Uncovering the ideal plan for building a world-class CFOs office

Madhurima Gupta:
Hi everybody! Who does not want to build a finance function, which is world class? I think every CFO wants it, but what is the right path to it? And that’s exactly what we are gonna talk about today, with our excellent panel. So welcome to the Mid-Market CFO Circle Live. I’m your host, Madhurima Gupta. We launch new podcasts every Thursday on the CFO Circle Community. So if you’re not on the CFO circle community yet you can join today. It’s free access to your peer insights on technology trends, predictions, and the potential cost of not implementing automation and emerging technology to solve CFO office challenges on a regular basis. So to kickstart today’s CFO Circle Live, let me introduce you to our panel of CFOs today. Blair cook and Wayne spack, I’ll start with Blair. He has held the position of corporate director at various organizations. He is an author as well. He’s currently working as CFO of Mara Renewable Corporations and Blair co-founded Executive Finance Partners in 2012, where he works with startups, growth, and turnaround companies as an advisor and executive. Blair has helped many companies to test the academic and real-world theories, practices and will help us understand today by sharing his experiences. So welcome to the CFO Circle, Blair. Thank you for joining us.
Blair Cook:
A pleasure to be here.
Madhurima Gupta:
Next up we have Wayne Spivak with us. He also has held various positions like that, of a CFO, CIO, and COO across many companies in his three-decade-long career. Right now he’s working as the CFO and President of SBA consulting. He is also an instructor with Illumeo academy. Hey Wayne, welcome. We appreciate you joining us today.
Wayne Spivak:
It’s nice to be here.
Madhurima Gupta:
So to our listeners, as promised, in this session, we will get tips from Blair and Wayne on how mid-market organizations should plan people, process, and technology to build a world-class finance function. So to get started, you know, let’s set some context. In the age of digitization, CFOs must act now to drive competitive advantage for their organizations or they’ll be left behind. So Blair, what, or when, according to you is the right time for the founders of the business to hire finance leaders.
Blair Cook:
So founders, uh, of businesses typically will reach out to a CFO when they’re ready to start scaling their business. And, and they’re probably going to need capital they’ll need infrastructure, they’ll need reporting. Uh, and that’s probably the first time they’re gonna say, you know, I need a finance person. And so, um, in those early stages, you know, I’ve been a CFO of a startup where there was myself and a founder, um, you know, very, that was very early being brought in. But the impetus for that one was, raising capital and going public very quickly. It was in a blockchain, uh, application. Other times you can go quite away cause there’s a lot of, um, you know, seed capital that might be spent over, you know, a year or two proving out a prototype. And you may not need a CFO or certainly not a full-time CFO. You may just wanna tap into a part-time CFO, um, or a fractional CFO. And that might be sufficient until you get to that point where you need to, build a financial presentation or raise some capital or you start, um, you know, having monthly reports of financial results that need to be shared with stakeholders and users like banks and the like. And then you may want to think about, uh, bringing on a CFO. So you really need to have that, that critical mass, uh, behind your business before you’re gonna reach out and find somebody.
Madhurima Gupta:
So Blair, if we narrow down on growing companies aiming to grow into enterprises, let’s say in the next five to ten years, right. Or even the companies that are aiming for mergers and acquisitions. So for such companies, how would hiring a CFO early on help?
Blair Cook:
CFOs will be, uh, you know, helpful in terms of, uh, well, there’s a number of different things that, that CFOs can do to really adds a lot of value. You know, we can do reporting, but to be honest, that’s not the best use of a CFO. You probably hire a controller type to deal with the reporting stuff. And so, um, you know, CFOs are really useful in terms of bringing that value-added skill that helps a business scale. And so scaling requires, uh, a couple of things. It requires building a team. It requires, you know, putting processes and systems in place. And of course, it requires, uh, a skill to help, the development and the execution of strategy. And that strategy could be through either organic growth or, a business pipeline of a product that they’re trying to bring to market. Or some companies will accelerate that by using mergers and acquisitions. And so that’s a part where a CFO will reach out with perhaps, uh, a director of corporate development or the CEO to identify targets in the sector, evaluate those targets, screen those targets, perform due diligence, negotiate the transaction, value the transaction. Then bring it to a term sheet and purchase a sale agreement and then eventually integrate that acquisition into a business. And so again, CFO would be a key right-hand person for the team to make that happen and bring that, uh, merger and acquisition to a successful conclusion.
