4 chief financial officers count out their best data

Clockwise from left: Mark Lords, Edge Homes; Chris Badger, NOW CFO; Jeanette Bennett, BusinessQ Magazine; Corey Lindley, doTERRA; Rob Lewis, Nudge.

Clockwise from left: Mark Lords, Edge Homes; Chris Badger, NOW CFO; Jeanette Bennett, BusinessQ Magazine; Corey Lindley, doTERRA; Rob Lewis, Nudge.

Jeanette Bennett, BusinessQ Magazine: What is the role of a CFO?

Corey Lindley, doTERRA: Every company has a CFO, whether they call it that or not, because every company is in business. Every company needs to keep their records straight or they won’t be in business very long.

Chris Badger, NOW CFO: Somebody has to make sure payroll is covered on Friday and that cash is moving. As a CFO, your job is to know what’s happened with the finances in the past, but also what will happen in the future. You have to know where your company is at on a day-to-day, week-to-week, month-to-month basis, but a CFO also has to take that day-to-day pattern and project where we’re going to be at the end of the year.

Rob Lewis, Nudge: In addition to managing the cash, it’s also managing the flow of data — making sure people are using data that is accurate and relevant to their roles and responsibilities.

Mark Lords, Edge Homes: Especially in Utah County, there are a lot of startups, so the entrepreneur initially plays the role of CFO because he or she is raising capital. Usually the next step is to get somebody to take care of the books in a more sophisticated way. As CFOs, we also become managers of risk for the company — with insurance, with the structure of the organization, and with data. We mitigate risk in everything we do.

Lindley, doTERRA: Another risk that goes along with that is the risk of succession planning. I spend a lot of time mentoring and developing stronger team members, to help them grow in what they’re doing so they are prepared to take on future roles at the company.


7 Habits of CFOS

1) Be a wingman to the CEO.
2) Drive numbers.
3) Build relationships with operations and sales departments.
4) Know the economics of the company and how to simply explain to shareholders.
5) Simplify. Know which key indicators move the needle.
6) Be the face of the business to banks, creditors and investors.
7) Be a creative problem solver.


Bennett, BusinessQ Magazine: How has the role of the CFO changed in the past 10-20 years?

Lindley, doTERRA: Things changed dramatically for a CFO in 2001 — forcing the CFO to ensure that the organization had the checks and balances and approval loops. In addition, the speed at which data moves today has become critically important. When decisions are being made, the CFO makes sure the right data is presented.

Lewis, Nudge: I couldn’t agree more. The big changes are Sarbanes-Oxley and the pressures it puts on CFOs, and also the speed at which data needs to be made available not only to the organization, but also to the customers who demand data instantaneously.

Lords, Edge Homes: The access to capital has gotten better, but the oversight has gotten much more strict. CFOs have to provide quicker and better data to banks and other lending sources, just to make sure things are going OK, that the investment is in good hands. I have more involvement with auditors than I ever have before.

Badger, NOW CFO: When I started as a junior accountant at my first job, we were a $400-million company and the CFO who had been there for 30 years still used general ledger cards. He closed out by the 25th of the following month in a manual system. Now, a $400-million company wants the books closed the first day after the month ends.

Lewis, Nudge: Even the audit requirements have shortened their time frame. Everything just gets faster. It’s interesting that you said access to capital has gotten greater. During the meltdown of ‘08 and ‘09, I noticed a significant tightening of capital.

Lindley, doTERRA: There are different kinds of capital available today, but following the meltdown, banks became more difficult to work with than ever before.

Lords, Edge Homes: Sources such as private money opened up, and we had to find ways to get capital. Most businesses are becoming more and more capital-intensive, and a big role for the CFO is to find sources of financing.

Bennett, BusinessQ Magazine: How do these changes and the speed of data affect the quality of life for a CFO?

Lords, Edge Homes: Technology has really helped. Without the advances in technology, we’d have longer hours and more fatigue. It’s almost as though technology has offset the required man-hours needed because of the additional oversight.

