This document provides guidance for CFOs and controllers on managing growth. It discusses determining when to hire additional staff as a business grows and examines signs that an accounting system is hindering operations. The document also covers focusing on key performance indicators and cash flow fundamentals to take a more strategic view of the business as it increases in size and complexity.

1. INSIGHT.
OVERSIGHT.
FORESIGHT.
Growth Management for the
CFO/Controller
www.trmoore.com
blogsight.trmoore.com

2. INSIGHT.
OVERSIGHT.
FORESIGHT.
About Us
 The Houston location of top 100 U.S. firm Doeren Mayhew
 Progressive CPA and consulting team that goes beyond
traditional accounting to help business owners reach their
profitability and exit objectives
 Clients range from locally owned family businesses to multi-
national companies
 200-plus member team to deliver a comprehensive service
model and specialized industry expertise

3. INSIGHT.
OVERSIGHT.
FORESIGHT.
About You
The role of a CFO or Controller is one of
the most challenging and demanding …
I think he may have
gone to lunch, but I
can’t be sure …

4. INSIGHT.
OVERSIGHT.
FORESIGHT.
About You
Typical CFO/Controller complaints or goals:
 Want to be more “strategic” or “big picture,” but don’t always
have the time
 Want to be more involved in the management of the company
 Want to be a key part of the decisions
 Want to be more valuable within the organization
Expecting these concerns to be amplified as your
company experiences growing pains?

5. INSIGHT.
OVERSIGHT.
FORESIGHT.
Addressing the Challenges of Growth
 When & What Roles to Hire
 When to Upgrade Your Accounting System
 Focusing on the Big Picture

6. INSIGHT.
OVERSIGHT.
FORESIGHT.
Hiring
 Determining the need
 Allocating or reallocating tasks among available
staff
 Part time/full time?
 Selling management on the idea
 Finding the right fit

7. INSIGHT.
OVERSIGHT.
FORESIGHT.
Determining the Need
 Document hours being
spent or hours needed for
each accounting task
 Consider realigning tasks
with available resources
 If there is a need,
determine if it’s part time
or full time, temporary or
long-term
 Determine if business cash
flow can sustain hiring
 Look to your competitors
to get a general pulse on
hiring in your industry
Document Hours
Spent/Needed
CanYou Realign
Tasks to Fill Need?
Yes No
PartTime/Full Time?
Long-Term/Temporary?

8. INSIGHT.
OVERSIGHT.
FORESIGHT.
Example
 Multi-million dollar international manufacturing
company
 Assumed each month was four weeks and only
had 160 total hours
 CFO documented tasks and had employees
create their own version
 Compared CFO version to employee version
 Able to reallocate some tasks and determine
need for one new person

9. Example
Controller
Accounts Receivable
• Establishment of credit/collection policies
• Review/analyze credit applications
• Establish credit limits
• Supervise maintenance of credit files
• Manage activities of A/R clerks – collections, debit and credit notes
• Report on status weekly/monthly
• Maintain/prepare weekly A/R reports
• Manage/supervise outside sales commission report
Month-End
• Reconcile deposits in transit/intercompany reconciliation
• Reconcile A/R and A/P
TOTAL
Hours
4
8
4
4
30
4
64
8
16
8
150
Accountant
• Post accounts payable payments
• Update outside sales commission report
• Post customer invoices
• Enter and post cash receipts
• Update customer files
• Prepare bank deposits
• File A/R documents
• Follow up with sales on credit notes and disputes
• Bank reconciliation
TOTAL
30
32
20
40
16
10
10
20
10
188
Invoicing
• Generate and print invoices
• Submit invoices to customers via fax/email
• Outbound deliveries
• Enter POs
• Track shipment of loads
• Respond to customer shipment inquiries
• Produce weekly inventory reports
• Support A/R manager in reviewing and amending invoices
• Track part numbers in inventory
• Weekly status of virtual returns and real returns
TOTAL
20
20
40
20
20
12
4
10
n/a
8
154

10. INSIGHT.
OVERSIGHT.
FORESIGHT.
Risk of Not Hiring
 Not billing the customer timely
 Collections not happening
 Month-end close delayed
 Not meeting bank requirements
 CFO not free to be more strategic and big-
picture – what could you get done if you had the
time?