Madhurima Gupta:
My next question is for you, Wayne. Post pandemic digitization has become a mandate for CFOs, but there is still a dilemma whether to accelerate business growth through digital initiatives or preserve or restore, an organization’s financial health by cutting costs. So, uh, what would you recommend, uh, in terms of finding the right balance?
Wayne Spivak:
So you have a lot of wiggle room, as we’d like to say. Um, it’s taking a look at your budget and making intelligent cuts and reallocations. So when I talk to people about cashflow problems, you know, sometimes you can increase revenues, but a lot of times you have to cut your costs, but cutting a cost is just not cutting costs. It’s reallocating some of those, uh, savings to go back into productivity, to help raise revenues. So for a business, you have to look at what technologies you need to adopt. I mean, you may not have a choice. You wanna go sell to department stores or big box stores, and they use EDI. You don’t have a choice. You must use EDI, but there are different EDI vendors out there at different price points. And if you are able to have some, uh, variance in who you could choose, sometimes you can’t. Then what you do is you try to find the most cost-effective solution. On the flip side, is you can turn around and say, not everybody needs access to our accounting ERP system so that we’re not gonna have to give you user access. And if there’s a per-user access fee, well, you’ve just saved some money. And not everybody needs it, even though they think they need it. So, it’s an intelligent use of your dollars to maximize the effort to digitalize or become more computer-centric. Also by doing it the right way, you’re able to decrease errors and then you’re gonna save money on manpower. Most costs are payroll, salary, manpower. So if you’re able to save money in configuring your systems to be more automatic, with less user intervention, and you set it up correctly the first time, you don’t have to worry about auditing everything that you have.
Madhurima Gupta:
Got it. How about creating values in the long run? CFO inhibitions can have detrimental effects. Do you agree with that? Or is that something that you’ve even seen happen?
Wayne Spivak:
You know, that’s why you re-forecast your budget on a monthly basis, or some decision made last month may no longer be valid with new information. I had to give a lecture at Columbia University in New York. And I came in with a plan on how I was gonna teach it. And I sort of did a poll with the students and found out that none of them knew accounting. It was for programmers who had to do with project management. So, you know, I had to change my whole lecture on the fly, which came back to an important concept that plans are dynamic, not static. So you have to be nimble. Companies that are no longer nimble have the greatest difficulty in sustaining themselves.
Madhurima Gupta:
So Wayne, in that case, when companies are, let’s say today planning for, uh, what their finance functions should look like in 2025 and beyond what would you say would help them to ensure the risks associated with let’s say cost-cutting today?
Wayne Spivak:
Today, more than ever before, especially when you use cloud-based systems, which used to be called coin servers back in the day when I had a beard that was not gray. Everything now can be connected through APIs. So you don’t want somebody to enter data three times. You want them to enter once and through the magic of APIs, it appears in all the systems. So all the systems should be interconnected, so that data flows. Somebody just asked a question on a slack system having to do with, uh, they’re doing consolidation. And they found that in their Excel spreadsheets, they’re double counting and triple counting revenue. And my question back was why isn’t your systems doing in the consolidation, which theoretically should allow you not to double and triple count. Assuming of course you configured it properly, but that’s always the case. So, you know, you want systems that are interconnected, not siloed. Great examples, Salesforce seems to be one of the biggest and most complicated of the CRM systems. They had been talking to a senior retail salesperson at this event, I went to the other day. And once you get an order and it’s confirmed, they move into most systems and that order into the accounting system and the entry system. That eliminates a lot errors because the order itself, the items, the prices, everything has been agreed upon. It’s sort of, uh, which is the same concept. EDI, uh, the order moves in. It should be seamless. And you really shouldn’t have to change the order once it’s been accepted,
Madhurima Gupta:
Coming back to you, Blair. There are a lot of cases where businesses start and the responsibilities you expect, the CFO to shoulder are often done by a CEO. Do you think when a company’s structured like this, there are certain areas that are left out, and will it be better handled by a finance leader instead? And why?
