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Conquer complexity: Get briefed on the latest accounting updates

In the accounting world, the rules are ever changing. Large in scope and long awaited, the new rule for recognizing revenue continues to get clarifications in the months leading up to its effective date. The new leasing standard is finally here as well and sharing the attention. Those are just the biggies—the Financial Accounting Standards Board has been coming out with a flurry of changes in recent months, and regulators are paying attention to what you are doing with them. There’s a ton of information to follow to stay compliant.

How equipped finance teams are to keep up with all the moving parts varies quite a bit. They oftentimes find it beneficial to lean on technical accounting experts who can decipher the never-ending landscape and help with interpretations. Such experts can help them stay on track in understanding the latest accounting refinements, transition-method choices and effective dates. Diana Gilbert, senior consultant at RoseRyan and head of our Technical Accounting Group, helped many companies get up to speed during the June 2 webinar, “Demystifying the Latest Major Accounting Changes.”

This fast moving, 90-minute, all-out binge covered the latest twists and turns that have come out from FASB and regulators over the past year. Some changes have simplified things. Others will have a narrow effect. And many will force finance teams to do some soul searching as the deadlines near. Contracts and compensation plans may need to be revisited.

Diana filled in listeners (most of whom were from life sciences and technology companies) on the five topics below, along with other changes, and gave timely advice along the way.

Revenue recognition: Companies that don’t have a game plan for the new revenue recognition standard are running out of excuses. The SEC has been “aggressively” referencing the new rule in recent speeches to let companies know they will be watching what gets said in disclosures, Diana said. Boilerplate, vague language won’t cut it much longer.

“This has been out there since 2014, so they are going to question why you’re still evaluating it now,” she said. “If you’re honestly, sincerely evaluating it, then just be prepared for the questions. But if you’ve done your evaluation and pretty much do understand the impact, then think about including more detailed disclosures, particularly about decisions you’ve already made,” such as the transition method the company will be taking and the planned adoption date.

Leases: The new standard finalized in February will bring what we refer to as operating leases today onto the balance sheet. The rule applies to leases of property and equipment with terms of at least one year and centers around the lessee’s “right of use” of an item (the obligation to pay for that right is what will appear on the liability side of the balance sheet).

The new rule could change behavior, Diana predicted. “Think about it. If you’re going to have it on the balance sheet anyway, are you still going to lease it or would you buy it outright?” she said. “You might create new forms of leases that are clearly less than a year, without the option to renew, and you’ll have to deal with the issue every year. That may make sense for inconsequential arrangements. It will be interesting to see what happens going forward.”

Financial instruments: Public companies will begin following new rules on classifying and measuring financial instruments for filings submitted in 2018, and private companies will do so a year later. Equity investments that are not consolidated are generally going to be measured at fair value through earnings. In some ways, disclosure requirements have been simplified with the rule changes—companies won’t have to disclose their methods and significant assumptions for estimating fair value—and in other ways they have expanded.

Stock-based compensation: Companies have “a grocery bag of different changes” to deal with when it comes to improvements to employee share-based payment accounting, Diana warned. The most significant relates to deferred tax assets. When the changes take effect, companies will no longer record excess tax benefits and certain tax deficiencies resulting from share-based awards in additional paid-in capital (APIC). APIC pools are eliminated under the changes.

Diana said this is a “huge simplification” in terms of tracking share-based compensation, but the downside is the potential for more volatility in the income statement. This particular change is applied prospectively from the date of adoption (which begins after December 15, 2016, for public companies).

SEC comments: The SEC staff has always tended to question areas that involve judgment and subjectivity, Diana noted. In recent years, in particular, they have been scrutinizing the statement of cash flows and whether companies’ internal controls are effective. Diana recommended that companies be as clear as possible and use tables and charts to help tell their story.

“Comment letters come about because they don’t understand what’s happening,” Diana said. “Or it’s a complex area and they’re going to ask you questions whether you like it or not.”

