📬 Moment of Zen: Deep thinking vs. doing

Al from Los Angeles, United States asked:

Any tips on protecting your time/energy to allow for deep thinking and progress against high-impact initiatives? The day-to-day of the CFO role often leaves me feeling unproductive.

I feel the pain here, Al.

This is something I’ve wrestled with myself throughout my career. I pride myself on being hands-on, approachable, and working with an open door.

The problem with that is you can lose control of your agenda. Working on other people’s priorities rather than your own.

An effective CFO must have thinking time and space. It’s non-negotiable.

The way I manage this is by scheduling time when I am purposefully hard to reach, and not approachable.

An open door does not need to be open all the time. You have to schedule and prioritize that time. Or others will eat up your time and attention.

Oftentimes, we leave our thinking time or quiet time for “later,” when we have the energy and space. But later never comes. You have to make that space. Now.

Schedule in time that is protected, and as immovable as an important meeting. Where you have complete control of what you are working on and thinking about. One afternoon a week, or a couple of two-hour slots, at least.

Put it in your diary. Make yourself physically unavailable (shut the door, work from home, or go hide somewhere). Make yourself digitally unavailable (close your email, and chat apps). Tell your team the deal. Make sure your assistant knows so they can act as a human shield for you.

Use this space to work on ‘non-urgent but important’ work. Or Quadrant II work, as Stephen Covey called it. If you are disciplined about that, you’ll delegate more, solve bigger problems, and over time, find that less urgent work hits your desk. It’s hard starting, but it’s worth it.

Thanks for the question, Al.

Philip from Birmingham, AL asked:

What can an external auditor do to help the CFO during the audit?

At a headline, the answer to this is simple: deliver a thorough and transparent audit in the way that is most painless for the CFO and their team.

The Big 4 have been through cycles in the past talking about how an audit can ‘add value’ to a client. It can’t. It’s just a lie they tell the juniors to make the job sound more exciting. The audit is a compliance exercise. It’s vital, and the business world would stop turning without it, but let’s not pretend an apple is a lemon.

As a CFO, I want to know my auditor is robust. I’m not one of these CFOs who wants a soft audit (despite my occasional social media joke to the contrary). It keeps me and my team on our toes, especially when you have public investors to answer to.

So the first thing you can do to help a CFO is deliver a high-quality audit. Don’t cut corners.

The second thing is, don’t surprise us. There is nothing that frustrates a CFO more than hearing late news from their auditor that should have come earlier. It could be an issue with the audit itself, or maybe it’s an over-run bill. No surprises, please. It’s embarrassing (for both of us).

Thirdly, be efficient. Most audit management is pretty damn poor. Teams that change every year, weak communication, issues emerging too late in the day. Poor day-to-day project management.

There really isn’t an excuse for this. Ensure there are regular client/auditor project meetings at the right level. A transparent list of outstanding items and status. These are all project management basics that any properly qualified PM would eat for breakfast. It’s also a valuable transferable skill for the auditor to learn for when they flee the nest at some point (which nearly all of them do eventually).

The best audit relationships I’ve had as a client are transparent, fair, and challenging (in both directions).

Thanks for the question, Philip

James from the United States asked:

In my industry, which is highly technical/engineering-oriented, many colleagues on the operations side understand how to improve and strive to improve our operations (ability to extract more resources). They do not, however, have nearly as strong of an understanding of how those results impact our financial outputs, which ultimately is what we care about for our shareholders.

Any ideas about the best way to teach/train about concepts like free cash flow, return on capital, capital efficiency, etc.? I think adding this understanding would really unlock their ability to help drive enhanced results.

It’s not uncommon for operation folk to be intuitively good at doing the things that move the needle for the P&L. Without ever really understanding the financials themselves.

Good operators are hard-wired to deliver the best possible results in the most efficient way. Where they tend to need support from finance is when the specific solution is not obvious; i.e. there are trade-offs to be made.

How do you decide whether to throw more labor at a material waste problem? Or when that capex project makes sense?

Operators with a good understanding of finance are potent weapons in a business. And part of our job in finance is to help build those weapons. So this is about thinking of ways to make finance more accessible.

One good way to start is to give them little heuristics that help them “financialize” their work:

• “Every 1,000 widgets we make per hour is worth $500 of additional profit.”

• “Every point of OEE (Overall Equipment Effectiveness) is worth $200k per month.”

Then you can build to giving them little spreadsheet calculators that help them answer the trade-off questions for their area of responsibility.

And finally, you can develop it into broader finance training. A kind of ‘finance for engineers’ course. The key is to make it super relevant to them, so try and avoid too much technical finance language. Instead, help them put $ into their own jargon.

You can also offer to take them through the latest published company results (assuming they are shared). Everybody in the company likes to better understand how the company is doing and their part in it. This is also a good way of helping them understand some key ubiquitous finance terms like gross vs net margin, profit vs cash flow, return on capital, etc.

Those are a few ideas for you, James. Take this on as a project. Helping others understand finance is fun. Especially when it has direct business benefits like it does here.

Every week I’ll share a book I loved or found useful.

A few of the biggest stories that every CFO is paying close attention to. This is the section you probably don’t want to see your name in.

Accounting Firms Hire Growth Leaders as Dealmaking Shakes Up Industry

Accounting firms hiring “Chief Growth Officers”… lol. Let’s hope the business development expense budgets are growing too.

Kroger Names PepsiCo Veteran as Chief Financial Officer

David Kennerley takes over during an interesting time for the biggest (non-Walmart) supermarket in the US. In December, anti-trust concerns killed their takeover of Albertson’s. So, not only does he have to navigate soaring food prices, but he’ll have to help pick up the pieces in the aftermath of a failed mega-deal. No easy task. Best of luck, Dave.

Undergraduate accounting enrollment climbs to its highest level since 2020

For the first time in a while there are more young people studying accounting. That has to be a good thing. For the profession, at least…

ICYMI, some of my favorite finance/business social media posts from this week. In the words of Kendall Roy, “all bangers, all the time”:

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And ICYMI, check out Saturday’s Playbook on the future of the finance function, and what CFOs need to do to stay relevant.

Disclaimer: I am not your accountant, tax advisor, lawyer, CFO, director, or friend. Well, maybe I’m your friend, but I am not any of those other things. Everything I publish represents my opinions only, not advice. Running the finances for a company is serious business, and you should take the proper advice you need.