Blair Cook:
Yeah, certainly it really depends on the background of the CEO. You know, some CEOs are very adept at, uh, raising funds and dealing with banks. And then some CEOs, you know, true founders are very technical, uh, because that’s where they found a business idea. And so for those, um, that are perhaps more hands-on, better at selling, better at technical, better at engineering, you know, it probably behooves those kinds of CEOs to have a good, strong financial person by their side. It just, makes them well-rounded. But like I said, some CEOs are very adept at raising their own money, negotiating their own deals. Uh, and so I’ve worked for both types of entrepreneurs that are out there and they can do both ways. Um, and so for those ones, it’s perhaps not as important to have, uh, a CFO by their side. If they are financially literate or financial experts themselves, and sometimes they just need somebody to run the numbers for them. In which case you don’t need to have as qualified a CFO, a good strong controller can help them with just running numbers and making sure the financial reports are available. So it really depends, I think, on the competencies and the background of the CEO to determine, you know, what and how soon they need to have, a full-time CFO, uh, by their side.
Madhurima Gupta:
So this also leads me to ask my, you know, the next question. How can a CFO create value in an organization in comparison to a financially equipped or educated CEO?
Blair Cook:
So there’s a lot of different ways that, um, a CFO can and should be creating value in an organization. You know, first of all, I always see the role of the CFO as kind of a strong number two to the CEO. And so I really think that the CEO is outward-looking, looking for strategy, direction, looking for opportunities, and bringing back that mission, vision, and setting the values of the organization. But the CFO, uh, really can add a lot of value because they take that input and they make it happen. They bring life to the vision, and that’s usually the source of entrepreneurs I like to associate myself with. And you can have, you know, you can have the most, aggressive and assertive CEO out there, and you have the most conservative CFO out there and it makes for a nice complement, a nice mesh, uh, because they complement each other in that way. And so one, you know, sets the vision and the other one executes the vision. And so that’s probably the first way that they can add value to an organization. Um, typically CFOs will add a lot of value in terms of the credibility that they will bring to an organization cause of their financial background, their experience, um, they’ll set up their reporting systems. They’ll hire good people to be able to put credible reports out there. And that’s foundational because that sets up the opportunity to, uh, engage with stakeholders and whether it’s with the board of directors, uh, on a credible basis or with lenders on a credible basis, or even if you’re raising, trying to raise equity financing or with capital markets on a credible basis. And so, you know, typically your CEO would not have that same level of credibility as the CFO would. And so that’s very often the second area that a CFO can bring value. And probably the third area, I’ll only mention three, but the third area that we add tremendous values are around the cost of capital. Managing cost of capital, which is through raising financing. And there’s so many different sources of financing to raise today. And so it’s knowing which sorts of investors to engage at which stages of a company’s life cycle. So early-stage companies will engage often with venture funds. Whereas later stage, um, more mature companies will try to use more debt leverage. And whether they’re doing it through private markets or through commercial banks, you know, that really depends on the nature of the situation and the context that they find themselves in. So a CFO is usually well-positioned to figure out what’s the lowest sources of lowest-cost sources of capital, um, that are available so that, you know, and that can add tremendous value to any organization.
Madhurima Gupta:
Understood. Wayne, we just discussed the need to consolidate disparate system into an integrated system. Given that disparate systems can become blockers for CFOs to implement new technologies and silos and spread out of data repositories. This to some extent keeps CFO offices from building world-class finance functions. For CFOs struggling through these issues, what approach would you say can help their offices get right back on track?
Wayne Spivak:
That being said, everything begins with a plan. And from the plan you process, what you are gonna do. So that’s business process mapping, you do it in gap analysis, and then you execute the plan. So the plan then becomes the new plan, which is how are we gonna go from A to B, which is gap analysis. And you start moving the data over, which entails, you know, dumping data from disparate system one and inputting it into we’ll say, consolidated system two. And that, you know, that takes time because of not only programming, but you need to verify. If you remember for, uh, Ronald Reagan, when, he was talking about the Russians, you know, years ago, it was trust in verify, you know, you have to trust the programmers did right. But you have to verify your data. That’s the number one thing when you put in a new system, is to verify that the outcome is what you intended, not something else.
