As a key individual within the company, you must make sure to lay a solid foundation for yourself and your role as CFO from the start. We have studied best practice and prepared a “to do” list for the first 100 days.
In this article, we are presenting the best advice McKinsey, EY and other leading companies have for freshly minted CFOs, and describe what should be accorded priority during the first quarter. We have studied the advice from the experts and “distilled the best of the best”.
- Study the company’s balance sheet. One of our sources calls this the First Commandment for CFOs. A well-ordered balance sheet is fundamental to everything you will have to get done in the role of CFO. With the help of smart tools, you can build up an accurate overview of assets, claims, liabilities and debt.
- Be prepared for the unexpected. The challenges you and the company are facing will often be different and bigger than those mentioned during the job interview.
- Familiarise yourself with the strategy and understand the business. Have in-depth discussions with the CEO and the Chairman of the Board about how the company puts its strategy into practice. Look for areas of non-conformance, and ask why any investments, cuts and other changes agreed upon have not been made.
- Review key documents. This applies in particular to the strategy (as mentioned above), but also to minutes from board meetings and audit reports. Hold meetings with auditors and others to discuss the company’s status.
- Ask “stupid” questions. As you are a new member of the company and not influenced by its history, asking “stupid” questions may shed light on fundamental issues that have been overlooked.
- Prepare a profit analysis. This is already part of your DNA, so there’s no need to go into detail. But how are profits looking compared to the goals in the strategy and action plans?
- Perform a cash flow analysis. Review previous reports and look to the future. Run a stress test where you compare the worst, expected and best case scenarios for money flowing in and out of the company bank account. Do you have a reasonable idea of how the company’s obligations will affect cash solvency in Q3 next year?
- Build up an overview of which estimates you need to deliver. Budgeting, forecasts and, perhaps, investment analyses are among the reports the CFO is usually responsible for delivering. Precise estimates generally require you to have a good handle on the preceding points.
- Become leader of the team. Most CFOs have colleagues in the department – with different roles, responsibilities and skills. Find out who you can rely on when it comes to detailed issues, so that you can leave the details to them while you concentrate on the overarching issues.
- Find a mentor. Newly minted CFOs interviewed by McKinsey highlighted the value of a mentor, but many of them were less than satisfied that their particular mentor was the CEO. One tip is to find an external and trustworthy mentor, and/or to participate in network meetings.
- Make friends. A CFO has to work with people in a variety of departments, so it is essential to prioritise when building up relationships – find out who is most important first. What do they expect of you? For most people, it is a good idea to prioritise the heads of the different business units.
- Make clear what you stand for. In order to build up credibility, it is essential that your colleagues know where they have you and your character – where you are unshakeable. This does not mean that you should be rigid and non-diplomatic, but it is never good to have a “weather vane” as CFO.
- Set some time aside at the start to build confidence. It can be demanding to build up a solid overview of the accounts, balance sheets and cash flow. If you use smart tools such as Complete Control, you can devote more time to strategic issues, and simultaneously build confidence in your digital skills.
- Listen first – then act. CFOs are often replaced during testing times for the company, so a newly minted CFO will often encounter expectations of fast decisions and changes. Resist the pressure. You need to be informed “widely and deeply” if you are to make decisions that will prove viable in the long term. People respect a listener.
- Select a limited number of areas to change. It is sufficient to find three or four areas where you wish to implement major changes; this is more than enough in addition to “the daily grind”. In order to make lasting changes, you need to repeat messages over and over again. And choose areas that are sufficiently general to allow room for new concepts on an ongoing basis.
- There is more to management and control than limitations. A company looking to grow must take risky but well-considered decisions to accelerate value creation. When a CFO is to challenge the existing strategy and business plan, he or she must do more than suggest cutting investments and making microscopic improvements in the margins. The management role demands more than being a typical controller.
- Draw up a “compliance” list. This applies to obligations linked to the employer role, HSE, customer conditions at the bank, reporting to the public sector, etc. – and this year, you can also add GDPR. For all items on the list, ask yourself if you are satisfied with the current status. Take the list with you when visiting key stakeholders such as your bookkeeper, auditor, bank, insurance company and attorney. With tools such as Complete Control, you can help yourself by setting up notifications linked to each aspect.
- Establish what value the department can deliver. Are you delivering figures that are important in helping the company achieve its KPIs? Figures that matter to the heavyweight decisions? Do you deliver your reports too often or too seldom? Do other departments receive figures from your department that can help them improve?
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