Keeping tabs on regulators’ areas of emphasis and accounting standard-setters’ changes takes time and effort. Things are in constant motion, and companies need to stay on top of it all. That’s how they can help minimize the questions that come from regulators and any uncertainty that may arise during implementation. To save time and effort in understanding the latest accounting standards (changes through June 1, 2016), feel free to check out the 90-minute replay of “Demystifying the Latest Major Accounting Changes” here.

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Superstar controllers need technical chops and so much more

Job interviews with controllers—whether you’re in the hot seat or the one asking the questions—are getting broader these days, as the role of the controller and expectations around it have escalated. Just as today’s CFOs are expected to be more strategic than the bean-counting finance chiefs of yesteryear, so too are controllers getting called upon for their operational skills and are expected to have broader, forward-looking views. Today’s controllers are not all about past figures. They contribute to strategy to guide it into the future.

We see this transformation firsthand whenever we’re embedded in teams at companies around the San Francisco Bay Area, and we’ve frequently taken on controller roles on an interim basis. RoseRyan consultant Cheri Koehler—a superstar controller in her own right—has gathered up some practical tips and advice for controllers at companies of all sizes:

RoseRyan_Report_SuperstarControllerLook beyond the numbers: Controllers who have mastered their role have a firm grasp of their company’s latest facts and figures, and they also need to be able to tell the story to everyone else. They are one of the few who can provide context behind the numbers and use their knowledge to ensure the company stays healthy. That knowledge can power smart decision-making throughout the business.

Be a bridge builder: Controllers have typically been buddies with HR and customer service folks as many of their transactions and activities overlap. Extend similar connections around the company, making links between finance and IT, procurement, distribution, manufacturing and others. In this way, controllers can set up collaborative partnerships and give themselves a voice when choices are about to made. As proactive business partners, they keep finance in the loop and provide valuable support, advice and analysis whenever it’s needed.

Find and keep talent: This requires a continuous effort—even when the finance team seems well stocked. Things can change and specialized skills may be needed for a complex transaction or someone could have to leave without much notice. Superstar controllers regularly tend to the talent pool by always keeping their connections open and paying attention to develop and retain the people they have on hand. They look for opportunities to empower the team and keep them enthused.

Stellar controllers know how to bring the information they gather to life. They’re excellent communicators by making sure they can influence and persuade, they help with strategic decisions and activities throughout the company, and evangelize potential improvements and efficiencies. What makes this possible? They are up to date on the latest technologies and can keep their eyes and ears to the ground to learn best practices in their field. Ensuring they have a talented team in place makes all the difference.

Are you a controller striving for greatness? Or a CFO who needs to strengthen the finance bench? To understand the controller role today and what skills are needed for superstar status, check out 5 ways to become a superstar controller.

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IPO, M&A: Big changes ahead require smart moves at every step

Companies that have made it past the startup stage and are growing like gangbusters have beaten the odds. They’re not only surviving but making it. They’ve branched out their customer base and perhaps their geographic reach. They’ve upped their production, they have a small group of loyal investors, and their earnings are going upward. But for how long? How long can organic growth get the company to where it wants to go?

At some point along many companies’ lifecycle, the growth plan turns into an acceleration plan. They want to expand—and usually fast. Either they know things will slow down without action and it’s time to make a strategic move. Or they need a boost to widen the intense gap between them and their competitors. It’s time for a transaction. A big one.

When a jolt of growth is needed, whether that’s a capital infusion, an acquisition of fresh talent or something entirely new (like intellectual property), thoughts turn to going IPO or making an M&A deal. And that’s when things really speed up. Smart companies on the IPO track take a hard look at themselves, to be sure their own financial house is in order (so key to a proper and favorable transaction). Acquiring companies put on their due-diligence hats and delve into the details of their target business.

The focus in either scenario is usually pretty narrow, with the eye on the final prize—a done deal, a successful transaction, a sigh of relief. But really the work, the drive forward, does not end. For teams that have never gone through such a process before, that narrow view may be all they can handle on their own. They do not have the experience—or the bandwidth—to think about what comes next.

