Part of my mission in this blog, and in my consulting work, is to change that.
The key is to bring your CFO into the core of how you create credibility and trust with your Board of Directors, shareholders, and lenders. You have a network of people who are interested in, or invested in, your financial success. Make sure your CFO plays a leading role in helping you develop that credibility and trust.
It starts with taking a more strategic approach to how you manage the financial side of your business. Smart financial management is made up of these three components.
- Accuracy and speed
This is where you can turn the role of CFO, and the role of your accounting function as a whole, into a strategic asset. You want to transform their role into one of helping you create trust and respect and away from the old view of accounting as just gatekeepers and people who are just a cost center.
Begin evaluating the CFO role, and the accounting function as a whole, in each of these three areas.
The foundation for success in managing the financial side of the business is captured in this one word - confidence.
You have a very unique opportunity to build confidence, trust and credibility with everyone who has a stake in the financial success of the company - your management team, lenders, investors and shareholders.
They need to have confidence in the financial information they receive and have confidence in the people who provide that information.
A lack of confidence from that group of people is a big warning sign that your accounting function is letting you down.
Next, the information you provide about the financial side of your business needs to be insightful. Too many CFOs fall short here because they see their role as just preparing financial statements… or just preparing a tax return… or creating an analysis schedule you asked them to prepare.
Insight goes way past that. It's about providing information that helps management make better decisions. It's about providing information to lenders and investors to help them better understand the key drivers of performance.
Financial information that is insightful and helpful is an important part of creating confidence and trust in their eyes.
Accuracy and Speed
And the third component has to do with the accuracy and the speed with which you provide financial information. Provide slow and inaccurate information and you kill your credibility. No one will trust your numbers if you do that.
And nothing kills your credibility more than providing financial information that is inaccurate or tends to bounce around and change.
But when you provide accurate information and you provide it quickly after the end of the month, and you do that consistently month to month, you set yourself out as a company that has its act together. Lenders and investors love that and it will help you forge a strong relationship with them that will last a long, long time.
(The Monthly Confidence Package is an important tool I use every month to grow that kind of strong relationship. Here is an article I wrote for the Business Bank of Texas that talks in more detail about the components of the Monthly Confidence Package.)
Where Do You Stand?
In an upcoming post I'll share an assessment tool to help you evaluate your accounting and financial function based on those three key result areas.
And I'll go into more detail about how a strong accounting function will make your life easier and help you win financially in the game of business.
Let's make sure your accounting function is doing its part to help you grow your business.
That's the smart (and fun) approach!