This article will help you to evaluate your Chief Financial Officer and the entire accounting department.

Phil’s Profit Points™ in Brief:
- Are you receiving information from your Chief Financial Officer, Controller or internal accountant about the past, the present or the future?
- Does this information help to explain what happened, what is happening now, or what is going to happen?
- As a manager, which information is most useful to you?

A Strategic Chief Financial Officer

You’re busy running a growing business. Is your CFO helping you to improve profits, increase cash flow and build up your business value? Many CFOs are glorified controllers in that they control information and prepare historical financial statements. Often, this isn’t even the CFO’s fault. Many CEOs aren’t directing or utilizing the accounting department to its full potential.

Personally, I hate riding backwards in a vehicle, whether I’m on a train or even a bus. I need to face forwards and I want to see what’s going on. Your CFO needs to do the same for you: show you the future.

In business, the future is more important than the past. The past, which is reported in your historical financial statements, tells you what happened according to specific accounting rules. Accounting rules were developed to standardize financial statement reporting so that external users like bankers and investors can evaluate different companies and make financial decisions.

Accounting rules weren’t developed to help managers run and grow their businesses. That’s shocking, I know.

That’s why you need a strategic CFO that can interpret the past, monitor the present and predict the future. You also need management information that measures business performance, in real time, so that you’re not constrained to historical financial statements.

Here are some key questions to guide your CFO or accounting department:
- What are the gross profits and gross margin percentages of our main product and service lines?
- How do these compare to the prior years?
- Are margins increasing or decreasing?
- What are the trends and estimates for future costs?
- Which products and services represent our highest revenue and profit potential?
- Ruthlessly pursuing profits will help you to increase your bottom line. For example, if you add $1,000,000 to your bottom line, you’ve added between $3 million and $5 million to the value of your company, assuming standard valuation multiples of three to five.

A strategic CFO can help you to improve profits in the short-term and increase the value of your business in the long-term. Investing in a strategic CFO is good for business.

Tough Question
Are you positioning your CFO as a strategic player on your management team and are they stepping up to your expectations?

From The Piggy Bank
Hiring people smarter than you and empowering them is the best way to achieve profitable growth.

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points™, and owner, or part-owner, of four businesses. www.symcoandco.com

Shawn Casemore, President, Casemore and Co.
www.casemoreandco.com