Companies at this stage bring on experts who can get them through the prep and details of the transaction. The smart ones also give consideration to the time after the deal is done. How will the combined companies in the M&A deal mesh? How do they keep the business trucking along while also setting a smart foundation for the new entity?

For IPO-bound companies, the post-transaction time needs to be folded into the planning. Does the company need to bulk up to take on tighter reporting deadlines and increased investor (and possibly, regulator) scrutiny? How can the company ease the culture shock that will certainly hit as the company transforms into a transparent entity that is subject to new regulations? The more planning that can be done up front, the easier the after effects will be.

Just as the needs and resources of their companies evolve as they get bigger, so do the needs and resources of the finance teams and the CFOs who lead them. They self-assess and evaluate to see whether they can keep up with evermore demands and expectations as the company goes big. Where are the skills gaps? Can we stay on top of the changing accounting and regulatory rules with a more complex organization? Will the CFO be able to handle the spotlight post-IPO and rally the troops during the rocky transition? Can the organization handle the many internal demands when integration of a merged company may take awhile?

The questions will vary depending on the transaction at the time and the team on hand. But they are worth asking when a deal is imminent. The earlier, the better when a large transaction is in the near future. When you don’t know the right questions to ask, it’s time to turn to seasoned pros who do.

Chris Vane is a director at RoseRyan, where he leads the development of the finance and accounting firm’s cleantech and high tech practices. He can be reached at [email protected] or call him at 510.456.3056 x169.

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An executive briefing: Demystifying the latest accounting rules and what you need to think about

A flurry of effective dates, interpretive guidance and new rules—companies are processing a lot of information coming their way from the Financial Accounting Standards Board and the Securities and Exchange Commission. Some of the changes have been in the works for ages (we’re talking about you, revenue recognition), and now there are overlapping implementation periods and many, many questions on the part of finance teams that need to put all these rules into place. Is your head spinning yet?

Finance professionals not only need to make sense of the rules, but they also want to know what their auditors think of them and how their peers are going to approach them. For the accounting change biggies—like the new leasing standard—some companies will need to revisit their internal processes and they’ll have some tough choices to make on how they’ll proceed (Should any contracts be changed? How much do investors need to know now about the potential effect on the company’s balance sheets?). The impacts will vary by company and can vary widely. Some companies are getting surprised by how much.

We’ve noted before that FASB has been in the process of clearing to-do items off its own agenda and dumping them onto finance teams’ plates, making this the time to get a handle on it all. That’s why we have developed a 90-minute webinar for senior finance executives called “Demystifying the latest accounting rulings—what finance leaders need to know” so they can get a grip on what’s happening and how to deal with it. This online event will break down the newly effective standards and proposals from FASB plus updates from the SEC and the Public Company Accounting Oversight Board. Senior consultant Diana Gilbert, who leads our Technical Accounting Group, will guide you through it on Thursday, June 2, 10:00-11:30am PT. Read more about this webinar and register here: bit.ly/AcctgWebinar.

Get ahead of these changes. With looming, varied effective dates, you’ll need to prioritize and understand the impacts, all while keeping watch for more updates coming down the pike.

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5 reasons I have no regrets about leaving the corporate world and becoming a consultant

I recently left the corporate world after nine years. I loved my job as a controller, but my life had become my work. Working 16- to 18-hour days, plus weekends, practically nonstop, left very little room for time with my 15-year-old son and no time for me. I kept thinking things would ease up. Until one day I decided to stop waiting and do something about it.

I had barely started applying for other positions when I heard from Michelle Hickam, our wonderful recruiter at RoseRyan. After my first conversation with Michelle, I knew that I wanted to be with the RoseRyan family. Michelle talked about the sense of camaraderie at the firm, which was something I had yet to truly encounter in my career. Once she gave me the insight regarding the consultant life, I instantly started visualizing myself with RoseRyan.

