In today’s business climate, the role of CFO is as exciting and crucial to growth as it’s ever been.
No—seriously. If your eyes are rolling at the idea of number crunching that doesn’t immediately put you to sleep, it’s probably high time to re-evaluate the way you’re looking at your company’s finances.
For every drawn-out calculation or seemingly dull process a CFO must establish, there’s a corresponding balancing act between sales priorities and financial pragmatism—something our guests this week on In Process know all too well. Hosts Evelyn Ashley and John Monahon of Trusted Counsel are joined on this episode by Tom Mall, who has an extensive background in the CFO role, and Kenji Kuramoto, founder of Acuity and AcuityCFO. Both men have extensive track records building and maintaining financial processes for companies, but rather than focus on the numbers, both men repeatedly drove home the importance of a CFOs relationship with the rest of their company.
“The CFO is acting as quarterback,” says Kuramoto, citing their work not only internally, but with attorneys, CPAs and investment bankers. He notes that a controller, which many companies rely on when they’re teetering on the edge of hiring a CFO, works best “in a bubble”—but that’s not the case with a Chief Financial Officer. “The CFO needs to make sure to get outside of just the finance and accounting office.”
The importance of the CFO’s relationship building is as relevant in day-to-day operations as it is in high-stakes meetings.
“When you’re going out to meet [investors], you’ve got to make sure that everyone is playing a role and that you look cohesive as a team,” adds Tom. “There’s an opportunity for CFOs, at this point, to play a very strong investor relations role.”
But before this “exciting” stuff—raising capital, making projections, and strategizing for success—you’ve got to begin with the base-level accounting. Having experienced the initial chaos of joining a company who may be working with a CFO for the first time, both Kenji and Tom stressed the importance of straightening out basic financial statements and keeping a close eye on cash flow, profit/loss, and the different sources of a company’s revenue.
“Companies bring you in with the ‘interesting,’ ‘cool,’ ‘strategic’ work in mind,” says Kenji. “You get there and you peer down, and the base-level accounting is in disarray. It completely sidetracks the more strategic work you’re trying to get into."
His advice for companies operating without a Chief Financial Officer is to keep an eye on the financials before the end of the month or the quarter, paying close mind to the what the leading indicators of your sales team’s progress might be.
“If you wait [too long] for someone to look at the financials, often too much time has elapsed—especially in the startup world—for you to take action,” says Kuramoto.
For the full conversation surrounding the role of CFO and how it relates to pro formas, flash reporting, capital raise and more, stream the podcast in full in the player below. You can download the episode directly and subscribe to In Process on iTunes here.