Madhurima Gupta:
If you talk about the order-to-cash cycle, what would you consider to be the most, uh, crucial process to be automated and why?
Wayne Spivak:
The receipt of the order into the order entry system, uh, needs to be automated if at all possible, because then the,uh, A, there’s error checking if the, uh, customer put in the wrong item or wrong price, Then, uh, if you have the employee do it, you have, you have another chance for an error manually. So there’s two errors, cause now they sent you a piece of paper, whether electronic or not, and you’re manually entering it in. So they may not know the agreed-upon pricing. It may not be the matrix that’s built into the system. So, so that that’s number one. That also frees up a tremendous amount of time, you know, from order to the warehouse management system back into invoicing, should all be automated, obviously, you know, as you ship, it’s a manual process, but you know, the flow of the information, once something is shipped should be automated. Cash receipts are semiautomated when the money comes in. Collections is semi-automated and, let’s go back to cash receipts. Why is it semi-automated? Because if you send out an invoice for a hundred dollars and they send a hundred, you have to match it up, but the systems nowadays will do a pretty good job of saying, does this look like this? Say yes, and you’re done. But what if they, in 99 now you have to decide what you’re gonna do. If you do e-com systems which all take credit cards, every day, the credit card company sends you back a check that’s net of discounts. And now you have, you have, 500 different orders that now you have to match up. So again, a little bit more work, but it’s manual to some extent. So that’s the cash receipt side. Then the collection side, which is the ultimately end of the path when things don’t come in, you know, within terms is high touch and high tech. High tech, cause you send out statements that’s automated. That’s great. That’s wonderful. If that doesn’t work, you need a collector to make phone calls. You also need a collector to find out why you did certain things in your opinion. Why is this deduction there? So you’re never gonna be able to automate that. You know, even though some of the, uh, like I mentioned before, department stores will send you a notice, you know, dig it out, cause their systems are really bad and then figure out what they did and you still have to make a phone call and go, why did you do this? Let me understand your thinking of why you took a chargeback or mock down or whatever else you did or should be automated processes that, uh, you’re never gonna get on the human intervention.
Madhurima Gupta:
Blair, you’ve worked at publicly listed companies, investment management companies, and companies that were acquired. Through this range of experience and as a growth-focused CFO, yourself, what are the steps that have supported, you know, what are the steps for you as a CFO that supported the business’ growth?
Blair Cook:
You know, the first thing I would say that we, we establish is you have to do kind of the nuts and bolts of finance and accounting. And it’s not to say I don’t do reporting, but I need to hire a really good team because nothing will shoot me, uh, in the foot faster than if I don’t have those processes in place. Good reporting framework in place, you know, setting up adequate or system so that we can report things, uh, in a timely fashion. So that’s, that’s level one. And then level two is really around trying to figure out what is the mandate of finance. And the mandate will depend on what is the business plan. And so if we’re in a high growth industry and we’re trying to scale, uh, quickly, well, then you’re gonna need to a team with competencies that allow you to, uh, allow the business to scale. So again, if it’s an international business, having international tax, for instance, and having access to that, whether you outsource it or insource it, but thinking about those, all the different competencies that the finance function needs to deliver on for that mandate. If you’re a public, a company you’re gonna need to have some financial reporting experts, you’ll need to have internal control experts on your team to deal with all those kinds of regulatory matters. And so that’s probably the next stage. And then the final stage is, you know, I call world-class finance, which is, this gets back to this idea that we have to add value through strategy and strategy development.
We have to add through, uh, value through data, data analytics, so that we’re making smarter decisions. We have more predictability, uh, to our outlooks. And then I come back to the idea that yes, we have to engage with capital markets and being raising, uh, funds or, fundraising aware, even if we’re not raising funding, we’re always aware of what is the investment thesis, the investment story of the company and our ability to raise funds, sometimes even when we don’t need it yet, it could be in the future. So always having that posture, that hat on.