Months later, I’ve only been here for a short amount of time, and I am so happy that I am with such a great company and great people. Here’s what I picked up about RoseRyan in just my first few weeks:

1. No politics to be found. With RoseRyan folks, newbies are supported as much as the veterans. Everyone I’ve encountered so far has made me feel welcome and part of the family. I was nervous meeting CEO Kathy Ryan for the first time, but she was very welcoming and made me instantly feel like this is where I belong. She gave me the impression that we are all in this together—our individual successes help us as well as our clients.

2. Siloes don’t exist. Over time, some companies build impenetrable walls between departments, leading to an attitude of every team for itself. That’s not an issue here. As consultants, we sometimes work separately, with different clients, but we’re all part of one big team. Everyone has been so helpful by letting me know I can reach out to any one of them if I have any questions or concerns.

3. Work/life balance is possible! I didn’t give “work/life balance” much thought until I joined RoseRyan. But around here, people talk about their activities outside of work. They’re all hard working but they make time for life too. My son and I can reserve Sundays for whatever we want to do—together. Vacations are no longer nonexistent or at risk of getting canceled at the last minute.

4. Morale is a positive one. Uplifting encouragements are a constant at RoseRyan. Other employees have introduced themselves and have offered me tips and assurances. I feel like they’re rooting for me.

5. We’re continuous learners. One of the things I love about RoseRyan is the emphasis on love of learning. RoseRyan offers training that enables consultants to advance their skills, keeping them marketable and competitive. RoseRyan makes sure that we all have the necessary skills and knowledge to be successful.

I’m grateful for my time in the corporate world. It’s where I learned how to deal with tough situations, and where I refined methods for consolidating financials, budgeting and forecasting, managing cash and making currency conversions. But it was time to move on, to try new things, and learn something new. It was time to see what the consulting world had to offer me.

And, most importantly, it was time to reconnect with my son (time with a teenager ticks fast!). Working for RoseRyan has made me realize that I can still work very hard without having to sacrifice my family and the things I love to do.

Anna Cruz joined RoseRyan as a consultant in April 2016. She previously was a controller at Playphone, regional accounting manager at Culligan and an accounting manager at Pepsi Bottling Group.

We’re always on the lookout for top talent—full-time and part-time. So if you like what we’re about—and you have the right stuff—contact Michelle Hickam or call her at 510.456.3056, x134. See our current job openings here.

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Managing through rapid growth takes smart, deliberate finance moves

If the startup stage is all about surviving, the next phase of a company’s lifecycle, when it is time to really grow, is all about scaling. Once you’ve made it past the viability test, you’re riding the momentum of rapid growth. The company has come out of the gate firing on all cylinders, putting the entrepreneur’s brilliant idea into action and trying to scale as it continues to raise funds, connect with customers, hire talented people and establish its worth in the marketplace. There’s pressure to move quickly, to get noticed and fend off any competition, but there’s also risk in this pressing need for speed.

A major part of maturing and progressing smartly out of the start stage is managing resources to support the growth. Building an infrastructure for growth that doesn’t materialize can spell disaster. A young company with all the potential in the world can skid off the rails if they’re letting loose with spending. Overly confident that sales will come in—some day, any day now—the company could end up with bloated inventories, mismanaged resources and employees with nothing to do.

On the flip side, underestimating growth can be equally calamitous. Not having enough inventory on hand will send customers running to the open arms of the competition. And not having the people needed to properly process orders, support much-needed upgrades and meet customer demands will require an extremely difficult recovery to your good name. By applying the right set of finance smarts and business acumen to manage and predict growth with intention, the company can minimize the risks of burning out employees, setting up unrealistic expectations with lenders and investors, and losing sight of their cash flow amid conflicting revenue and spending goals.

Senior-level financial leadership can bring some much-needed order to the company so that it can progress at the right growth trajectory to match the strategy and end game. They can also direct focus onto the future, laying the groundwork for whatever is in store for the company. It is usually at this strong growth stage when a company brings in more reinforcements to supplement the finance team and hires its first full-time CFO. A seasoned finance pro can help steady the ship, to keep the company moving at high velocity but with a plan in place that is thoughtful and deliberate.

