📬 Well-Balanced Information Diet: Consuming Information like a CFO

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Michael N. from Chicago, USA asked:

What is your information diet like? Interested in what types of content you take in and where you source it from for topics ranging from finance to personal interests.

Thanks for the question, Michael.

I don’t claim to be a model example here, but you asked, so I’ll answer it!

Our information diet is so important. Not just in terms of building our worldview and experiences, but also our mindset.

For this reason, I try to avoid following breaking news as much as possible (although that’s been hard recently).

You can spend a lot of mental calories following the latest tariff drama or global conflict. That might sound ignorant (and maybe it is), but I’ve found it important to keep my distance to preserve my sanity. This helps me keep my head clear to focus on the things that matter to me. And to those that I make commitments to.

I do try and stay close to the trade/industry press, for industries I have a business interest in. As well as the financial press. This captures anything emerging that might have a direct impact on my work.

Beyond that, I like to read. Both fiction and non-fiction. I like timeless business books (those I recommend through this newsletter) and take a great deal of inspiration from them. And then I like to read fiction before bed to help me sleep.

I have a weird relationship with social media, as I’m both a consumer and a creator (just threw up in my mouth a bit as I wrote that). So making sure I’m not spending too much time doom-scrolling is important to me (although this is a work in progress).

And finally, I love podcasts. Anything from sports, business, history, comedy. I tend to listen to them while I’m working out or traveling. I’ve found they’ve enriched my life in a number of ways. Not only that, but I’m fairly sure I would never have started this newsletter without the inspiration I partly found in podcasts.

Who knows … there may even be a podcast for CFO Secrets one day.

Tyler M. from the USA asked:

In this week’s newsletter, you talked about CapEx vs. CrapEx. ESG strategies tend to be CapEx heavy, how do you think about ESG in the context of your CapEx budget?

ESG can be CapEx-hungry, which is fine. But your business needs to decide how important ESG is. Some ESG projects stand up well on a financial return basis. i.e. LED lighting replacements tend to have a great payback. Especially those with large footprints like retail, manufacturing, and warehousing. Those are easy decisions.

But there are also many ESG investments where the payback is slower or harder to get (and quantify) like carbon offsetting. These could still be vital projects for the business. But in the absence of a financial return, they need a broader strategic commitment from the business.

Remember, strategy is about choices. Saying yes to one thing is a no to another. Good businesses make those choices intentionally and execute them with rigor.

I’ve seen a lot of business time wasted and misplaced on ESG initiatives. The business will charge headlong into ESG investment cases, with good intentions, but without thinking about the opportunity cost to the business. Only to do a full 180 when it begins to learn the consequences for the rest of the investment program.

That is a sign that the strategic commitment to ESG was not as strong as people liked to say it was. A kind of corporate virtue signaling.

The key is having honest conversations at the board and exec level as early as possible. So it can be decided just how important ESG is to the business, and where it ranks in the list of priorities.

You’ll find once you are clearer on the strategy (and where ESG sits within that), evaluating individual projects becomes a lot easier.

I recently heard Mr Beast talk about his commitment to eliminating child labor from the chocolate industry. He is using his Feastables brand to lead the industry on the issue - making this declaration public and vocal. You can bet any investment needed to make that happen will be marked ‘high priority’ on his CFO’s CapEx envelope… regardless of financial return.

Yusra from Sri Lanka asked:

I love your ‘envelope’ framework for managing capex spend. Is it ever ok to bust the envelope? What happens if the facts change/cash frees up once you have set the spend?

The short answer is yes.

If the facts change, it might make sense to change the size of your envelope. For example, if the priorities shift. Or new funding becomes available. Or the business is generating more cash than expected. These could realistically justify increasing the size of the envelope halfway through a period.

But keep in mind that the bar needs to be set high here. The business cannot believe the envelope is an ever-moving target.

In this past week’s CapEx piece, I talked about those in the business trying to convince finance that projects are maintenance CapEx to get an expedited stamp of approval. It’s their way of gaming the system.

Waiting for new money to crop up mid-cycle is another way for your savvier colleagues to will their pet projects into existence. Which is why the expectation cannot be that the envelope is a moving target.

So, yes there are examples where you can outspend your CapEx envelope, but make sure the controls are robust. Rather than busting the envelope you have, it’s better to see it as a conscious choice to move to a bigger envelope.

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.

KPMG Shrinking Number of Country Units in Revamp of Global Structure

KPMG is shrinking its number of country units because “Greater integration of our businesses brings a number of benefits to our clients, people and the capital markets.” Translation? Layoffs incoming.

FINCEN Calls A Much Needed Time Out For Beneficial Ownership Information Reporting While Congress Mulls Changes

This has been back and forth so many times, I’ve lost track. But it looks like a time out for BOI reporting for now. The Treasury Department decided it won’t enforce fines or penalties against companies that don’t file.

Deloitte says office attendance will be considered as part of some employees’ performance reviews to decide their bonuses

Just more evidence of big companies pushing back against working from home. I’ve heard how a number of top CEOs talk in private about WFH. They don’t like it. And these are the people that ultimately set company policy. We will continue to see more ‘carrot and stick’ initiatives to drive office attendance.

AICPA and NASBA push forward with CPA licensure reform

Desperate times call for desperate measures. The AICPA and NASBA finally figured out that an extra year of college might be a barrier to convincing students to get their CPA.

And states are taking matters into their own hands. Last week, Utah joined Ohio in making it possible for candidates to get a CPA without 150 credit hours.

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

Check this out … Buried in this astonishing story of corporate espionage is the news that the Deel CFO is the CEO’s dad. Not his metaphorical ‘Company Dad.’ His actual Dad. Lol.

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Let me know what you thought of today’s Mailbag. Just hit reply… I read every message.

In case you missed it on Saturday, we deep-dived into how you begin to put the CapEx ‘envelope’ to work (i.e. CapEx vs. CrapEx). You can read it here.

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.