Madhurima Gupta:
Blair, every job that we take, we learn what we do, right. And the mistakes we make. Are there certain learnings that you’d like to share with our viewers?
Blair Cook:
Uh, no. I’ve learned a lot of, I’ve learned a lot of things I’ve been doing. I’ve been, uh, 30 years into my career at this point. And so, you know, and I’m always learning. I don’t even pretend to think, I know it all. But, you know, I’ve been CFO seven times, I’ve been on three corporate boards. And so I’ve seen a lot of different businesses over the years. And, uh, probably some of the key learnings, one of the key learnings, that stands out in my mind was, um, you know, I had recently got an MBA. This is, you know, 20 years ago and my first CFO engagement, and I always thought everything was a strategy issue. And this was a turnaround company. And one of the directors came up to me and he said to me, he said, Blair, yeah, this company may very well have a strategy issue, but it’s the execution that’s killing it first. And so in my mind, and that’s fundamentally changed how I approach the companies I get involved with and a number of them happen to be turnarounds. And so sometimes you need to do those, those basic processes that I alluded to earlier. And if you aren’t doing that, don’t even bother talking about strategy because you don’t have the credibility, you don’t have the foundation built. And so that’s why that focus on execution before strategy. If you don’t do that, you’re a turnaround. And it’s interesting how many companies I’ve come to that are, that have been around a while. And they all think they’re growth companies, but yet they’re not executing their own strategy very well. And so until they’ve found what market niche, what value proposition that they bring to the market that makes them unique in the first place. There’s no point in talking about mergers and acquisitions, and organic growth strategies when they aren’t even doing their existing business. Right. And so for, in a couple of these instances, uh, these turnaround situations, we shrunk the business, we shrunk it down to the profitable core and then started talking about strategy and how to grow it. Because over the years, both of these businesses had, uh, just gone after top-line growth without meaningful increases in the bottom line. And so those were key learning execution before strategy. Probably the second, I’ll only share two with you, but the second one is the importance of people. And there’s been all kinds. You know, I haven’t gotten far in my career, the organizations I’ve worked with, haven’t gotten as far, and haven’t been as successful without the people. And, you know, that seems like an easy statement to make, but so much, uh, that can be done on, uh, people management and leadership that you think people take for granted. But it’s very rare in the real world to see, uh, good people management and good leadership, good leadership skills. And so, you know, one of the mistakes I’ve made, you know, very often you’ll try to go out there and hire people who, you know, maybe the cheapest or the people who maybe, you know, you can train and develop people. You know, I’m fond of this expression that sometimes you pay peanuts and you get monkeys. And so it, sometimes I go out there and I try right now, I try to hire the very best people I can find. And sometimes I have to pay more for them, but I find they pay off in spades. And so it, uh, I’m very conscious of talent, not only recruitment but talent retention, talent development. And I think as a CFO, you know, I am a finance guy, but that’s become probably the secret of my success is focusing on people because good people will deal with processes. Good people will deal with systems, good people will deal with strategy issues. But if you don’t have good people, you can’t deal with any of those things. And so, uh, a huge amount of emphasis goes into people management, uh, talent management and leadership.
Madhurima Gupta:
If you talk about cash posting, I think the process that is most manual is collecting checks. And when you have these checks, you have to map them with your remittances and then regard the payments. So, Wayne, this is a question for you. So in your experience, based on your peer interactions, which part of the cycle is most automated today?
