The CFO Who Knew Too Much (February 2012)

I was in a meeting last year as the new/acitng/interim/fractional CFO for a company. Truthfully, I am not sure how best to describe the role. Major investors had asked me to step in and basically informed management that I was coming aboard. Management was less than pleased. Obviously, there was a reason for my injection into the company and it wasn’t to count all the money they were making. Things had been going badly for some time and there wasn’t much optimism about the future. It’s not the first time I’ve accepted such an assignment and I’m sure it won’t be the last.

Shortly after coming on board, I was in a meeting with the CEO and major investors. Much of the meeting focused on operational issues which were causing the cash burn. While I hadn’t been to the plant yet (something I always try to do immediately) I was still pretty well versed on the problems they were facing. At one point during the meeting I offered an operational improvement suggestion – I had another client dealing with a similar issue and had been at their plant days earlier. As always, part of my visit with that team included walking the plant and discussing operational issues with others on the management team as well as the rank and file.

When I offered my suggestion, the CEO responded with “That’s an obvious solution”. He was right . . . what I suggested wasn’t rocket science. Yet, he had failed to take action on something that was obvious because he didn’t grasp the economic impact of solving the problem.

His feedback after the meeting was that I “knew too much about operations”. Sometimes all you can do is shake your head. I got the company through a major milestone and then departed. To this day they struggle and they will continue to struggle until they change management.

The CFO can’t know too much. The primary role of the CFO is to understand the business and the economics of the decisions being made. These decisions need to be team based with input from all the major disciplines in the firm. For the CFO to have valid input, he needs to fully understand the implications of decisions just as much as the marketing or operational person needs to have an understanding of finance. Executives need to be well rounded and that is particularly important in the CFO role.

The CFO role is not about debits and credits. The CFO role is about adding strategic value to the firm and playing a major role in the decision making process. Money is a finite resource and how that resource is deployed determines the outcome of the firm. You need a CFO who can help you make decisions that add long term strategic value to the firm. Why settle for anything less?
If your business could benefit from fractional CFO services, I would welcome the chance to speak with you. Please give me a call at (314) 863-6637 or send an email to

your cash is flowing. know where.®
Ken Homza
Copyright @ 2012 Homza Consulting, Inc.

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