Strategic Questions for Your CFO

Are there strategic questions you can ask your CFO that can help you accomplish business goals? There are many questions that can arise, but it may be difficult to know where to start. One of the best leadership skills to acquire is knowing how to ask the right questions, so we have compiled the top 10 best questions to ask your CFO.

What we cover in this episode:

02:55 – #1: What could I do to grow my business more effectively?
05:43 – #2: What are the key metrics that drive our profitability?
08:31 – #3: Are there any changes coming up that you think could affect my business/industry?
10:40 – #4: What are the main risks/opportunities you see within my company? What can I do to mitigate those risks?
13:45 – #5: Are there any best practices or operations opportunities you see that would improve functions in my organization?
15:24 – #6: What can my team do to improve cash generation?
17:13 – #7: What can I do to increase the value of my business?
19:45 – #8: What is holding me back in my business? How can I work on this?
22:55 – #9: What are the implications of making this change?
26:26 – #10: What are my action items based on this meeting?

#1: What could I do to grow my business more effectively?

Regular conversations with your CFO, chief financial officer, are required to ensure the financial health of your business remains in good shape. Consult with your advisor about your strategic plan, long-term goals and make it clear to them where you want to be and where you want to go so you may identify how you can get there. By asking this question, your CFO can lend insight to what financial strategy is best to achieve the growth you’re after.

#2: What are the key metrics that drive our profitability?

Megan makes a great point by stating, “We all talk about growing business, but that can mean different things to different people…and as an established business, you probably have some key metrics that you’re tracking but having the humility to step back and ask somebody that has that background and say, ‘Hey, are these actually driving our profitability?’ ‘Am I paying attention to the right things?”

Speaking with your CFO about what type of growth you have in mind is crucial to your success and the success of your organization. Your CFO looks at your business from a different set of eyes and background than you do; so both you and your CFO’s perspectives are crucial to consider. Financial reporting is one of the most basic tasks any accountant can offer, but establishing key metrics that are driving growth and profitability is the value a chief financial officer, or CFO, can add.

#3: Are there any changes coming up that you think could affect my business / industry?

Partnering with a financial advisor who knows your business and industry can make a large difference in your company’s financial success. Your CFO should have knowledge from current or previous clients that could help with your growth. Of course the way you run your business may differ from others in the industry, but different perspectives can aid in avoiding rough patches and other economic travisities. Access to specialized and specific information about your industry can be some of the best results of strategic questions for your CFO.

#4: What are the main risks / opportunities you see within my company? What can I do to mitigate those risks?

If you haven’t created a SWOT analysis, this is a good question to ask your CFO so you can create a SWOT analysis together. Finding your threats (risks) and opportunities is how you grow as a business. One of our most popular episodes focuses on the SWOT analysis if you’re interested in learning more. Your CFO will have a great perspective from a financial planning and analysis point of view. The risks you may see and know as the operator of your business are different from the risks a financial advisor would know.

Depending on the risks identified, yourself and your CFO can go over ways to reduce these or prevent them entirely. One of the best ways to mitigate risks is by putting simple procedures into place. There are plenty of conversations to have about internal and external opportunities and risks. Consulting with your financial advisor about these are important to your business running as efficiently as possible and generating profit.

#5: Are there any best practices or operations opportunities you see that would improve functions in my organization?

CFOs have more to offer than simply reviewing your balance sheet and other financial statements. They can lend insight regarding the operations and procedures that can help support your team.

Katina adds, “We have one meeting a month that’s designed specifically to look at those operational systems and look for improvement areas and work on those actively with the clients that we work with. Because that’s a big part of what goes into a lot of things. What goes into profitability being better? Just generally making life better for everybody and making things more efficient and less frustrating.”

#6: What can my team do to improve cash generation?

Finding different avenues of creating cash flow is definitely a conversation to sit down and have with your CFO, especially if they are specialized in your industry. Having a solid cash flow plan that’s measurable and attainable is crucial. Learn more about this in our cash flow series. Cash generation comes from profitability which comes from good sales. With your knowledge of the business and your CFO’s expertise you can create a solid plan to attain the sales needed.

Katina explains, “There’s generally a lot of issues that can come up from a lot of businesses in the service industry, especially if you’re just not quick enough on your collections…” Setting best practices within your accounting department can make a substantial impact on generating your cash flow and avoiding a cash crunch situation.

#7: What can I do to increase the value of my business?

Your CFO can help you focus on improving the value of your business as well. Katina expands on this, “I would say it’s a pretty misunderstood thing out there, with regards to people looking at the value of their business… Ultimately the value of something, is what somebody’s willing to pay for it.” Finding out the value of your business differs from what you think it is can be a rude awakening.

Some factors to consider that impact your organization’s value are the size of your business, the revenue it generates, the profitability you see, and the reliability of your performance. What are the risk factors associated with your business? A great example to think about is, if you were to sell your business, what would it look like to a buyer?

#8: What is holding me back in my business? How can I work on this?

CFOs have more to add than financial analysis. They generally have many years of business experience and have seen how business owners can get in their own way, or make great strides. You can leverage this experience and background to help learn more about general business success and get tools regarding how to improve your leadership skills.

#9: What are the implications of making this change?

Consult your CFO BEFORE making major decisions, instead of after. When dealing with your business and finances, this isn’t the best time to implement the ‘ask for forgiveness later’ mantra. By talking it over with your CFO you can “ward off a lot of potential problems by asking the questions first” because your financial advisor may have some past experience with the change.

Katina discusses additional insights regarding “what the implications are going to be, what the costs are going to entail, maybe the timing could have been better, lots of different reasons. Business implications, reporting implications, tax implications, etc.”

Making big decisions even when it comes to purchasing new equipment can have an unneeded impact on your business. Your CFO should be a partner you trust to consult with when you have questions concerning small and big issues.

#10: What are my action items based on this meeting?

Katina states, “If you aren’t getting a list of action items, you should be asking, what are my responsibilities? What are my action items based on this meeting? So that you have a clear understanding of what you’re responsible for so that you can keep things moving.”

Meetings are necessary and useful, but most of the time in meetings you don’t do things, you talk about what things need to be done. So it is important to have a clear understanding of responsible parties and due dates. Whether this is a follow up email or a few minutes set aside at the end of the meeting, action items need to be set. If your CFO isn’t giving you action items, you need to ask them, so you both are on the same page.

Conclusion

The most important takeaway from the list of best questions to ask a CFO, is to iterate how important it is to ask the questions. You don’t know what you don’t know and your CFO may not know what you don’t know. Starting the conversation with them and being open about what you want and need can go a long way. If you don’t ask, you will never know and the impact of that on your business can be detrimental.