Wayne Spivak:
I mean Europe and in Asia, everybody’s using wires. So while you might get a payment advance notice, you’re waiting for it to come in their bank. The bank is accurate enough. All right. So in other words, it has the company name and has the amount, the amounts exactly match up. The AI in a lot of the accounting systems today from the low-end systems like QuickBooks and Xero to, you know, the high-end systems be they Microsoft Dynamics, Sage Intact, NetSuite or SAP, JD Edwards will match up your checks in the course the system says, is this, you know, it doesn’t automatically do it. And immense saving is in time. So a lot of that’s already being done. And with the advent of all these systems, being able to read your bank account and download the data, I mean, you don’t have to do the checks manually anymore. I remember when you had to add, literally take the checks that came in the mail, yeah. Nowadays you can just add them up. I mean, you don’t even have deposit slips anymore in the US. You just can scan them or bring them in and they’ll scan the individual checks and put a credit on your account in the bank. And then you just match it up afterward and you can look at which checks came in. So, um, it’s been automated tremendously to double-check because there, you know, there are errors even on the flip side where, um, with positive pay, which is a process to make sure that you, the company actually wrote this check, cause we’ve all been victims of attempted fraud. They make mistakes, you know, it could be the check. It could be in there and the scanner read the check wrong and they bounced the check and you don’t want this check to be bounced. Now the copy you’re showing me is exactly what I wrote, but, and exactly what’s in the system, but you still bounced it. So you always need a human being, you know, that’s why you’ll never get, you know, as much as one of the big, uh, topics in accounting is getting rid of accounting salaries because of AI. Yeah. You’ll get through with some people, but the percentage is gonna be very low, you know, some of, of quirks that you used to use, but so you’ll go from bookkeepers or, or, or accounting clerks to accountants that are more trained that will be able to do some more analysis.
Madhurima Gupta:
Understood. There are CFOs today who are looking to manage cash seamlessly, what steps would you recommend them to take so that their finance function can be on the path to success?
Wayne Spivak:
Your accounting system, if that’s not clean, you know, there’s an old data , uh, cache garbage in his garbage out. Well, you’re already gonna get garbage in. So your cash, uh, management will be off. Your runway will be off. So you need clean data. You need a good accounting system. Second is your budget and your forecast, you really need, in my opinion, to forecast on a monthly basis and the re-forecast or the forecast, whichever way you wanna look at it is not as time-intensive as the budget. It’s looking at, what information have you garnered and what has changed in sales that can move your different sales lines up and down. You may have had a price increase in what you sell and or you might have a new estimation of how many units you’re gonna sell. So you need to do a monthly re-forecast out for 18 months. So you are over rolling 18 months, and you have to understand that three months out is pretty accurate. Four to six months is not so accurate. 12 months to 18 months is really wild. After 18 months, you’re kidding yourself unless you have contracts out that long, that’s a joke. On the expense side, you know what your rent’s gonna be. And if you have a three-year contract, you know exactly what it’s gonna be for three years, it’s not gonna change with the exception of maybe your share of taxes. All right. So you would, uh, find out what the taxes are and re-forecast that of your rent, uh, telephones, you know, bills may or may not remain constant. You know, team is always a cap sheet. That’s one of the areas that, uh, you know, you can play with a lot and cut. Advertising is something where if you have a long-term advertising campaign, you might have a better feel for it. The biggest area and the biggest expense that you have sans, uh, salaries, which needs to be re-forecast every month, because you constantly have different headcounts and raises and whatnot is, if you sell a product to your buyers. And your buyers need to be adjusted and maintained based on your Salesforce. If you buy a lot of goods based on a 60-day turnaround time, and you’re selling at 120 you’re gonna have cash flow problems. Because you’re not recouping your investment plus your profit and very topic, or not a cliche, but line, you can’t spend profits, you can only spend cash. So now you have the two biggest inputs into your cash flow system, which is good accountant and your budgets forecast. And then you need a system. And the best way of doing it is having automated system, uh, like a product like Dry run, or, and there are others out there there’s called Sentinel a few others that will allow you to take these inputs in, and it will quickly calculate what your runway is. So it’s always better to know ahead of time that you can run outta cash, because unless you have built-in lines of credit, it takes time to factor or get an asset-based lender or loan from the, uh, or investors the case may be. So, you wanna computerize it, doing it in Excel is mind-numbing going slow. Cause you have to enter all the data. I mean, some of the data you might have your budget, you’re gonna enter in through, uh, an import from Excel, but budget is much easier than literally going down. What if you need to model and change certain assumptions, right? If you have a system that does it, and it all takes is saying, okay, increase everything by 5%. And it does it, that’s a lot easier than building it into Excel and changing a number than going back and going back and going back with somebody’s software, you just create a new, um, forecast. It reads the same basic data in, you can put in the same, um, budget. And then you can say, add 5% to sales. You can make the, you know, all sorts of things. So that’s what I would suggest people do for cash flow. That’s one of the things that my company does for customers.