NatureBox, the Silicon Valley company that delivers smart, delicious snack packages, was moving at lightning speed when we sent in an interim CFO and an accountant to shore up ranks. At the time, its fledgling finance team was understandably struggling to keep pace with the explosive growth underway. And demand for NatureBox’s products was fierce. We helped out with extra hands to keep up with day-to-day accounting and also got them ready for the future, putting practical processes into place, prepping them for their first audit and providing strategic insights into key areas of the business.

Once set up properly, the finance team at a fast-growing company is poised to provide the full perspective that’s needed to successfully advance. Until then, the decision-makers may have had disparate vantage points, focusing only on their piece of the puzzle. The well-led finance team can put it all together and dig into the meaning of all the numbers and how they are connected. With a cohesive view, the direction of the company can become clearer and the company can prepare for what’s next, whether that next move is an IPO, an acquisition or whatever is behind door #3.

Avoid erratic moves that force the company into the slow lane. Bring some order to the chaos. Be realistic about the growth rate of your company and make solid plans to support it.

RoseRyan helps companies across the lifecycle, from when they are starting out, growing like gangbusters, expanding through M&A or IPO, and evolving as a public company. To find out more about the lifecycle stages, go here.

Pat Voll is a vice president at RoseRyan, where she mentors and supports the dream team, and heads up client experience, ensuring all our clients are on the road to happiness. Her article about creating a winning culture in the midst of the talent war was recently published in Accounting Today. Pat previously held senior finance level positions at public companies and worked as an auditor with a Big 4 firm. 

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Finance’s role in unlocking value for private equity portfolio companies

When private equity firms choose their investments, they see promising potential. The entity that becomes their portfolio company may have hit a roadblock and is in need of a transformation. An entirely new strategy could be in order. Behind that strategy is a strong finance team that plays a pivotal role in helping the PE firm realize the full potential of that new investment.

Over the past 15 years, I have had the opportunity to help PE firms translate strategy into financial decisions for their portfolio companies. It’s a fascinating CFO role, as there are so many unique factors at play with every company—and there is a sense of urgency, a sense of purpose. Every operating plan, every exit strategy is different. All parties (new investors, old investors, the management, the board) have a vested interest in getting the company moving in the right direction. With the right kind of finance guidance, and alignment around a well-thought-out set of objectives, the company can move where it needs to go.

The CFO in this type of scenario—whether it’s outsourced or a full-time position—has responsibilities to investors, the PE firm and the portfolio company, and is entrusted with improving the company’s operating performance, uncovering efficiencies, boosting productivity, executing the game plan and, ultimately, unlocking value.

The following activities are critical:

Setting up a strong governance foundation: Jumping in to lead the finance function at any time requires leadership skills, technical know-how and an action-oriented mindset. There are a lot of moving parts, and it’s important to focus on alignment toward the goal, creating the right set of performance-based metrics and compensation, and setting up the right practical processes to aid in decision-making.

Laying a strong foundation of financial operations: Timely, accurate financials are essential for understanding the state of the business. These are made possible when accounting systems and processes are up-to-date and internal controls are set. A robust finance function will help the company meet its compliance and regulatory requirements, ensuring the private equity firm can stay focused on the overall strategy and feel confident that the company is progressing rapidly. When the pace of business is fast—as it tends to be in the private-equity world—underlying data needs to be accurate for effective decision-making.

Victory lap
Sure, the transactions make the headlines, but what excites me is the transformation of a company to meet the PE firm’s strategic objective. Every journey is different and sometimes the timeline is several years. The wheels put into motion vary considerably based on the situation. If you do it properly, your efforts will be rewarded and your investors and management will have realized significant appreciation, and that’s exciting stuff.

Terry Gibson heads up RoseRyan Private Equity to help PE firms extract more value from their portfolio companies. A founder of Steel Partners Corporate Services, he has been focused on serving the PE industry for over 15 years. He was the CEO of CoSine Communications and BNS Holdings, and he oversaw the finances at Calient Networks and served as controller at Lam Research.