"We need to help the CEO understand that if he does this, these are the risks. Ultimately it’s the CEO’s responsibility to make the decision, and then the CEO relies on the CFO to implement the decision." —Rob Lewis, Nudge

“We need to help the CEO understand that if he does this, these are the risks. Ultimately it’s the CEO’s responsibility to make the decision, and then the CEO relies on the CFO to implement the decision.” —Rob Lewis, Nudge

Lindley, doTERRA; That’s a great point, but you look at a team — I have 40 people — and from where it was 20 years ago, our field requires people who are little bit brighter and with more intellectual capacity. They don’t work more hours, but in today’s world, they have to think a lot more and be creative problem-solvers.

Lords, Edge Homes: My first year at Arthur Anderson, they introduced the PC. All it did was add, subtract, multiply and divide. What we’ve arrived at from then until now is unbelievable. Technology has played a huge role, and keeping up with technology is one of the biggest challenges. It’s constant re-education, constantly learning and knowing what is available, then putting it to use.

Badger, NOW CFO: I was at a company on Monday, and they have 40 people in their accounting department, of which 15 are CPAs. It shows you the level of accounting that is required. It’s not just processing. They have to think, and it requires more education. If you took that same company 20 years ago, they would have only had a CFO and one CPA.

Lewis, Nudge: We don’t have bookkeepers anymore because technology does basic bookkeeping for us. We are analyzing data; making sure things are managed and reconciled more than anything.

Lindley, doTERRA: We’re making sure data is correct and we’re really thinking about the data. You want people on your team who can analyze and understand the data.

Lords, Edge Homes: Because we can now benchmark against others in our industry, we can know if we are on track or out of line. I don’t know about your industries, but we never got good industry data to benchmark against until recent years.

Bennett, BusinessQ Magazine: What personality traits are essential in a successful CFO?

Lewis, Nudge: You have to be a good communicator because CFOs have to make sure data is being communicated around the organization, and we need to know the needs of the organization and make sure the data is getting passed in a usable, reliable format.

Badger, NOW CFO: The days of an introverted accountant or CFO are long gone because we disseminate information to all groups. If we can’t communicate well, it’s to the detriment of the company.

Lords, Edge Homes: As a CFO, you’ve got to tap the brakes once in awhile. You’ve got an entrepreneur who is go go go, and you have to say, “Look, here are the constraints.” If you cannot communicate the reasons why, you are going to be in trouble.

Lindley, doTERRA: You have to tap the brakes or push the accelerator, depending on the situation. And you have to explain it in an understandable way. To be able to summarize the information and communicate it in a way that people understand is critically important.

[pullquote]”You have to tap the brakes or push the accelerator, depending on the situation. And you have to explain your reasoning in an understandable way.” —David Lindley, doTERRA[/pullquote]

Badger, NOW CFO: We’re talking about both written and verbal communication. You live by emails, but it’s the face-to-face communication that is key, especially with senior management.

Lindley, doTERRA: And also with senior customers and senior outside stakeholders. They need to see that you are confident. They are going to look at how you say things as much as what you are saying. It goes without saying that as a CFO you have to have integrity and you must maintain a pulse on the value system of the company.

Lewis, Nudge: I would also add most people don’t view a CFO as a salesman, but CFOs are selling the business and the idea to banks, shareholders and investors. They are the front line sales people to those types of organizations.

Lindley, doTERRA: The CFO and CEO need to be aligned on where the company is going. They will come at it from different angles, which is good. You should have a healthy deliberation between the CFO and CEO, but they have to be aligned on the end game.

Bennett, BusinessQ Magazine: Describe what a healthy relationship looks like between a CFO and a CEO.

Badger, NOW CFO: Not adversarial. They need to be a team. They have to know where they’re going long-term. The CFO should be the right-hand of the CEO. The CFO has to be the conscience of the CEO because they are entrepreneurial, they are 100 miles an hour, and they may have 50 ideas they think are great. It’s usually the CFO’s job to figure out which five of those 50 are really good.

Lords, Edge Homes: You got his back, you keep him safe.