11. INSIGHT.
OVERSIGHT.
FORESIGHT.
What Hiring Isn’t an Option?
 Implement best practices for working
smarter/more efficiently
 Review policies and procedures for
opportunities to eliminate redundancies and
create efficiencies
 Consider your accounting software and whether
adjustments/improvements can create
efficiencies

12. INSIGHT.
OVERSIGHT.
FORESIGHT.
Accounting Systems
“Our accounting system needs
to share data with our
spreadsheets and other
software.”
“I want reports to
show data the way
I want to see it.”
“I’m tired of making our
business procedures fit our
accounting system.”
“We have too many
systems that don’t
work together.”

13. INSIGHT.
OVERSIGHT.
FORESIGHT.
Signs Your System is a Hindrance
 Staff keying in the same data more than once
 Recurring issues that aren’t resolved each month
 Too many hours spent reconciling between systems
 Use of Excel spreadsheets vs. system-generated reports
 Not enough control
 Not providing reliable information
 Month-end close takes more than five business days

14. INSIGHT.
OVERSIGHT.
FORESIGHT.
Key Considerations
Currently working
with more than
one system to
generate financials
Noticing
redundancies
in processes
Consider
compatibility or
replace with
fully integrated
software
Consider revisiting
processes and
make changes to
improve
efficiencies

15. INSIGHT.
OVERSIGHT.
FORESIGHT.
Key Considerations
 Do you have sufficient resources to replace existing
software?
 Staff
 Technology
 Budget
 Have you or your management team ever gone through
a system implementation?
 Are you capable of overseeing the implementation?

16. INSIGHT.
OVERSIGHT.
FORESIGHT.
System Considerations
 Will the system capture all operating processes or will
you have find “workarounds”?
 Will the system produce real-time, effective reports to
monitor the business?
 Does the system offer advanced security levels for
users?

17. INSIGHT.
OVERSIGHT.
FORESIGHT.
Pain Points & Best Practices
System
 Assist in the assessment and determine software that has the
“best fit”
 Dual processing – manual entries
 Amount of “workarounds” and Excel reports
 Data capacity
 System capabilities
 Cost
 Support
 Evaluate functionality

18. INSIGHT.
OVERSIGHT.
FORESIGHT.
Pain Points & Best Practices
Process
 Review workflow chart processes and identify weaknesses
within the process
 Recommend best practices:
 What processing obstacles are creating bottlenecks or rework?
 Are there processes not being captured in the system?
 Are there processes incorrectly configured?

19. INSIGHT.
OVERSIGHT.
FORESIGHT.
People
 Evaluate skill set of employees entering information into the
system and recommend whether additional training is required:
 Identify individuals who create bottlenecks in the system
 Identify individuals who “work around the system”
 Recommend or assist with training to facilitate a better
understanding of the process
Pain Points & Best Practices

20. INSIGHT.
OVERSIGHT.
FORESIGHT.
Cost/Benefit of Implementation, ROI on Purchase
 Use the 1% rule – estimate of revenue on total spend for new
system (i.e., annual revenue $25 million, budget = $250,000 for
new system)
 Analyze cost of consultant(s) and employee resources
 Consider cost of software – package, licenses, maintenance
 Consider cost of hardware
 Determine if annual cost moving forward is appropriate for the
business
 Quantify the cost of man-hours saved

21. INSIGHT.
OVERSIGHT.
FORESIGHT.
Client 1: Optimize Existing System
 Plastics manufacturer for oil/gas industry
 Implemented system on its own, resulting in problems:
 No real-time reports or dashboards
 No accurate job costing
 Lengthy month-end close
 Lost sales opportunities
 Evaluated the system, outlined recommendations and helped
the company implement changes
 Result: Estimated reduction of 550 hours and $28,000 per year
Example

22. INSIGHT.
OVERSIGHT.
FORESIGHT.
Client 2: Implement New System
 Service company looking for new system to better integrate
with Microsoft Access database to alleviate:
 AP issues
 Billing errors
 Double entry
 Researched software options, weighed costs versus benefit and
assisted in implementation
 Result: Estimated reduction of 875 hours and $23,000 per year
Example

23. INSIGHT.
OVERSIGHT.
FORESIGHT.
Words of Wisdom
 When planning your system assessment remember the
inter-relationship between the variables:
 Cost – inexpensive/expensive
 Time – least amount of time/maximum time
 Quality – low/high
You really can only choose two of the three, as the third variable
will always be affected by the other two.
Choose wisely!

