Transition is constant and, as today’s corporate environment evolves, it becomes more challenging for companies to keep up with changing times and deal with company downturns. In such cases, CFOs must expand their roles and exercise creativity.
On October 15 The NYC CFO Leadership Council presented Back From The Brink: How CFOs Contribute To A Turnaround, a panel discussion led by experts who have met harsh obstacles in times of organizational turmoil and, ultimately, guided their companies back on track to successful turnarounds.
Our speakers were:
Their tips and advice included:
Sound The Alarm When Needed And Navigate Company Turmoil
A CFO must always be ready to tackle all dilemmas and stumbling blocks in times of company downturns while still maintaining integrity. So, what’s the best way to navigate through the rough periods while keeping a “business as usual” philosophy? Here’s what our panelists suggested:
- Build a strong support team to provide help and create an internal alignment between your board and management team, as well as with investors and customers.
- Ensure that your CEO is fully engaged with all company operations.
- Encourage your sales team to be highly accessible to customers, as they continue to maintain a positive image and ensure that the wrong messages are not relayed.
- Foster an open and honest relationship with stakeholders.
- Maintain a strong vendor rapport, especially if you cannot pay.
- Don’t delay tax payments.
- Be fully aware of PTO liability.
- Pay close attention to international division obligations and issues.
- Look at all situations from an objective viewpoint, especially when contemplating forecasting, employee retention, cost cutting, compensation reductions, commission schedules, payroll, and internal controls.
Be Realistic And Honest With Your Team
To prevent rumors and negative publicity from starting, it is important to communicate all information, both favorable and unfavorable, to your senior and middle management teams. Never lose sight of company strategies, offer retention bonuses and stock options to motivate and keep key staff on board, and consistently cultivate a positive atmosphere to promote employee productivity. And, always ensure that your executive management team is committed to understanding the reasons behind vital decisions and actions.
Effectively Manage Your Cash Flow
Liquidity is generally the best option during a turnaround and a CFO is the one who must take responsibility for cash flow management and forecasting. Our panelists agreed that a 13-week cash forecast is an essential tool, along with monthly meetings with investors, regular communication with vendors, resetting payment terms, and, if needed, equity opportunities. It is also important for your marketing department to fully understand how cash will be spent.
Be A Strong Leader
Your leadership is imperative to the guidance and future of your organization and you need to consistently present situations and facts to your CEO and lenders to help drive decisions and strengthen your credibility. And, above all, the courage to push ahead is essential. Always look at the factors involved, mainly the people, the products, and the processes, and, when order has finally been restored, always think about the lessons learned.
For more expert advice on successful turnarounds, take a look at The Future of Finance Blog, written by one of our members, John O’Rourke, Vice President of Product Marketing at Host Analytics.
If you have any questions, comments, or suggestions about this topic or future events, please contact us. We would love to hear from you.