Lewis, Nudge: I’ve found we have to provide the data for them to make the right decision. Another role of CFO is risk management — we need to help the CEO understand that if he does this, these are the risks. Ultimately it’s the CEO’s responsibility to make the decision, and then the CEO relies on the CFO to implement the decision. The CEO is generally more entrepreneurial and less detail-oriented as far as process and procedures go.

Lindley, doTERRA: There certainly can’t be an adversarial relationship between the two, but there should be some healthy tension. The CFO needs to respect the role of CEO but be vocal and express views. When a decision is made, the CFO needs to move forward as a team player. A quiet CFO is not helping the business and the shareholders reach the maximum potential.

Lords, Edge Homes: A CFO’s goal is not to be argumentative but educational. You can’t have a yes man in there or you are in trouble.

Bennett, BusinessQ Magazine: What questions do CFOs ask in executive meetings that nobody else is bringing up?

Lindley, doTERRA: “Did you consider the impact?”

Lords, Edge Homes: “What is the risk? What are the consequences if it doesn’t happen the way we have it planned?”

Lewis, Nudge: “Are there regulations we have to comply with? What are the total costs of this new venture?”

Badger, NOW CFO: Sometimes the CFO has to be the worst-case scenario type of person. Entrepreneurs can see a vision, but they don’t realize if it goes south what the implications and costs are.

Lindley, doTERRA: And not just the costs today but three to six months down the road. We are solution-oriented by providing alternatives that may be better from a financial perspective to accomplish most — but not all — of what they want to accomplish.

Bennett, BusinessQ Magazine: What are the benefits of having a CFO in-house vs. hiring an outside perspective such as NOW CFO?

Badger, NOW CFO: For a small startup at $5 or $10 million that’s growing and trying to ramp up the senior leadership, perhaps they can’t afford an experienced CFO full time, so an outsourced CFO solution makes sense. They basically buy a few hours a week to help make key strategy-level decisions.

Lindley, doTERRA: If you bring in a CFO, there’s usually a long-term commitment, but with an outsourced CFO you can use them for a short period of time.

"If you don’t believe you can drive the numbers, get out. You can have an impact. That’s why we do this, to get historical trends to drive the future." —Mark Lords, Edge Homes

“If you don’t believe you can drive the numbers, get out. You can have an impact. That’s why we do this, to get historical trends to drive the future.” —Mark Lords, Edge Homes

Lords, Edge Homes: There’s this “no man’s land” in the life cycle of a company, right exactly where Chris is talking about. Many companies in that position won’t hire a CFO or outsource a CFO yet, so they’ll struggle during that period and slow their progress. They’ll make mistakes and stumble.

Lewis, Nudge: I’ve seen the need when a small company needs financing. The types of services Chris’ group provides act as a good liaison between the company and the bank to facilitate that loan. So I’ve also seen outsourcing as a transaction-oriented type of role.

Lindley, doTERRA: As companies reach a new level, they need someone in the CFO role to structure the approval process and to implement all of the subsystems.

Bennett, BusinessQ Magazine: I read that one of the seven habits of highly effective CFOs is to drive the numbers. What does that mean?

Lindley, doTERRA: You can’t be reactive to the numbers. You’ve got to be forward thinking and know what you want the numbers to be and have a goal.

Lords, Edge Homes: If you don’t believe you can drive the numbers, get out. You can have an impact. That’s why we do this, to get historical trends to drive the future.

Lindley, doTERRA: I try to tell my CPAs that financials should never be a surprise. You should know what’s coming out. You have to know what the end game is and what it takes to get there. In the world of a CFO, in the world of business, the question is, “What’s driving success?” You have to understand operations because operations generate expenses and revenue for the business.

Bennett, BusinessQ Magazine: What role does data gathering play in the role of a CFO?

Lindley, doTERRA: There’s so much data out there. It’s an opportunity, but it’s also a challenge. Controlling access to data becomes an issue because sometimes there’s too much data for a group to have. It’s important to make sure people have the right data to make the right decisions.