Madhurima Gupta:
All right. Uh, you know, drifting a little, um, on the other side, um, human resources play a major role in ensuring that you’re building a world-class CFOs office. That counts me to talk about the CFO’s team. So we see that one of the key drives for great resignation, in general, is the employee’s motivation to work because, um, often they’re assigned mundane and laborious tasks. Do you think automation could be one of the things that can be implemented to solve this problem because automation can take away this mundane and repetitivework?
Blair Cook:
It very well could be. Um, but I mean, at the end of the day, depending on the maturity of your organization, for many organizations, somebody has to put those invoices into a system and that can be mundane and all that stuff. And so until you get to an RPA solution, uh, robotic processing automation solution or something like that, somebody’s gotta put those invoices in. And so some of the ideas like, with my teams, what I do is I set a roadmap and once a quarter, we have a strategy planning. And then we have once a year, we have an annual strategy planning for the finance department. And on that roadmap, we have a three-stage maturity model that we’ve developed. Level one is very much a compliance level, which is just, you know, trying to get financial statements and processing transactions, just getting stuff out the door and, you know, through my own experience and through being a thought leader in the space is over half of organizations out there live in this level one and level one is not a fun place to be, cause you’re always just trying to keep up with the waves of invoices coming at. You’re just getting the statutory reporting, done, filing the tax returns, filing the remittances. You know, it’s, it’s very administrative feeling. It’s not adding a lot of value to an organization, but there’s so many things that are coming at the finance function today from the regulations to the legislations, to the tax rules, to the this, to that. There’s everything coming at us that we just overwhelmed. And so level two is trying to get a control of that. And, and level two is, uh, you know, I use the analogy of a train with my own team, as I talk about, you know, there’s, uh, you know, the caboose is level one. You’re, you’re lagging the organization. You’re just trailing. You’re trying to keep up. Level two is when you get to become a passenger on that train. And a passenger means that we do have good processes. We do have adequate systems. We do have people who are competent, uh, motivated and we’re in the loop on everything that’s going on. So we’re dealing with issues as they come up in real-time, as opposed to leaving them till year-end or a quarter-end to deal with them. So that’s level two and then world-class finances, level one. And that’s where you’re, you know, you’re leading the train that strong number two, right beside the CEO. And a good CFO will have a team behind them that enables that to happen. And so those are kind of the three levels of making that happen. So the great resignation in my mind is like, you have to tantalize people with the art to the possible, you know, I can’t do robotic process automation overnight. That’s a big undertaking, you know, it may take a year to transform. And so this roadmap, I call it the finance transformation roadmap. It can take, you know, years to make this happen. You know, at Mara, my current one, I’ve been there four years now. And we went from when the day I started four years ago, we were a flat level one. And we have a maturity assessment. There are 23 indicators. And you just say, we were there one, two, or three. We were ones all the way down because we were an R&D company that was largely tracking, uh, costs. It didn’t need much more than that, but as the company went through that R&D stages now commercializing, and now it’s going, it’s trying to go globally. The expectation, the mandate has very much changed. And so I’ve had to figure out how do I transform that finance function from just a back-office into something, you know, that’s more value-added, value-driven, um, in its delivery. And so we’ve got this roadmap of all these different things. And generally speaking to people who have been there each year, we see incremental improvements and that, you know, that gives people something to look forward to. It gives us something to always be working on. It gives people, a career track, and whether you’re getting a promotion or not, as a company grows, you grow in your role, and you learn new things. And so, uh, I think this idea of, uh, mundane tasks, I think that if you are a static organization and you have that mindset, that this is all there is then, you know, I could see why people will get tired of that now. Um, and then, opposing if somebody has this opportunity that the world around us is changing and we have to adapt to that world, you know, I firmly believe that accounting is in the news distribution business, whether we like it or not. You know, we live in a Twitter world and accounting and finance over the last couple of decades has not changed that much. We still report financial results in 45 days or year-end results in 90 days that doesn’t align with the Twitter world. And so are reporting old news, uh, or are reporting real-time news. And then of course the other challenges are we repeat reporting, uh, you know, real news, or are we reporting fake news? And that too is a challenge in finance. And so anybody who sits there and tells me that, you know, there’s nothing that we can do to improve and engage our people to be stronger. I think they’re missing a lot of opportunities out there because no matter what organization you’re in, there’s opportunities to adapt to what we see in the world, uh, around us.
