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What is Keeping Your CFO Up at Night?
What is Keeping Your CFO Up at Night?
We recently performed an informal survey of CFOs that we work with regarding the things they worry about most for their company. The results were not surprising. The size of the company didn’t seem to matter, the concerns are the same. Below are the top 5 items of concern and the percentage of CFOs who mentioned them in the survey.
- Cash Flow 7 of every 10 respondents
- Talent Development 5 of 10 respondents
- Right Numbers and Accurate Reporting 4 of 10 respondents
- Shareholder Value Strategies 4 of 10 respondents
- Financial Controls 4 of 10 respondents
Cash Flow
The majority of CFOs worry about the company’s cash flow. Running out of cash is their biggest nightmare. Many companies have a yearly cash forecast built up by month, but also supplement it with a 13-week cash flow projection. Some of the things they’re doing to help them manage cash are: expanding lines of credit and other debt facilities and managing accounts receivable and accounts payable days outstanding to order to speed up the cash flow cycle. Additionally, many with companies in the start-up and growth stages are always working on their next round of funding to insure the company won’t run out of money.
Talent Management
Capable CFOs are concerned about hiring the right financial people and more importantly, retaining them. Finding good people is always difficult and networking with peers seems to be the best way to find good people in financial circles. Retaining good people requires proper training and your CFO should be giving adequate time to this. It is important to note that there is a shortage of talent with good controllers and as a result compensation has been trending upward in order to get and keep good controllers.
“Right” Numbers and Accurate Reporting
This concern was shared by most CFOs but had two schools of thought. CFOs are always concerned about accurate reporting because decisions made by top management rely on accurate financial information. It is critical that the financial reporting system gather numbers accurately and reporting can come right out of the system. Too much reliance on Excel spreadsheets opens the information up to errors and potential problems. The second thought related to reporting the “right” or “correct” types of numbers. It is crucial to know the drivers in the business and make sure the dashboards of the company reflect those drivers. Key Performance Indicators (KPIs) have to help top management see a clear picture of the status of the company on a daily and weekly basis.
Shareholder Value Strategies
It is critical that the strategies of the Board and shareholders are communicated to the executive team and that those strategies are executed on. The CFO needs to understand what the core values of the company are and also the strategy of the company because a value is not a strategy. A strategy is a plan of action to achieve an overall aim. In order to execute a strategy, the CFO and executive team all have to be on the same page as the Board.
Financial Controls
Fraud is increasingly becoming one of the biggest concerns for your CFO. One CFO in our survey shared a statistic he’d recently heard that 5% of all revenues in small businesses are lost to fraud (Association of Certified Fraud Examiners). CFOs are concerned with both fraud detection and fraud prevention by plugging leaks into processes and procedures related to financial controls. Making sure that vendor payment responsibilities are split properly among your accounting team is the most pressing issue. Smaller companies often have one person doing too many things and technology can help provide proper controls. Larger companies frequently have transaction volume that is hard to properly monitor. Proper procedures and split duties are the answer here.
Over and above these top five concerns, there were several other concerns that were mentioned, including:
- Technology
- Risk management
- Knowing what you don’t know
- The integrity of company and staff
- Growth in revenues and margins
- Health care
- Doing more with less
The list is not all-encompassing and every CFO has his own list of items to prioritize. But you’ll know you have a good CFO if they anticipate these issues and strategize on how to overcome them while assisting to achieve the company strategies. Now, go get a good night’s sleep. There is a lot to do tomorrow.
Dave Chase is a Director at Amplēo. He is currently taking a sabbatical to move with his family to Chicago for a service opportunity. This will take him away from Amplēo for three years. He intends to return to Amplēo at the end of this assignment in July 2025.
Before becoming a Partner at Amplēo in 2011, Dave spent 9 years in various financial strategy roles such as divisional CFO at Honeywell International Inc in their Phoenix and New York offices. In 2007, Dave became the CFO, and ultimately the Consumer Division Executive VP, for Cricut, a large private equity-owned company in consumer products manufacturing, distributing, and retailing. Dave has led or been instrumental in raising multiple rounds of equity and debt in excess of $500 million. After a successful career, Dave has used his broad experience in global finance and strategy to assist Amplēo clients. Dave is active in the entrepreneurial and small business mentoring community in Utah and is a frequent speaker on finance and entrepreneurship.
Fun Facts/Hobbies
- Wakeboarding
- Snowboarding
- Ski-mountaineering
- Hiking
- Passion for humanitarian work
Education/Certificates
- MBA from Brigham Young University
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