Let’s face it, if you are operating a business that all of a sudden has found itself in a struggling industry, the only way you will survive is to mitigate by drastically cutting costs. Miti-gate or close-the-gate.
There is no magic wand. Your CFO isn’t going to turn a bad industry into a good one. And your CFO isn’t going to open the floodgates on your existing revenue streams or create new ones out of thin air. Your CFO isn’t going to be able to create opportunities for you to seize in this climate – and if you think they will you’re dreaming. Suddenly your CFO becomes a very expensive luxury item that is operating at less than 100% utilisation.
CFO’s around the world will be looking in all corners of their businesses to cut-costs; often at the expense of unique capabilities provided by their people. Human nature and agency theory tell us that left up to their own volition the last place a CFO will look to cut costs is at their own CFO position and salary. But should it be one of the first?
If your business is effected by the crisis, with t/o between $10M and $50M your CFO probably could and should immediately cut back to part-time.
Honestly if you pair it back to identify the most essential and valuable work, (which will be a consequence of the crisis) if you take out the time wasted from unnecessary (convenience + proximity) interruptions “ just thought you’d be interested” and duplicated effort in ‘controlling’ the business, your CFO is nowhere near 100% effective. Don’t take my word for it, ask them – straight up – they will admit they have a lot of distractions.
This current crisis is a major turning point. Companies must strive to cut costs, mitigate impact, identify ways to drive productivity and improve efficiency. Every company that survives this health crisis, will have done so by using the Virtual model – they have no choice.
Thrust upon everyone, remote working has become the ‘new normal’.
Now virtually every CFO is having to operate as a Virtual CFO anyway. Perhaps the next logical step is to pair back their cost by going back to part-time as they will no longer have the distractions of the historical rituals.
I understand too well how tragic the current situation is and I am taking it very seriously. I have elderly parents who live 3 hours away and have isolated, I’m not sure when I will see them next. My partner owns a local café that is getting decimated as I type, and my daughter has already lost her part-time job due to lack of customers.
I’m not looking to benefit from someone else’s misfortune, but I’m going to call out the waste that having a full-time CFO in the ‘new normal’ workplace is. Save your cash and use it to keep front-line people that you will need on the rebound.
Many mainstream established businesses might have preferred to cling to the historical rituals that take place in the physical office model, but to survive the biggest crisis in their history they will have needed to use the virtual team’s model. CFO’s might have preferred the comfort of the corner office, but to survive they will have had to adapt and work as Virtual CFO’s.
Think about this, if your company can weather the worst storm on record by embracing a Virtual CFO, when you come out the other side why would you ever revert to the old way?
David Dillon is a Fellow of CPA and CA, has an MBA and over 30 years of corporate experience. He has been the Managing Director of Custodian Backoffice, a specialist Virtual CFO business since 2014. He is also a committee member of the Virtual CFO Association + Author of “3-Levers” https://mailchi.mp/1453761b50c9/cfy6cguw3u “Profit Metrics” and e-book “So, you want to be a Virtual CFO” https://vcfoassociation.com.au/so-you-want-to-be-a-virtual-cfo/