What should a new CFO do first? Essential first steps to start off on a path to success

Launching your CFO journey in a new role, the essential guide to excelling in your first moves and beyond. Use our checklist to make the most of your initial interactions and research, to unlock the keys to establish your execution plans and success.

Managing your time

Let's start here. The role of CFO is a big one. You’re new in position and there is a lot of information that you need in order to be successful, Inevitably there will also be fires that you need to identify, and extinguish from the get go. All this to say, you need to be structured and organised. Don't be a one man army, identify quickly who are the A-players in your team that can help you leverage up your efforts, and support you in fast tracking the process made. 

Wherever possible, stay in charge of the structure of your days. What time of day do you work best, as this is the time best reserved for quiet, uninterrupted work reviewing, learning, absorbing and producing. Structure and batch your meetings to protect your biggest asset.

Get to know the business

You will clearly be familiar with the business and industry already. But you are now on the inside. You have the access, so go get the knowledge. Areas best to focus on initially which we will take in turn are

• Strategy & vision
• Operations of the business
• KPIs & metrics
• Industry & customer base
• Your peers & ways of working
  

Strategy & Vision

The logical place to start is at the top, understand where the company is intending to go, and how the leaders envisage it getting there. Such that you can complement this with your’s and the actions of your finance team, as well as the processes that support. It’s important to understand the expectation that has been set of how the CFO is to support this vision, and this will remain your north star on how you approach the remainder of the activities listed below.

Operation of the business

We know that exceptional CFOs are not only finance people. For you to exceed and build influence in your organisation, you must be operating from a place of knowing the business intimately. Assessing opportunity & risk, making financial decisions in allocating resources, and driving valuable strategic financial planning and analysis can only be done with the operational knowledge of what makes the place tick. Get into the business, ask a lot of questions, absorb, and learn. Doing so will ensure you can be balanced in your view of both financial and non financial impacts which leads to a sustainable and valuable approach to operating in a CFO role.

KPIs & Metrics

You need to have your finger on the pulse as quick as possible, and you can’t learn everything about a business at a detailed level, you've got work to do. Key performance indicators (KPIs) and Metrics are a critical tool in gauging how the business is performing, at a sensible level of detail to direct you to the areas that need focus, and those that are best kept at a surface level. Review the KPIs that the board currently use, both financial and non financial, and where possible benchmark these against available information on the competition, or those of the industry.

Industry & Customer base

Your aim is to understand the competitive landscape of the company, how it sits within the industry, how the company is perceived, what strengths the company has that can be leveraged. Who is the company chasing, or is the gap to you narrowing within the industry. How has or is the competitive landscape shifting, and what impact is this having today on the organisation? 

External factors have a huge bearing on performance of an organisation. In order to provide the foresight for the future, you need to understand what impact these have had or continue to have. How has the organisation, its customers, its suppliers and investors been affected by economic climate shifts, or supply chain factors in recent times. What are some of the big trends that are being seen in the industry across technological, social, political, regulatory and environment? 

The customer is king. You should understand any risks that are present, and which customers and activities are really driving performance. Identify how centralised or decentralised the customer base is, are you dependent on a small number of large customers, are there any known attrition risks? Consider if there are contracts in place that need a closer look. If customer satisfaction data is also available, take a look and consider how it is trending and if this could have a significant bearing on risk to the financials.

Looking to the future, how is the condition of the sales pipeline, is there unfulfilled capacity in the business or key resources and constraints that are preventing growth? 

What is the culture around sales planning, and how well aligned is the realisation of pipeline on a predictable basis to the fulfillment by the organisation. Does this wildly fluctuate or have inaccuracies that lead to unnecessary operational friction or challenges being placed on the business. 

Your Peers

The aim here is to start to forge relationships with the key peers that you will be working with to ensure success in your role as CFO. You should be focused on listening, understanding and asking good questions initially, as well as identifying where their expectation lies in you supporting the business. Key areas to consider include

• Identify who the key players are and which decisions and influencers exist in which areas. It is worth also understanding if there are existing succession plans for key roles, as this often shapes the dynamic of decision making
• What are their ways of working, and how do things get done in the business? What are some of the styles of working in the leadership team
• How financially savvy are they, and how do they perceive finance’s role in the business success. Where possible start to gauge how much autonomy and trust can you expect to have 
• Where do they see the opportunities, both for you as CFO, and for the business at large
• What did they like or dislike about what the previous CFO did, and what were the true reasons for them leaving
• Now that interviews are out the way, what can they now disclose to you that they could not previously. Care should be taken that you do not come across as lacking trust or making accusations. Keep it light, what has changed since we met? Now I’m on the inside, what do I need to know? 

Finance team and productivity

It’s time to get to know your team. Don’t make it all about business, get to know the people. People will step up for people that they like.

It makes sense to do this in conjunction with assessing and reviewing the financial state of the company. That way, you can have topical conversations and will also act to identify who is tuned into what is going on with the business and financials and who is not. This being said, be considerate that while some take well to being put on the spot, others do not, but they may have other strengths which still make them an exceptional member of the team when in the right role.

Consider what data can be made available to you to support getting to know your employees. Performance reviews, feedback from stakeholders, disciplinaries; as well as identifying the good you want to see where any problems might arise. 