Lewis, Nudge: You have to decide what the key performance indicators are and then monitor those on a regular basis. You can make changes right away if you see that you are starting to fail on one of those indicators.

Badger, NOW CFO: If a division has 10-15 key performance indicators they are trying to track, they need to drive that down to the top three.

Bennett, BusinessQ Magazine: What’s an example of a key performance indicator in your businesses?

Lords, Edge Homes: Follow-up phone calls with prospects, which are key to getting eventual sales.

Lewis, Nudge: Two things: collections as a percentage and profitability per home.

Lindley, doTERRA: We’re a consumer business, so we look at retention rates. How much are they reordering? How often are they reordering? Those key numbers are vital to our business.

Badger, NOW CFO: Our key indicators include cost per leader, marketing cost and also revenue per customer. Tomorrow I’ll be spending all day with a company trying to get through their database of recurring revenue. Those types of indicators are key to how they’ll build their business this year.

Lords, Edge Homes: If you aren’t growing, people don’t see the opportunities and you lose your best people. They stay because they see an opportunity, so companies have to grow. They have to be viable. In order to do that, you have to develop good people.

Bennett, BusinessQ Magazine: Tell me about your day-to-day life. What’s on a CFO’s to-do list on a daily or weekly basis?

Lords, Edge Homes: We play Groundhog Day every month to get the numbers out, but we are working on insurance one day, a land deal the next. Being a CFO involves all kinds of things. No two days are the same.

Lewis, Nudge: Mondays and Tuesdays we have meetings all day. Wednesday though Friday I deal with operational issues and try to implement new systems. I have as much routine as possible with my departments so they know I’ll consistently have the same expectations every week.

[pullquote]”The days of an introverted accountant or CFO are long gone because we disseminate information to all groups. If we can’t communicate well, it’s to the detriment of the company.” —Chris Badger, NOW CFO[/pullquote]

Lindley, doTERRA: We meet weekly as a management team, but otherwise it’s a pretty varied schedule. We’re a large business, so I have a team of people who have more regular schedules, but mine is varied in terms of being pulled lots of directions.

Badger, NOW CFO: I like to set up a monthly cycle to get the financials out, and to conduct reviews with managers and directors. We also do a KPI review on a weekly basis. Even though I have a schedule, I still get pulled everywhere. Suddenly it’s payroll issues or what happened with property casualty insurance this week. You plan for the best and plan for the worst.

Lords, Edge Homes: I’m not good at this, but you’ve got to discipline yourself to have time to sit down, put your feet on your desk and think about the bigger picture — because it’s easy to get lost in the details of this role.

Bennett: BusinessQ Magazine: What advice would you give to high school or college students who want to pursue a career as a CFO?

Lindley, doTERRA: You have to pay your dues to become a CFO. There’s not a quick or easy path. You’ve got to do well in school. Everyone in this group had Big Four experience — a future CFO doesn’t have to do that, but they at least need comparable experience to get exposure and training on different aspects of business. Then you’ve got to dig in and understand the company where you work.

Lewis, Nudge: A lot of successful CFOs come from good accounting schools and also from Big Four accounting. They learn how to work hard and how to work well with other people at a very young age. One of the biggest skills a CFO can have is to communicate. You also have to get into the operations of the business and understand data flow.

Lords, Edge Homes: Education is the No. 1 thing. The second one I would add is that good CFOs have expanded their skillsets by being involved in other community activities. Develop your personality because you have to become a bit of a salesman and have some personality to be effective. When companies are looking for good CFOs, it’s not just the technician they need.

Badger, NOW CFO: We’ve talked a lot about education. Public accounting also requires certification. I teach CPA review courses for financial reporting and auditing. We get a lot of students in their last year of school wanting to sit for a CPA exam, and I tell them to go Big Four. You can’t go wrong there, but you will have to pay your dues to get there.

Lindley, doTERRA: Going with the Big Four is like continuing your education. You pay your dues, and you get to work with a powerful firm and gain experience.

Lewis, Nudge: You’re dealing with chairmen of the board and CEOs in your 20s. It’s a phenomenal education. You can’t beat it.


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