My first CFO job was working for a relatively small organization with an administrative assistant who still used a typewriter and refused to have a computer on her desk. She had been with the company since its origination and she knew where everything was located. She had all the contracts, historical Board reports and legal agreements in a file drawer. If you asked her for a document, she could stand up from her desk open one file drawer and hand it to you within 3 minutes tops.
The truth is, in today’s environment, to locate corporate, financial and administrative documents when they are needed can cost organizations unbelievable amounts of money.
Betty did not like me too much when I became CFO, as she thought I was taking a job away from a man. My approach to this and all discrimination I have experienced in my career is to analyze the situation and determine if I could make it better by doing such an awesome job no one could ignore me. If that was not possible, I would have changed my geography.
When she came to some of the first C-level management meetings, she would ask all the men in the room what they wanted to drink and skip over me. I was fortunate to have a wonderful boss who would then follow her out of the room and tell her what I would like. I quickly realized that if I wanted to be successful in this position, I had to figure out how to win Betty over so that I could get to those documents and of course get a cup of coffee at the management meetings.
Who’s Job is it to Manage Corporate Documents?
Times have changed and the days of Betty or any administrative assistant asking if you would like something to drink or logically organizing documents have gone the way of the rotary telephone.
Businesses have, for the most part, eliminated the administrative assistant position as they feel the position is not needed now that professionals have email and all the APPs and tools a computer provides. Even if there is an administrative assistant, the job description generally will not include managing and maintaining corporate documents. I frequently ask when I begin a new job with a company who has this responsibility; C-Level executives of small and large organizations look at me just like I asked them what kind of cheese is on the moon. They have no idea.
Failure to follow a document management process costs your organization in the following ways:
- The C-Level executives do not have a clear line of sight to the contract terms they are bound to as they are carrying out their corporate responsibilities. This can lead to losing major customers, noncompliance issues with regulatory bodies and lawsuits that take a tremendous amount of time to litigate.
- Creates negative relationships with vendors. I once spoke with a professional who had served as a manufacturer’s rep for an organization for several years. The management of the company changed, and when the manufacturer’s rep came to meet with the new management, they were told: “I looked in the file drawer, there was not a contract, so I am terminating our relationship today.” The manufacturer’s rep had a long-term relationship with the company and its customers in a very closely held industry. Once the new management realized the mistakes they had made, it was too late. Not only did the contract had a 90-day termination notice clause, but the rep was well-loved by many customers. The negative ethical behavior on the part of company management left the rep unwilling to work with that company.
- I have seen many a deal fall apart, and the potential investor or buyer walk away, before due diligence is complete. When a company’s documents are distributed in corporate and personal emails, shared corporate drives, personal drives, even the email files of terminated employees, locating them takes valuable time in which the potential buyer can find a lot of other things that interest them, causing them to move on to another deal that is ready to move forward.
- Compliance issues are not dealt with on an ongoing basis. As a new CFO at an organization with government contracts, a governmental agency called me to report my organization was out of compliance with the terms of the contract. I pulled the “I am the new kid on the block” card and asked to call them back. It was shocking how long it took to locate the contract after I hung up the phone and even more shocking to learn the terms of the contract to which we had agreed. It was apparent to me that our organization had failed to thoroughly read and understand their contractual obligations. When I appealed to the agency that the terms were not reasonable, the agency basically said, “Well you (meaning the organization) signed the contract and you will be compliant, or we will terminate the contract.” This was not the welcoming present I was looking for.
Who is Your Betty?
If I had a nickel for every time someone sent me a contract they considered final, but was not fully reviewed and executed with all signatures, I would be inviting you to my corporate yacht this weekend. Betty would never have filed an incomplete document in her precious filing system without all the signatures, dates, notary stamps and corporate seals. Honor Betty and her memory, as she now rests in peace in the clouds; put someone you trust in charge of finding and organizing all the corporate documents and maintaining them. Your organization will be better for it.
Barker Associates has the unique ability to work with all sizes of organizations and building infrastructure that matters. Contact us today!
Mindy Barker, Founder & CPA | Jacksonville, FL 32256
(904) 394-2913 or (904) 728-2920 | CFO@MindyBarkerAssociates.com