24. INSIGHT.
OVERSIGHT.
FORESIGHT.
Focusing on the Big Picture
 Basic financial statement WITH explanation of key issues and
highlights
 Budget-to-actual reporting
 Cash flow and cash-flow forecasting
 Key Performance Indicators (KPIs)
 Benchmarking to industry
 And more …
Be sure to explain differences and changes,
not just note them …

25. INSIGHT.
OVERSIGHT.
FORESIGHT.
Cash-Flow Fundamentals
 Many businesses don’t realize that when you begin to
grow, cash flow will actually be extremely tight
 Example:
 Days’ sales in A/R = 40
 Sales increase by 10%
 Cash will need to increase at same rate
 4 fundamentals …

26. INSIGHT.
OVERSIGHT.
FORESIGHT.
Cash-Flow Fundamentals
1. Your Budget
 Is an essential cash-flow management tool
 Is only useful if you update it regularly to reflect actual spending
 Should tie into and support business goals (if you can’t
demonstrate how an item enables a goal, question its merit)
 Should be examined line by line

27. INSIGHT.
OVERSIGHT.
FORESIGHT.
Cash-Flow Fundamentals
2. Cash-Flow Statement
 Is created with your budget as a starting point
 Reports the net increase or decrease in cash for the business
 Factors in the cash inflows and outflows of daily operations,
asset purchase, sale proceeds and financing activities
 Excludes non-cash accounting items, allowing you to pinpoint
problems
 Should be generated monthly
 Can be automated with the right accounting software setup

28. INSIGHT.
OVERSIGHT.
FORESIGHT.
Cash-Flow Fundamentals
3. Manage Expenses
 Should be tracked by keeping accurate expense records, which
can be automated with your accounting software
 Can be examined for ways to reduce day-to-day operating
expenses
 Outsourcing
 HR
 Payroll
 IT support

29. INSIGHT.
OVERSIGHT.
FORESIGHT.
Cash-Flow Fundamentals
4. AR/AP Process Review
 Credit/Reference checks
 Deposits/Early pay discounts
 Aim for zero-defect invoices to reduce scrutiny by the
customer
 Adhere to a tight invoicing sequence to prevent payment delays:
 Consider billing upon completion of sales vs. on a standard
monthly date
 Try to make partially completed work billable
 Email/Fax invoices
 Tracking and collections on aging receivables

30. INSIGHT.
OVERSIGHT.
FORESIGHT.
Cash-Flow Fundamentals
 Discounts on payables for early pay
 Buying power negotiations
 Frequent/large purchases
 Free financing
 Extended terms

31. INSIGHT.
OVERSIGHT.
FORESIGHT.
Learning to Rely on the Number
 As the business grows, the CFO/controller begins to
lose the “intuitive” feel he once had about the business:
 Don’t “know” everyone anymore
 Grasp on management capabilities not as strong
 No longer able to gauge employee productivity
 Business becoming more department-oriented rather than
individual-oriented
These growing pains are just a few signs that it is time to
take a higher-level approach to financial management

32. INSIGHT.
OVERSIGHT.
FORESIGHT.
What’s a KPI?
 A measure of how well a process or area in the overall
business is performing.
 Can measure processes in dollar or quality terms
 What can be measured?
 Operational performance – a straight measure of an activity
 Financial performance – results comparison, i.e., period vs.
period, your business vs. others in your industry, plans vs. actual
 Product/service quality – warranty issues
 Customer satisfaction – loyalty to your product/service
 Employee satisfaction – turnover, salary comparison or morale

33. INSIGHT.
OVERSIGHT.
FORESIGHT.
Purpose & Benefits of KPIs
 Facilitate better management
 Provide more than a scorecard of performance
 Help to identify existing or emerging problems, as well
as negative trends, before they become a problem
 Measurement assists in clarifying and improving existing
processes
Sales Order Fulfill Order Documents
to Invoice
Invoice Prep Invoice Sent Cash
Collections

34. INSIGHT.
OVERSIGHT.
FORESIGHT.
Purpose & Benefits of KPIs
 Serve as change agent
 Alignment of long-term goals with short-term
performance
 Provide milestones while working toward long-term
objectives
 Promote understanding of areas critical for success
A way to get non-accountants to listen to you …

35. INSIGHT.
OVERSIGHT.
FORESIGHT.
KPIs & Critical Success Factors
 You must always get them right
 They are measured by KPIs
Sales Order Fulfill Order Documents
to Invoice
Invoice Prep Invoice Sent Cash
Collections
Obstacles
• Data Entry Errors • Poor Quality Control
• Missed Target Shipping Date
• Inadequate Inventory
• Data Missing • Invoice Sent to Wrong Address

36. INSIGHT.
OVERSIGHT.
FORESIGHT.
KPIs & Critical Success Factors
To identify Critical Success Factors, ask which processes:
 Are vitally important to achieving your vision/maintaining your
differentiation or competitive edge?
 Are most important to the customer?
 Have the greatest impact on cash flow?
 Have the greatest impact on ROI?
 Directly impact team morale?

