What considerations should the board and management make in determining the needs from its CFO?

February 22, 2010

Regardless of the sector, size or model of your organzaton, you need clear and accurate visibility into your financial activity through metrics, measurement, planning and understanding. Often when we go out to speak with a potential new client, we ask them a series of questions in order for us to deploy our own methodology in helping solve their challenges. Review this summerized version below to provoke thought in what you may need and want from your Chief Financial Officer.

FINANCIAL STATEMENTS

Do you receive a profit & loss statement, balance sheet and statement of cash flows (at a minimum) in a timely, relevant manner? Are your ratios being calculated and how do they compare to peers in your industry and sector. Are they in compliance with your borrowing agreements and can departmental or divisional leads review and respond to the data?

COMPREHENTION AND UNDERSTANDING

Do you or someone in your firm have the expertise and knowledge to understand the reported financial data and be able to implement changes to add value and increase profitability? Can this person also add clarity to current and future business and initiatives?

BREAK EVEN ANALYSIS

Do you have visibility into the revenue targets that your company must meet in order to satisfy and cover your other obligations and do you know how you are tracking against those targets?

CASH FLOW

Do you have at least a three month view of what your cash projections looks like? Can you articulate where the shortages and surpluses will be and the strategies for both?

VALUE

Do you know the value of your business and have insight in the the metrics and activities that are beneficial or detrimental to its overall value?

BUDGETING / PLANNING

Do you have a budget and strategic roadmap in place for this fiscal year and do you measure against what your initial plan intended?

VISIBILITY

Do you have the visibility into the most important key performance indicators in your organization?

INFRASTRUCTURE

Are your current systems adequate for collecting and reporting the data that you need to effectively run the business? Are you maximizing the potential of the systems you do have in place and have the cultural buy-in to where employees are effectively using these tools?

BUSINESS PLAN

All organizations large and small should have a strategic roadmap for that is updated regularly. How do you review and compare actual operations back to the business plan to determine your level of success or failure versus plan?

EXIT PLAN

Is there a clear plan in place for exiting the business or building a succession plan around your departure?