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Lucky for now: Dealmakers are optimistic about the near future

It’s fitting the annual Association for Corporate Growth (ACG) West Coast M&A Conference was held on St. Patrick’s Day. We were all feeling a bit lucky with a nice bounce-back in the markets, and a cautious sense of optimism was shared by many of the upwards of 300 attendees, consisting of specialists in private equity, banking, and finance and accounting, as well as entrepreneurs.

A faint wariness has been in the air since November, when the economy had a clear drop in financings and valuations. Conference attendees in general believe the dip was due to overheated valuations that had continued to rise despite concerns over whether imprudent investments were getting made.

With the state of the markets setting the stage for the event, there were many takeaways to be had at this San Francisco conference, which I attended with my counterparts at RoseRyan, Terry Gibson, who oversees the RoseRyan Private Equity service, and director Stan Fels, who was there for the small-business perspective. Here are the topics everyone was talking about:

  • In one session, approximately 30% of the attendees predicted that there would be a recession starting some time in the next year and a half. It was tempered with thoughts that it wouldn’t be nearly as bad as the 2007/2008 recession.
  • There was a strong shared sentiment at the conference that the business cycle has gone to the wayside as Fed policy is now the biggest indicator of whether the economy will expand or contract.
  • A common topic of discussion was the democratization of fundraising. This is taking form through the increased use of technology to bring buyers and sellers together in an efficient way. Tremendous growth in the enabling technologies has made this all possible (consider these now-common names we didn’t know a decade ago: Kickstarter, Indiegogo, Lending Club, GoFundMe, Lending Club, Prosper and Funding Circle).
  • The personal touch is not leaving. Investors still want to understand the business owners who are seeking money. The old rule of being close to your money still resides. This was emphasized from the private equity folks in the room to the entrepreneurs as well.
  • Bankers are starting to get risk averse—no surprise there.
  • There is lots of money in the PE marketplace. Due to the dearth of opportunities and low interest rates, opportunities are still out there. Valuations are coming down dramatically. Fidelity, in particular, has been aggressive in downgrading its investments.
  • Fintech is exploding, enabled by the rise in big data and analytics. Machine learning and artificial intelligence have helped companies in this field better gauge risk and tap into markets where bankers are afraid to risk capital. Attendees and speakers expressed great optimism about this sector and marveled that it’s a phenomenon that’s been going on for at least five years now.

Deal-making has its up and down times, but there are opportunities in the M&A space at the moment. Capital is definitely available. It is a safe bet that there will be more prudent investing, more cautionary growth plans and more options on how to raise money in the coming year.

And there will certainly be new ideas brought to the table by entrepreneurs looking to transform our lives. The last session I attended was an entrepreneurial meetup in the style of the TV show Shark Tank. I watched as Amy Errett, CEO of startup Madison Reed, flawlessly executed her pitch for a prepackaged hair coloring kit billed as “makeup for hair.” Using a combination of technology and healthier formulas, the startup is attempting to be a disruptor in the hair-coloring space.

As the father of three daughters, I took notice when Amy mentioned the hair coloring market is a $50 billion industry. I introduced myself to Amy after her presentation and took the free $75 gift certificate and headed out the door, feeling cautiously optimistic about the prospects ahead.

Chris Vane is a director at RoseRyan, where he leads the development of the finance and accounting firm’s cleantech and high tech practices. He can be reached at [email protected] or call him at 510.456.3056 x169.

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What CFOs need to know about the new leasing standard

One loud giant thud is the sound you’d hear if you printed out all 485 pages of the new lease accounting standard and threw it on your desk.

Multiple giant thuds. That’s what we’ll all be hearing when trillions of dollars worth of leases land on many companies’ balance sheets in 2019. That’s when public companies will need to bring right-of-use assets and associated obligations onto the balance sheet and out of the footnotes. (Privately held companies get an extra year to comply.) The full effects are yet to be known, but two things are known for sure: balance sheets will get heavier and many questions for CFOs will follow.

In the works for over a decade, the new standard issued by the Financial Accounting Standards Board in February will affect almost every company. Lessees will feel it the most. As I mentioned in a recent article in ComplianceWeek (sub. required), the new standard will be “pretty pervasive.” The rule addresses leases of property and equipment that are 12 months or longer.

