Remote CFOs – Is Success Really Possible? It’s All a Matter of Trust
More people are adjusting to the idea that our “new normal” includes remote work in some capacity. And this realization brings along new considerations, including which positions are better suited for remote work and the opportunity to attract additional top talent in various geographical areas. But when you’re talking about a leadership role, there are a number of other factors to consider, especially when that role is based in accountability and highly sensitive, confidential information, like a CFO. As such, many wonder if it is possible for a CFO to have success remotely.
As we all know, the CFO holds the top financial position of an organization. Some focus more on financial planning and strategies, while others focus more on budgeting, accounting, reporting, and risk management. In either case, the CFO ensures that the organization’s numbers fairly reflect its performance. Also, in either case, the foundation of the CFO role is relationships, which are generally viewed as stronger when individuals are physically together.
The key to working remotely is developing solid relationships with your direct reports. You need them to feel comfortable reaching out to you, as they would if you were in the same office. Previously, when we all worked together, you could see fear and anxiety in someone’s face and body language when they were nervous about something. It was palpable because, in large part, it was right in front of us. Now, we no longer have that ability, as it is far easier to hide nervous tendencies when you are in front of a computer camera. As the CFO, it is your responsibility to build trust in any situation, including when you are not physically present.
Remote CFO … In the Beginning
If this is a new role and you are just coming into an organization, spending one-on-one time with each team member is crucial in developing a strong foundation. If you do not live in the same area, that will essentially mean more travel in the early stages, but it will pay dividends in the long run. Simply, there is no better way to establish trust in a relationship than being face-to-face, sharing a cup of coffee (or your beverage of choice), and empathetically listening to the other person with whom you work.
In these meetings, learn their strengths and weaknesses, their aspirations, and their fears. Further, be abundantly clear about how and when you will be available when you are working remotely, as well as your expectations. Setting boundaries and clearly communicating them from the beginning will save you headaches down the road.
Building Trust as a Remote CFO
Continuing to incorporate relationship-building and trust as you perform your day-to-day responsibilities is key. Schedule weekly one-on-ones with your team and other stakeholders, and keep that time sacred. These meetings should be non-negotiable for anyone, including the CEO, to continue to build trust. One tip on virtual meetings is insisting on the use of cameras, despite everyone’s fatigue of them. Seeing the person with whom you are working, even though a camera, is better than not seeing them at all. Finally, when your team members reach out to you when you are not available, make sure you respond to them as soon as possible.
Another tip with virtual meetings is to be cognizant of differences in time zones. More than ever, you could be working with team members and clients across the globe. It is not always easy to accommodate others due to their various locations, but in your position as CFO, and to continue to garner trust, you must be flexible. If that means getting on a call at 5:00 am or 10:00 pm, that’s what you do. However, be nimble only where it counts. If other stakeholders or team members are reaching out to you off-hours (and time zone is a non-issue) regarding ordinary work activity, then put a stop to it immediately. Determine how to proactively communicate to them to keep it from happening again.
As always, boundaries are a key piece of trust, and they are never more important than with remote work when we are seemingly available at all times. Of course, if there is an emergency, all bets are off. In your position, you must answer that call and help find a solution. But be aware of the distinction between the two scenarios.
Your team members are not the only ones with whom you need to build trust. To build trust with other C Suite members, take time to understand their issues and challenges. For example, if you find out that an SVP is spending hours a month on a manual task that the accounting or IT department could easily automate, offer the solution, and help make their lives easier. These instances become huge wins all around, as you build stronger relationships within the organization.
More than ever, after a global pandemic and resulting economic crisis, organizations understand that a CFO is an investment and not an expense. And to have the best fit, that may mean hiring someone as a remote CFO. While this will require a different type of critical thinking and creativity in addition to the ordinary technical knowledge and risk mitigation skills of CFOs, many will find it more challenging and fulfilling. Their success is not only possible, but likely when trust is established from the beginning.
Barker Associates provides strategic guidance and outsourced CFO services to companies of all sizes. We can provide the higher level of strategy your company needs to grow. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
Unwrapping the Top Three Overlooked CFO Year-End Processes
The holidays are upon us. And while we all may enjoy the traditions, family time, gift-giving, and merriment (likely even more so this year), there is still work to be done … particularly for CFOs. It’s time for year-end analyses and processes to end 2021 in an organized, balanced way in order to start 2022 with a clean slate. While it can all be overwhelming at times thinking about reviewing operations, marketing expenses, and all financials, it’s imperative these responsibilities are met accurately.
Unpredictability Doesn’t Change the Basics of Financial Planning
With all its tasks and checklists, end-of-the-year financial analyses and planning comes down to the assumption that when you evaluate where you were, you can better understand where you’re going. However, the past nearly two years has made this assumption somewhat unreliable with unpredictability appearing to be the only thing that’s predictable in business.
Despite this volatility though, CFOs ultimately remain responsible for performing the same duties – analyzing financial reporting, balancing accounts, preparing records and documents to file and pay taxes, and creating budgets. These tasks remain stagnant regardless of outside economic factors. But it has never been more important to dig deeper into some additional, often overlooked, processes.
Top Three Overlooked Year-End Processes
For many, we think CFO and Year-End and we automatically think financial statements, balancing accounts, and preparing for tax returns and payroll reports, but there’s so much more. The end of the year presents a unique time to unwrap real opportunities. Whether its negotiating with vendors, securing investments, or looking for better deals with health insurance, in some instances, you can start over in the new year, advancing your company even further (not to mention faster).