You want to identify who your A-Players are. For they will be your leverage to support you in both your fact finding mission, and eventual change mission. Who is excited by change and challenge? You want to build up a picture of where the ambition in the team is, where the team is stretched or under unsustainable pressure, and who is firmly sitting in their comfort zone. How does this map to your assessment of the personal objectives, ambitions, stage of career and how they are motivated by work.  

Gaining an understanding of the output of the Finance function will provide you knowledge of who has unique, hard to replace knowledge and skills. Do you have any obvious flight risks in the team? Consider the need for succession planning and cross training early, before it becomes a problem.

Doing a first pass of relating the outputs produced by your finance team with your new knowledge of the strategy and bigger picture, as well as your past experiences, you will inevitably start to identify value opportunities. These can be quick wins, if you have the resource and capacity to execute now and this learning can support both you, and potentially new learning for the business. 

You can also start to assess where work appears to be taking longer than it should or is being done inefficiently. Be on the lookout for unproductive effort, for example where tasks are being completed for stakeholders that don’t actually want or use what is provided. You don’t necessarily need to act straight away, you don’t want to rush and risk frustrating a stakeholder, however they are points of action to consider when the time is right.  

Benchmark your finance team cost base with a costs over revenue of the business metric, The below tables should help in this exercise. Bear in mind that there are limitations and other factors that are a challenge to quantify, depending on company size, industry and culture of the company based, as well as the output finance are there to provide in your particular organisation’s circumstances. 

Finance Tech stack 

Get to know your tech stack, its level of sophistication, automation and fit to the business and its non-financial processes. What is working well, and what is placing a burden on productivity and the team or hampering other teams in the business. Doing so, you should look to understand which activities are keeping the lights on and transactional in nature (accounts payable, accounts receivable, credit control, general ledger) and which activities are value adding and supporting the business (financial planning, analysis and reporting, pricing, strategic work) in its objectives.

This will likely come with opportunities for modernisation and improvement. For which will feature later when you consider your road-map.  

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Get under the skin of the numbers

By this point, you have heard it from your peers and from your team. Now it's time to form your own assessment. As a minimum you should look to review

Company Financials

• Complete picture across income statement, balance sheet and cash flow 

Budgets and Forecasts 

• Purpose - What business activities, resource allocations and decisions does the planning of the organisation impact? Are plans made realistic, valuable and action inducing 
• Stakeholders - How engaged are stakeholders in planning, who and how do they use them for the above 
• Method - What process is used to arrive at plans, are they heavily reliant on manual work by teams, or is the organisation leveraging operational, sales and other data in planning 
• Post mortem - How effective is the variance analysis process from plans to actual, and what level of learning is gained during re-forecasting that drives dynamic future planning
• Practices - What are the cultures and biases that are at play during planning. Are actuals recognised but reforecasts ‘held’ at notional budget levels for the remainder of the year

Other Focus Areas 

• Audit Reports and working papers - Have the auditors identified risks? A look at large journals processed are good insight into inefficiency as well as management actions 
• Cashflow - Are there short term challenges, what credit facilities are you working with, what headroom do you have, how are your cash management and collections working
• Aged receivables - Relating to the earlier look at customers, do you have any current problems or risks, old debts, large provisions or potential conflicts between the customer being served and cash landing in the door 
• Compliance checklist - what are the compliance matters which are upcoming, or overdue and see that they are in hand by the team
• Understand the timetable of other key deliverables by the finance team that you are not responsible for- Across budgets & forecasting, management reporting, financial reporting and audit 

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Identify any problems and risks

‍The first goal here should be to Identify if there are any burning fires, or potential fires that will require extinguishing. You should be on the lookout for these at all times as you undertake all of the activities in this checklist. The CFO needs a constant picture of the company's health, and any risks that the organisation may be exposed to.

Your Role

It’s now time for some reflection. On your scope of the challenge that you face, on the reasons you are in the role you are in, what you were brought in to do, and the expectations that are being placed upon you. You should start to think about the future and get stuck into the work that is in front of you. Approach it with a bias for action, and let's get going. 

Execution

Establishing a Vision

Your vision should be bold, however must remain realistic relative to the budgetary constraints and the control and autonomy you should expect to have and, as a result, achievable. You do not want to over promise to either your peers or your team, or communicate plans for which you may not receive the resources and support from your fellow leaders. 

Prioritisation and road-map 

By now, you probably have a list as long as your arm. From here you can do anything, but you can’t do everything. Now is the time for prioritising, and building out your road-map for action. 

As we know, the role of the CFO broadly falls into two areas 

1) Keep the wheels turning and avoid any issues of regulatory, compliance and governance

Unfortunately, it just needs to be done, and done in a timely manner to avoid exposing the company to unjustified risk.

2) Delivering valuable insights to support decision making and attainment of  business objectives. 

It's helpful to rank this potential backlog against the two critical dimensions (see the below diagram) 

• The value to the business in support of strategy
• The ease of implementation and change

When deciding on your order of priorities, start with those that fall into the high impact with low effort, and work down the list based on value delivered for effort expended. 

Wrap up

Well that's it for now. We hope this checklist was useful to you in your new role as CFO, and we wish you the very best in achieving success on your mission.

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