Many companies will be bringing their operating leases onto their balance sheets, which will make them appear more leveraged than under historical GAAP. The new guidance will lead to “a more faithful representation of an organization’s leasing activities,” according to FASB Chair Russell G. Golden.

One of the most common examples given while standard-setters ironed out the details of the new rule was the leasing of airplanes. For aircraft leased for several years but not for their entire “life,” airlines did not have to show their ongoing obligation on their balance sheet. Some viewed this allowance of off-balance-sheet reporting as misleading (this is not just an issue for airlines: Amazon will have to factor in the new rule as it moves forward with its reported plans to lease 20 Boeing 767 planes).

Although it will be awhile before we see the full extent of the standard’s changes in publicly filed financial statements, CFOs are going to have to be ready to answer some questions about how it will affect their company and how they’re going to deal with it. For now, companies will need to add it to their new accounting pronouncement disclosures. And then there’s the detailed work ahead in figuring out what leases the company has and evaluating them.

In the months ahead, companies will need to thoughtfully review their current lease agreements and consider whether any will need to be reclassified under the new rule. It may need to be a cross-functional effort. Companies may want to revisit the wording in some contracts. They may notice that some debt covenants could be affected. There’s some time to get ahead of the changes—but only if the work is put into it now.

Feel like 2019 is a ways off? Some long-term leasing agreements you have in play now could be affected as the standard requires modified retrospective adoption. Comparative financial statements will accompany the reports when it comes time to comply with the rule. And by then the time to transition to this new way will seem to have flown by.

Diana Gilbert has been a member of the RoseRyan dream team since 2008 with almost 30 years of professional experience. Frequently tapped for her insights by Compliance Week, Diana excels at technical accounting, revenue recognition, SOX/internal controls, business systems and process improvements.

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The CFO juggling act of managing resources

A crazy sprint in the middle of a marathon would leave anyone gasping for oxygen. It’s not sustainable. Go too fast and there’s a risk of real burnout. Then again, go too slowly and there’s the risk of a competitor catching up and taking away your lead.

Sound familiar? Companies are always in the turbulence of growth, whether they’re chasing after it or striving to complete a mega transaction, like an IPO. And CFOs are at the helm of it all. On top of all the roles that they already take on at their company, finance chiefs are also guiding the velocity. Are they deploying the right amount of resources, or are they expending them much too quickly? Thoughtful growth is the secret.

RoseRyan director Stephen Ambler, who has served as CFO in several companies, shares his wisdom about the essential areas in finance that need the close attention of senior finance executives. These include:

Cash flow: Finance organizations can’t afford to look away for a minute. Literally. In RoseRyan’s latest intelligence report, A CFO guide for managing resources, Stephen relays the tough squeeze one company fell into when it lost a grip on its cash position. Sounds unbelievable, but it does happen, and it can sink the ship.

Growth strategy: The pace of growth is not always something the company can control, but a realistic forecast and deliberate path should be developed—wild guesses have no place here.

Talent: It’s about timing and understanding that you get what you pay for—even with people. That includes knowing when hiring junior-level employees does or does not make sense. Having the wrong mix of people may actually cost the company more over time. And today’s world is all about outsourcing. Know when to bring in the ninja team to get things done in a tough, overflow situation.

Upgrading systems: Get a sense of when the company has outgrown processes and systems (QuickBooks can be awesome as a small-business accounting program but an upgrade will be needed when the company has the public markets in its sights). Are the systems in place scalable and appropriate for the company’s size and complexity? If not, it might be time for an upgrade.

Managing resources well is an ongoing effort. No matter what size company or how fast you are growing, the same essential best practices will help you to stay in control of your financial situation. Be the steady hand at the helm. Along the way, don’t hesitate to lean on trusted advisors who can help you over the finish line.

Is your company galloping ahead without a well-centered plan? Or are you too conservative in your spending approach? To understand growth path considerations, check out A CFO guide for managing resources.

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