37. INSIGHT.
OVERSIGHT.
FORESIGHT.
Example: Cash Flow as Critical Success Factor
KPI 1
Days in Accounts
Receivable
KPI 2
Clients Lost to
Aggressive
Collection Policies
CashFlow
Measure Both Sides
Financial Non-Financial

38. INSIGHT.
OVERSIGHT.
FORESIGHT.
Levels of KPI Reporting
Enterprise-Level
(monthly reporting):
Ex. – profit and cash flow
variance from annual budgets
Business Unit-Level
(daily or weekly reporting):
Ex. – average transaction value, transaction
count, number of complaints received
Operational-Level
(daily or more frequent reporting):
Ex. – weight of coffee beans roasted per hour, number of sales calls made per day

39. INSIGHT.
OVERSIGHT.
FORESIGHT.
Example: Retail Industry KPIs
KPIs Actual
Budget or
Industry
Sales per day 10 6
Average transaction value $4,700 $5,556
Sales per employee $90,000 $100,650
Revenue $1,410,000 $1,000,000
Gross margin percentage 32% 36%
Gross profit $450,000 $360,000
Operating expenses $350,000 $300,000
Net profit $100,000 $60,000

40. INSIGHT.
OVERSIGHT.
FORESIGHT.
Example: Manufacturing KPIs
KPIs Actual
Budget or
Industry
Dollars produced per
available labor hour
$40 $100
Labor hours available 5,250 9,000
Materials mark-up 20% 15%
Revenue $455,000 $900,000
Gross margin percentage 55% 50%
Gross profit $250,000 $450,000
Operating expenses $200,000 $350,000
Net profit $50,000 $100,000

41. INSIGHT.
OVERSIGHT.
FORESIGHT.
Example: Service Industry KPIs
KPIs Actual
Budget or
Industry
Dollars produced per
available hour
$125 $200
Average time per client 20 hours 40 hours
Number of clients 200 175
Revenue per employee $5,000 $8,000
Revenue $500,000 $1,400,000
Gross margin percentage 30% 50%
Gross profit $150,000 $700,000
Operating expenses $100,000 $400,000
Net profit $50,000 $300,000

42. INSIGHT.
OVERSIGHT.
FORESIGHT.
Defining KPIs
 Who should be involved in defining your KPIs? Those
who:
 Own the process.
 Are accountable for the process.
 Can respond to unfavorable trends.
 Three musts:
1. The owner must understand the business strategy and how the
business processes contribute to it.
2. The KPI must describe the targeted performance in measurable
terms.
3. The KPI must be actionable.

43. INSIGHT.
OVERSIGHT.
FORESIGHT.
Where Should KPIs Be Used?
 Within all the major Critical Success Factor areas:
 Finance
 Business processes
 Customer relations
 People development

44. INSIGHT.
OVERSIGHT.
FORESIGHT.
KPIs in Conclusion
 KPIs are the first step toward business performance
management:
1. KPI definition
2. KPI measurement
3. Analysis and action toward business goals
 KPIs are instruments for effectively managing the
business.
 The resulting ACTIONS provide performance results.
 KPIs allow you to give strategic insight into the
business.

45. INSIGHT.
OVERSIGHT.
FORESIGHT.
Communications Best Practices
 Listen to management and other departments!
 Understand what information is requested and why
 Set an expectation of when the information will be
delivered
 Try to repurpose information you already have, vs.
creating new reports, if you can meet the same goal
 Meet with the owner or other departments – don’t just
leave information on their desk or send an email
 Challenge the status quo and prove it in a way that
others can understand
 Examples – commission program; raising prices or discounts

46. INSIGHT.
OVERSIGHT.
FORESIGHT.
Conclusion
Questions?

47. INSIGHT.
OVERSIGHT.
FORESIGHT.
Thank You
TR Moore & Company, A Doeren Mayhew Firm
www.trmoore.com
713.789.7077
Check out our blog @ blogsight.trmoore.com