The Secret CFO

The Secret CFO



Building a great finance team is HARD 😅 But get it right, and it makes your life 10x easier as CFO. It took me 10 years to perfect a framework that worked. Let me share it 👇

There are lots of things that go into building a great finance team. So, where do you start? Simple. You start with getting the right structure...

I’ve seen plenty of bad finance teams full of good people. Often times, the problem is right people but in the wrong place. In this thread I'm going to set out how you make sure you end up with square pegs in square holes

There are four key types of roles in a finance function. I’m going to explain it using a car as an analogy. this is for two reasons; a) I can draw a car b) the analogy works, just about... (But mostly a)

So where is our car headed? Finance utopia. That’s where. A place where balance sheets balance, we have Ps not Ls, and cash flows free and maintainably (it's a word). And we are taking all of our cool accounting buddies. Like a road trip for nerds Anyway, the 4 roles types;

1) Finance Operations - The Engine A car is going nowhere without an engine. And a finance team is going nowhere without slick finance operations. So what do I mean by Finance Operations?

These girls and guys look after your key cycles; - Order to Cash - Procure to Pay - Inventory - Record to Report - Cash Management If these don’t work properly then nothing else in your finance function will work…

They make sure you bank receipts, pay suppliers, maintain records, get reporting out. When this stuff goes wrong it’s horrible. You will have overdue debts, angry suppliers, inaccurate balance sheets, huge cash forecasting volatility, no information to drive the business, etc

Literally everything grinds to a halt And it’s hard to fix once it goes wrong. Really f*cking hard. Without an engine, you aren’t going anywhere. Look after it, finely tune it. It makes everything else easier Best way to look after it…

Centralize it. Get it in one place. Pool expertise and drive automation. A finely tuned engine. And get a fantastic controller to look after it all for you. This is particularly necessary if you are a CFO from a non-accounting background.

But the real work happens in the team underneath the controller. They are processing thousands and thousands of accounting transactions. They aren't the most senior roles, or the sexiest. But they are important.

Motivating these people to drive process improvement can be hard. They can feel the AI army coming over the hill coming to take their jobs. And you need their support to automate (you can't automate what you don't understand) Whatever your plans... you need them

It’s an unsexy, under loved part of finance. They are the unsung heroes of the finance function. Make them sung. As CFO, be their cheerleader. Learn their names. Show you care. It's a very high ROI activity. And it's a nice thing to do ...

I don’t have favourite people in my team. Except I do. And they all work in finance operations. They have the power to make your job 10x easier or 10x harder... Back to the car. We've got an engine... now for the wheels

2) Business Partners - Wheels The wheels are where the rubber hits the road (literally). In the finance function, the wheels are the business partners. (Note the wheels can't move without the engine)

These are roles in the business, working alongside profit / cost driving functions in the business. Sales and operations functions are the clearest examples. The BP's job is to ensure the business is making the right decisions for the P&L & Cashflow on a day to day basis.

A commercial business partner will partner with the sales VP . They will make sure the sales VP is growing sales profitably. An operations business partner will work alongside an operations VP. They might build a labor model, to support ops in improving profit conversion.

Each business partner is like a wheel on the car. They each have an important role, but it’s as a unit that they are most powerful. In finance that means ensuring there is no leakage from the P&L (or cashflow)

Sales / Ops VP roles aren’t easy. There are lots of competing KPIs to consider. The finance business partners are there to make sure the finance KPIs are being given the right air time. We don't want the P&L to be trashed to meet a service target now, do we...

Business partners are often experts in the business / industry with a finance slant. They need tenacity and personality, knowledge of the business and good modelling skills. It’s important they are close to the business. A decentralized structure works best.

The challenge with these guys? Keeping them on the finance agenda. They could (and should) be spending 90%+ of their time working with the function they are supporting rather than finance. They can often feel more belonging to that function than finance, if not well managed.

It’s easy for them to forget who they work for and go native. In a mature culture, this ‘matrix management’ won’t be a problem. In an immature culture, you need to retain the hard line in to finance and dotted into the partner function, until the rules of engagement are clear.

If these roles are done well, the business will make better decisions day to day. This will make your job easier. Done badly, they are irrelevant, ignored, or an irritant to either their partner function, finance, or both. Onto the third role type..

3) Technical Specialists - Driver Assistance Technology makes a car easier to drive. Cruise control, powered steering, airbag deployment, etc. You know roughly how they work, but not exactly... And that's fine.

You just need to know when and how to use them, and that when you do, they won’t let you down. Well in your finance function, these are your technical specialists; - Tax - Accounting Technical - Treasury - Pension - Internal Audit Deep subject matter expertise.

They are your internal consultants (outsource if there isn’t enough work for a full FTE.) You don’t need to know what they know. They should be the experts, not you. You just need to know they have your back, and know enough to know, how and when they can help you.

Many CFOs fail to get this balance right, they either a) ignore this stuff because its boring. Face it, its not as sexy as flying round the business 'being strategic' (Non CPA CFOs take note) Or b) spend too much time there because it’s comfortable. (CPA CFOs take note)

They should each have deeper expertise in their field than you do as the CFO. If not, you have the wrong people. A note of caution though: These specialists need managing carefully. They don’t get out very often...

When they get their moment in the spotlight, they can be guilty of getting on their soapbox. Showing off what they know, rather than laser focus on the problem that needs solving. Good ones won't. Most I've met do. Even if it's just a little. They like to feel important.

Pick the right people, and like a driver assist system, they will always have your back. They must be centralized. Under your Corporate Finance VP / Group Controller A technical centre of excellence providing service to the business. They will need reminding of that : )

Anyway, back to our car … So we are moving, but where are we going???

4) Leadership & Governance - Driver / Steering wheel With an engine, wheels, and good driver assistance the car will move. But you’ll have no control over where you are going. You’ll be careering off a cliff in no time. That's where the driver & steering wheel comes in.

These are the roles that bring everything together and control direction How and where you steer depends on both the conditions on the road ahead, and also whats happening in the car. It’s where everything comes together. Where the big decisions are made.

You need to make sure the parts of the car are working in harmony. And most important that the car is serving the higher purpose... The journey itself (which is delivering for the business) You might need to make a quick decision and detour, if there is a roadblock ahead.

In finance these roles are BU CFOs, Finance VPs, the FP&A Team, etc. If you have everything else working well, these roles are much easier. But that's a big if. Making a finance function work well, requires brain power and hard work. Stability requires effort.

Your finance structure should mirror the business structure. You may have one large car with you (Group CFO) sat in the driver seat. This is heavily centralized. Or you may have a fleet of cars with BU CFOs sat in the driver seat. There is no right answer here, but ...

As I've said before that Group CFO - BU CFO relationship is critical. If you are overseeing a fleet of cars You must: a) trust the decision making process of each driver b) reduce the variables by standardizing the car as far as poss c) keep in close contact with driver

Those are the 4 key types of roles in finance. By grouping the roles together that behave in similar ways, you can anchor a structure. I've got a lot more to say on this topic, and will share some clearer structure examples in a 'part 2' of this thread. So look out for that!

TLDR: Building a good finance function is like building a car; 1. Engine = Finance Operations 2. Wheels = Business Partners 3. Driver Assistance = Technical Specialists 4. Driver = Finance Leadership All parts need to work in harmony led by the driver.

I hope you liked it. 1. Follow me @SecretCFO for more of these 2. RT the tweet below to share this thread with your audience

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