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The Value of a CFO

By LVEDC Staff on July 16, 2013

By Gerry Pandaleon

Call me biased, but Chief Financial Officers (CFOs) are the unsung heroes of the corporate world. Sometimes we’re quiet, sometimes we’re funny, but we’re always there when you need to know your numbers. But what do we do, exactly? Maybe the easiest way to answer that is to imagine, as in It’s a Wonderful Life, what life would be like without us.

Imagine your monthly board of directors meetings. With no CFO, how will you review your financial statements? How will you decide if you can afford bonuses or what dividend to pay?

Now head to the bank for a loan. There you stand, empty-handed, when the banker asks for financial statements. “Sorry—no loan.”

When it’s time to cover bills, who makes sure there is enough money? Managing cash flow isn’t as easy as it looks. Without a CFO, who masters the timing of money so ‘money in’ meets the demand of ‘money out’?

Payroll is the one time a month when CFOs are actually pretty popular. But imagine the 15th and 30th without us. Now who makes sure your paycheck is accurate? Who is in your corner, taking the time and care to work with HR to be sure you get the best health care and retirement plans for the money?

Now zoom out to the big picture. Without a CFO, who will be the traffic cop of your Key Performance Indicators? Who lets you know when you’re on track with sales orders and prices? Who tells you when and how much inventory is obsolete, slow-moving, at risk, or ready for sale? Who calculates the ratios that keep you on track with your bank covenants? Who has the GAAP (Generally Accepted Accounting Principles) book at their side, ready to answer questions? Yes—it is your CFO.

Computers generate reports and numbers galore. With no CFO, who has that invaluable ‘gut feeling’ that something’s wrong? Who would notice that margins don’t look right? Who wonders if someone input the numbers wrong, or a product is selling too low, or something’s wrong at the plant? Many people think we have ESP, but it’s really our ESGF (Extra Special Gut Feeling) at work when the numbers don’t make sense.

No CFO? Then who is your CEO’s confidant and keeper of confidentiality? We CFOs know what we can and can’t say; we know when to talk, and when to be silent.

So let’s recap. No CFO? Then no financial statements, no loans, no bonuses, no dividends, and no paychecks. Have a CFO you trust? Then make the most of your unsung hero.

Gerry T. Pandaleon, CPA, CMA FCPA, has spent the past 26 years helping companies understand their financial and non-financial data so that they may reach their goals. She is the principal of the consulting firm Continuous Financial Improvement (www.continuousfi.com). Look for her book How to Sell A Business for What It’s Really Worth, www.ForWhatItsReallyWorth.com.

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