Whether your CFO has just resigned unexpectedly or you decided it was time for a change, management transition can cause worry, disruption, and sometimes a fair amount of chaos. It doesn’t have to be this way. In the hands of an experienced Interim CFO, transition presents a valuable opportunity to reevaluate the position and realign responsibilities and mandates with organizational objectives. Through Interim CFO Consulting, continuity can be maintained, improvements can be made and the hiring process can proceed more thoughtfully with a greater chance of finding your perfect-fit CFO.
Filling the Financial Knowledge Gap
Most CEOs and COOs have some degree of financial operations know-how, from a strong finance background to a good general understanding of the finance function. But, even for those who carry impressive financial bona fides, it’s probably been a while since they were on the finance front lines. Officers running smaller companies can be at an even greater disadvantage, and finding themselves without a trusted CFO can really leave them scrambling. Their limited bench often means there isn’t an existing team member ready to step into a CFO’s shoes even for the short term. If merger and acquisition activity is thrown into the mix for companies of any size, things can become even more complicated, and the need for financial leadership and acumen only increases.
Interim CFO services can help in all of these situations. Interim CFOs bring up-to-date and highly nuanced knowledge that spans from finance to accounting. The latter is especially critical given the accounting knowledge gap that CFO consulting services firms almost always find. Understandably, very few CEOs or COOs have been steeped in the minutiae of accounting, and it’s certainly not their job to focus on such details now. CFOs tend to be finance-driven rather than accounting-driven, and even those with accounting experience typically rely on a CAO or controller to keep up with changing regulations, technology and procedures. An Interim CFO with an accounting background can inject new ideas and up-to-date precision into the accounting function, turning something that people often view as tedious and boring into innovation that can have a powerful impact on the bottom line.
The Reality Check of an Interim CFO Consultant
Unlike Jack Nicholson in A Few Good Men, an experienced Interim CFO knows you can handle the truth. S/he will tell it like it is and also ask questions without fear of appearing not to know it all. In-house employees, including CFOs, don’t always feel the same freedom when talking to the superiors who sign their paychecks.
It’s rare that Interim CFOs have to reveal a truly dark situation, but it does happen. A CFO may have used smoke and mirrors for years to mask anything from minor mistakes to outright fraud. Whether from trust, habit or not knowing what to look for, CEOs and COOs may have accepted a CFO’s reporting without much question. CFO consulting firms will provide a reality check and findings that can be surprising and illuminating – even if results don’t come anywhere near fraud.
Want to learn more about benefits of leveraging CFO Consultants? Read our blog: “Benefits of Using an Outsourced CFO in Times of Challenge or Change“
Hire Your New CFO Thoughtfully Now or Regret It Later
When a CFO has resigned or been terminated, the inclination is often to rehire as soon as possible. It’s too important a position to leave open for long, right? The problem is that CEOs and COOs may not have objectively evaluated their financial departments for years, if ever, and outdated job descriptions can misrepresent what they now need to move their companies boldly forward. Failing to capture the CFO position’s evolution through an intentional recalibration process does a disservice, both to the company and the person who will eventually fill the role.
Interim CFO consultants can lead this evaluation and recalibration, digging in to find out what’s been done well and what hasn’t – and seeing things that others might miss. Related positions can also be looked at from a fresh perspective:
- Do staff changes need to be made?
- Do staff members need to be better trained?
- Is there a “diamond in the rough” whose potential has not been recognized?
Many staff issues can and should be addressed before a new CFO arrives, allowing him or her to hit the ground running with a more finely tuned team.
What to Expect With Interim CFO Consulting
Not all CFO consulting firms work the same way, but you should expect things to proceed in these general phases in an Interim CFO consulting engagement:
Phase 1: Knowledge Transfer
To absorb current procedures, mandates and priorities, your Interim CFO will either work with your outgoing CFO or, if the position is now vacant, thoroughly review his or her work.
Phase 2: Discovery
This phase should include meetings with the executive and financial teams as well as other key team members, investors and business stakeholders. The process should culminate in a clear and objective assessment of your cash flow situation, cash conversion cycle, key performance indicators, business profitability and balance sheet strength. Businesses with inventory and/or manufacturing processes should also expect evaluation of these areas.
Phase 3: Assessment Review and Creation of an Action Plan
An Interim CFO’s action plan should include recommendations with estimated completion dates and identification of any needed support and resources. It should also include a cash management model that will efficiently drive operations.
Phase 4: Action Plan Implementation and CFO Search Support
Expect regular feedback and ongoing management of your financial team during implementation. Interim CFOs can also guide the revision or creation of the CFO job description (and other related positions) and can participate in candidate screening and interviewing if asked.
Phase 5: CFO On-Boarding and Hand-Off
CFO consulting firms will ensure a seamless transition that positions your new CFO for success.
What Your Interim CFO Consulting Firm Needs from You
Company leadership has a critical role to play and sets the tone during a transition from one CFO to another. Your Interim CFO will depend on you for:
- Candor and full disclosure
- Collaboration and input
- Clear and timely communication
- Reasonable availability when needed
- Establishment of team spirit via a clear explanation to staff members that interim work is being done to make their lives easier and build a more efficient, productive department
Attract and Keep a Champion CFO by Focusing on Financial Team Morale
When an Interim CFO arrives on site, s/he can find anything from healthy curiosity about the future to a thoroughly demoralized and exhausted financial team whose members are barely communicating. In some cases, there may not be much of a team left at all. A good interim or outsourced CFO can inspire confidence and breathe life back into a struggling department so that all involved will be more inclined to go the extra mile. This, in turn, will help a company attract and keep the type of champion CFO who fits the ideal in their (newly recalibrated) job description.
Interim CFO Consulting: Setting a Clear Path Forward
At first, thinking about the departure of your CFO may keep you up at night. Help is out there, and talented Interim CFOs specialize in turning a seemingly tough loss into a markedly positive gain. Consider your CFO transition as an opportunity for a corporate re-set, one that can underscore strengths, address any weaknesses and ensure that you are on the most promising path forward.
If you need Interim CFO consulting immediately, have experienced turnover in the finance/accounting function or want a high-level assessment of your financial operations, 8020 Consulting can help. You can contact us, or call us anytime at 855.367.8020.
If you’d like to learn more about how we work with clients in this capacity, visit our Interim CFO services page by clicking below:
About Our Senior Consultant
Scott has more than 25 years of finance and accounting experience spanning several industries with companies large and small. He is an Ernst & Young alumnus who was Manager of Finance for Disney’s Network Television Division before he moved on to Director of Financial Planning & Analysis for Korn/Ferry Futurestep. As a consultant, Scott has performed system implementations, conducted business process re-engineering, created forecasting and budgeting models, and managed internal and external financial reporting. He has filled the role of Interim CFO for several companies, managing them through successful acquisition as well as post–merger accounting integration for the acquiring companies. Scott holds a Bachelor of Science degree in accounting from the University of Southern California and is an active CPA.