So, before you start the countdown to midnight, readying yourself for all that the new year has to offer, make sure you count the top three overlooked CFO processes so that your company is just as ready for 2022.
1. Accounts Payable. Sure, we remember to look at accounts receivable – our team has worked diligently, and we need to collect the money owed for that work. But what about what we owe?
Analyzing the company’s Accounts Payable is not merely a process to get caught up on payments though (although that is also clearly crucial). Rather, it is also an opportunity to review vendor contracts and negotiate better terms in an attempt to save money in the new year.
Are there any other options?
Are there hidden cost savings?
What does the competition look like?
If the CFO doesn’t look at ways to save the company money, no one else will.
2. Financial Technology. Technology has perhaps never been as important as it has been recently. Technology is what kept businesses running and team members connected when they couldn’t physically be together during a global pandemic. And yes, from an expense perspective, you’re likely spending more on it than ever before. But are you also considering what financial technology you are using? Are you asking yourself –
Is it up to date?
Have we switched over to the cloud, where there are automatic backups?
What does your accountant use and prefer?
If not, you probably should. This is a great time to do an end-of-year financial technology audit.
3. Future Scenario Planning. You may be saying, “Of course, we take time to strategically plan out the year,” and I’m sure you do, but things are different now. Knowing the challenges unpredictability creates in successfully running a company, it’s crucial to expand this planning by using future scenarios. Essentially, you create different scenarios and develop the response or plan of action for that particular set of circumstances. While this type of planning was historically the foundation of crisis management, with crisis permeating every aspect of business, it plays a more prominent role in day-to-day strategy.
With future scenario planning, you define triggers in advance and commit to be flexible and nimble enough to account for them. For example, a common future scenario planning topic this year is PPP forgiveness. For those who do not know yet if their PPP loan has been forgiven, future scenarios include full forgiveness, partial forgiveness, and no forgiveness. Analyzing how each of these scenarios will affect your business next year is key to unlocking future success.
Barker Associates has extensive experience in year-end processes and planning. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
The Pandemic’s Larger Impacts on Financial Reporting It’s About Much More than a Loss of Revenue
Many people incorrectly assumed that the pandemic’s only true effect on a business’s financials was a loss (albeit often significant) of revenue. And while that assumption is not even necessarily true of every business (many did very well), Covid-19 impacted much more—not just financial performance, but also position, cashflow, and balance sheet accounts. There have been impairments to goodwill and other intangibles, effects on inventory, a change in how and when audits are conducted, and impacts to overall company strategy and goals. And these impacts are especially challenging for a company in the growth phase.
If your company is in the growth phase, it’s crucial to think about your options, understand your needs and, more significantly, how they have changed since the pandemic, what numbers are required, and to develop a new strategy. Companies in the growth phase are experiencing positive cash flow. With this increase in cash, they have the ability to repay debt, and are in a better position to seek additional capital from investors to expand their market reach. However, if the CFO hasn’t been carefully monitoring the pandemic’s impact on all aspects of the company’s financials, they likely don’t have their reporting in order to even approach potential investors.
Changing Financial Needs Means Increased Financial Monitoring
We learned fairly quickly in the beginning of the pandemic that liquidity is key to keeping a business from closing its doors in a crisis. The question that plagued many was how to increase liquidity with revenue decreasing? But those CFOs were often only considering pre-pandemic needs and observations, not the changing needs of the company in the midst of the pandemic. Auditors have noted that many accounts, including sales, inventory, and bad debt have been affected, as well as production and distribution.
First, these changing needs require a change in financial monitoring. Cash flow projections and other assumptions used to measure financial instruments pre-pandemic should be adjusted to reflect your company’s new reality. Remember that a majority of businesses have been affected in one way or another, but if that results in their lack of ability to pay you, you’re going to incur additional credit and liquidity risks, increased bad debt, and write-offs.
Cash Flow A careful analysis of your company’s cash flow can help. Some questions to consider about revenue include:
Are accounts receivable being paid?
Are past due accounts being followed up on?
Are late payment fees and interest being charged to customers (your money should not be free)?
Do you need to offer pre-payment discounts?
Should you look at retainers/deposits?
Do you have the capability of setting up auto-payments?
Of course, we can’t consider cash flow without considering expenses. And while there will be a decrease in some, there will be an increase in others. At a minimum, consider the following questions:
How have your office needs changed?
Do you have the ability to downsize?
How much are you saving due to decreased meal and travel expenses?
Where are these savings being utilized?
How much more are you spending on technology expenditures to maintain communications with staff and customers/clients?
Balance Sheet Accounts
Additionally, other balance sheet accounts have also been affected. One issue that warrants attention if you plan to seek outside funding is inventory needs and accessibility. With productivity and supply chains being disrupted, it may be difficult to allocate costs to inventory. There is also the issue of inventory that cannot be delivered because of travel restrictions. This also plays a significant role in the larger economic impact of decreased supply and increased demand, resulting in higher prices going forward.
Goodwill, post-retirement plans, and internal controls are other accounts/issues that require an in depth look at your financials and a pivot in business strategy, as we slowly climb out of this pandemic.
If you’re still waiting for things to get back to “normal,” and analyzing your financials based on pre-pandemic assumptions, you are not doing your business justice. You may think you have enough cash on hand or that expenses are timely being paid, but without meticulous monitoring and a true long-term plan based on our new reality, you cannot forecast or grow to the next level.
This can be overwhelming. But pivoting in your financial planning and forecasting is necessary. Barker Associates has extensive experience in financial statement analysis, plans, and forecasts. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.