the bottom line, it is CFO-related. If it’s going to affect the bottom line, especially in a start-up, I want to know about it.

  • I want to be involved in any long-term agreements that may affect our financial health.
  • I want to have a direct hand in offer letters. These are the financial commitments I can tie back to original financial projections. Does it support our stated mission?
  • I want to be involved in the implementation of our reporting system, whether that’s in Excel, Quickbooks, or SAP. I want to know where the holes are, as well as points of control.
  • I want to be involved in the set-up of all service-related vendors since these are the folks that will be our foundation for what will be accomplished in years to come.

     Going back to the original question of self-assessment, are you really ready to take on these tasks, work in a humbling and collaborative environment, that isn’t supported by multi-million dollar budgets and casts of hundreds, or even dozens. For me, it was an easy “Yes!”. It’s an exciting environment to be a part of, but you have to be honest in your ability to execute at that level. You have no individual firewalls, key support staff, or other vehicles to hide behind. You’re the guy that is front and center in the trenches and “fighting” with your team.

Have you given yourself and honest self-assessment and are you ready for that level of exposure?

Thanks for reading…

Jeffrey Ishmael

Have You Defined Your Blog Rules of Engagement?

April 29th, 2012 Comments off

            For the last 2-years I went dormant with this blog and took some time away to develop some steadfast rules regarding the content of this site and the subjects I write about. Those guidelines have sometimes flexed in the  past depending on the size of the company I’m working with, whether a public or private entity, but the goal has always been to keep content at the most professional level.

 

            With a recalibration in mind, let’s take a look at some of the more basic ground rules that should be in place for a blog for a corporate finance professional:

·         Specific numbers should never be discussed, regardless of whether it is already in the public domain or not. Leave that to the reporters.

·         If you find yourself working for a public company, refrain from discussing, even generally, initiatives or change management, regardless if it might be in the past.

·         If working for a private company, make sure you have an understanding of the culture and how your writings might be viewed by management…as a liability or a signal of the value you bring to the company.

·         Even if you don’t work there, is it appropriate to discuss your efforts there and the initiatives/improvements you managed. There are a few companies in my resume that I simply don’t discuss in this forum.

 

            Great, so you’ve just taken away a lot of my day-to-day experience that I can write about…what do I have left? When it comes to strengething your skills as a Finance professional there is no shortage of topics that you can choose that can continue contributing and impacting your personal growth.

·         While you’re going to be part of a larger “reporting” group, you can always choose new developments in accounting topics that are of particular interest to you.

·         Discuss situational experiences with colleagues at other companies, what they were challenged with, and the strategies they employed.

·         Are there any recent books related to your functional area to write a review on?

·         Are there any industry or professional summits that you attended which would be of interested to your readers?

·         What professional organizations do you regularly contribute to? I’ve been a member of FEI for 3-years and expanded my contribution to the Board last year, which has provided some great discussions and content.

·         Are there any recent magazine articles or interviews that you have an opposing view on.

 

            Very simply, the everyday experiences in your current work environment aren’t your only source of content inspiration. As a Finance professional we are all tasked with knowing what the available resources are and how to deploy them. With the challenge of developing content, your office isn’t the only resource available to you.

 

Thanks for reading….

 

Jeffrey Ishmael

Ken Tudhope: CFO or Controller…?

October 20th, 2009 Comments off

     It’s a topic that has been widely covered lately, but Ken weighs in with his views on the differences between a Controller and a CFO…..

As a networker and recruiter of senior finance and accounting talent, I often meet CFOs who truly fit the bill, but oftentimes I meet folks with a CFO title in a Controller job.  Some people have such a hard time breaking into the CFO ranks, while others have no problem at all.  I’ve often wondered what separates a good CFO from the others working in the finance and accounting function, and I’ve identified 5 factors I believe which clearly define the CFO position:

 

·         CFOs are more outward facing than any other position in finance and accounting.  The outside world is more dynamic and risky, and the CFO position requires maturity, real technical knowledge, and good relationships developed over a career.  The outward-facing relationships include investors, bankers, regulators, clients, vendors, accountants, industry contacts, etc.  Many people know that I am passionate about networking and relationships.  Many of these outward-facing relationships are developed deeply through networking.   If you are a CFO in a middle-market company but it’s actually the CEO who “owns” these relationships, you are acting like a controller.

 

·         CFOs are more forward looking than any other position in finance and accounting.  Whereas a Controller spends much of their time looking backward while closing the books or determining how to record an entry according to GAAP, CFOs spend relatively more of their time on hiring, developing their people, budgeting, planning and most importantly, on strategy.  These are clearly things that impact the future.  Listen to a good public company conference call and you will see how much time is spent on how current information will impact the future.  Networking also comes in here as well, as what is more forward looking than building a relationship? 

 

·         CFOs are more expansive in their thinking.  I recently had a conversation where a hiring CEO was describing what he wanted in a CFO.  The CEO said, “I want them to take the cost out of the cost structure!”  I thought to myself that, for a good CFO, this isn’t really a huge requirement.  And while a good CFO needs to do that, the great ones will also be thinking about how to expand the business.  Cost-cutting opportunities are finite; expansion is limitless.  This is why good CFOs are constantly thinking about M&A opportunities.  Have you ever heard of a Controller proposing a merger or acquisition?  Real CFOs influence strategy.  Real CFOs sell!

 

·         CFOs are experts on the Balance Sheet.  The Income Statement is simple; the Balance Sheet is complex.  The Income Statement takes the short view; the Balance Sheet takes the long view.  The Income Statement looks backward; the balance sheet will impact the future.  More than any other position in Finance and Accounting, the CFO is the expert on the Balance Sheet. 

 

·         A good CFO is also a good networker.  I have interacted with hundreds of CFOs and I have determined that good CFOs are good networkers because most of the responsibilities and activities mentioned above require great relationships inside and outside the company.   Good networking is a requirement to excel as a CFO, much more so than any other position in finance and accounting. 

 

If you are one of the many people who aspire to be a CFO, I recommend that you ponder what it is you will need to do differently not only to break into the CFO ranks, but also how you can excel there. 

 

Ken Tudhope

Project Pro Search

ktudhope@projectprosearch.com

CFO’s – Are you an Executive Chef or Line Prep?

August 21st, 2009 Comments off

     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

IFRS planning & IT collaborations

September 3rd, 2008 Comments off

In my post this morning about making the jump into an IFRS conversion, I wrote about the platform upgrade we had completed prior to our move into the adoption of IFRS. We had implemented Hyperion HFM, which would allow us to report under the new standards. I wrote that a word of caution was necessary knowing whether your current or planned system would be able to support IFRS since not all platforms are capable at this time. Just posted to CFO.com is a great article regarding the necessary collaboration that needs to happen with the Finance and IS departments. Definitely worth the few minutes to read.
CFO.com article:Can your CIO spell IFRS?