Madhurima Gupta:
All right. So now that we are at the end of the session, I want to understand and ask your parting thoughts for our listeners and yours on lines of, uh, how you would recommend our listeners to build a world-class finance function that drives, uh, their businesses to success.
Blair Cook:
Some of the, the thoughts I’ve shared with you here today.Number one is, uh, it’s about the people. So, uh, this idea that we just finance people, and if you, uh. And a lot of CFOs, you know, we’ve all come up, we’ve all got designations. We’ve come up through the controller office or the finance function, but when you become that CFO, it becomes almost a big chunk of your job becomes leadership and talent management. And so recognize that embrace that, uh, because it is the secret to your success. Um, the second idea that I think, I talked a little bit about was this idea of a roadmap, uh, a maturity model. I don’t care what you call it, but it gives people the opportunity to look forward not. And so we look forward 90 days, we look forward a year and we also look forward indefinitely and to determine what our mandate is and how we’re going to get there. And I don’t overwhelm my team by saying, listen, you’re gonna achieve this in the next 90 days, or the next year. It’s over the years, the transformation gradually happens. And it’s remarkable each year. Our little needle is changing and getting a little more progressive. And we’re getting a little bit closer to what, fulfilling the mandate that we’ve set for ourselves. And so I’d say that’s a, a key thing as well. And, then, probably the final parting tip for the, the CFO is to recognize the opportunity to, uh, increase your value, add in the organization. Uh, I think, um, a lot of people because of our backgrounds, a lot of CFOs are, you know, CPAs or, or accountants or finance people. We, we rely heavily on the numbers, but it’s the softer side of selling numbers that makes us influential, gives us clout, makes us powerful strategic thinkers. And so it’s taking that data. It’s taking those numbers, spinning them into stories. It’s showing the impact of those things. It’s negotiating. It’s the soft skills that actually make you, um, uh, a very powerful individual. And a lot of CFOs as they just get the, get into that corner office, don’t spend as much time, or don’t recognize the importance of cultivating all those soft skills, like relationship building and team building and communication skills and leadership skills. Those are the things I don’t do very much technical anymore. It’s all my soft skills and, and learning to use other people to communicate and deliver the message that makes me effective as a CFO and a leader in an organization.
Wayne Spivak:
And when I say plan, I also mean, look at your business plan, look at your mission statement. And this is CFO can do with the other C-suite members. See if things have changed. Nothing’s worse than starting off as a pure one brand eCommerce company, all of a sudden going up to eight different brands, which means a lot more inventory, um, then selling white label and opening up an office halfway around the world, which wasn’t part of the initial plan. So all the decisions based on the initial plan were no longer, uh, I won’t say valid, but, uh, would’ve been different. So you, you always need to reassess and the best time to re every month when you do your, your re-forecast, it gives you time to see incremental changes and see what, what, what the CEO’s thinking about and what marketing is thinking about. And where you think you’re gonna, and the CFO is right in with all those, your job is to say, no.
Madhurima Gupta:
Great. I think this was an awesome discussion. So thank you so much, Blair and Wayne. It was great speaking with both of you and I’m sure your inputs on this session will help CFOs build world-class finance functions. So thank you so much for your time once again. And for our viewers out there, you can watch complete episodes with our guest speakers on the link, in the common section. And we’ll be back next month with another roundup of industry stalwarts and thought leaders. In the meantime, don’t forget to subscribe to the Mid-Market CFO Circle Community, to never miss an episode. See you next month, stay tuned.