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Don Welker's Financial Minute

Jun 20, 2017, 9:00 AM


Your company’s financial reports provide the basis for a great deal of decision making. You want to be sure that they enlighten rather than confuse! Here are five of the most common things that make financial reports confusing:

1. Poor formatting – Just pushing a button in QuickBooks and spitting out a report often doesn’t cut it. Taking a few minutes to spruce up the formatting can make a big difference in a report’s usability.

Beyond the “look and feel” of the document, though, poor formatting can also be a matter of inconsistencies in the data that’s being formatted, or data presented in an illogical order. For example, I’ve seen Income Statements that listed “labor” in six different places—none of which were at the top of the list, even though labor was the organization’s number one cost.

2. No narrative or context – Chances are slim that everyone who reads the report will be able to instantly discern what the data is communicating. It is helpful to point out the key issues, and possibly provide a conclusion or suggestions for improvement. In many cases it is also a good idea to include historical or industry data, to give context to the data being presented.

3. Undefined acronyms – When sharing financial information it’s important to speak English and not “accountant-ese.” Don’t assume everyone reading the report knows what “Cap Ex” or “EBITA” is.

4. Too much detail – In large companies it is common for the Income Statement to have 50 or more potential line items. Obviously, the report can get confusing if all 50 are included. It’s just too much detail! In cases like this, see if you can consolidate things on the main report, and then provide the ability to drill down into the details as needed.

5. Not tailored to the audience – Think about who the report is for, and customize it accordingly. Your rank and file employees, for instance, will be interested in different data than your investors and bankers, who may have different data needs than your executive team.

The bottom line is, if you’re going to do the work to gather and analyze the data, put in the extra 10% more time to polish the report. Confusing reports do not benefit anyone.

Need help creating financial reports that are a pleasure to use? Give me a call. As your part-time CFO, this is one of the many services I provide.

Jun 6, 2017, 9:00 AM


You’re ready to bring in a part-time CFO. Now what? What should you look at when evaluating candidates for the job?

Start with your specific needs

Chances are the majority of your part-time CFO’s responsibilities will be project-based. A logical starting point is therefore to take a close look at what you expect this person to accomplish. List the three biggest projects for which you need help, and then seek a CFO with experience addressing these types of issues.

Consider some consulting-related factors

Your part-time CFO will most likely be a 1099’d outside consultant. As such, you’ll want to find out:

• How quickly can they get up to speed? You want someone who can come in and hit the ground running. Do they have the background and expertise to pull this off?

• What is their availability? Can they offer you the hours and flexibility you need going forward?

• What resources do they bring? If a project gets too big, or if you need help from professionals in other fields, do they have a network of vetted experts they can tap?

Then look at experience and qualifications in general
Of course, in many ways hiring a part-time CFO is similar to hiring a full-time CFO. You’ll also want to consider all of the usual hiring factors, such as:

• Education, credentials, experience & track record – Be sure to look at the specifics here. Do they have a CPA? Do they appear to have the ability to understand your business? Do they have experience doing the broad array of things that you will ultimately need, or just a subset of this? For example, some CFOs are great with strategic planning but not well-versed in insurance-related issues. If you need both, this person would not be a good match.

• Communication & interpersonal skills – Will they be able to analyze the numbers and then communicate useful, actionable information to you based on what they find?

• Management style – As a part-time CFO, how will they fit in with both your management team and the staff members that they’ll supervise and/or work with?

• Personal chemistry – You’ll be working very closely with this person, and they’ll be working with the intimate details of your business. It’s got to be a good fit!

The right part-time CFO can make a big difference for your company. Before hiring someone, be sure to complete a thorough interview process, check references, and do a background check.

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