“Profit, and Peace.” That’s how one interim CFO for Cerius Interim Executive Solutions summed up the role of a Chief Financial Officer (CFO.)

On the surface, they seem to go hand in hand, but what if you come to realize they are mutually exclusive in your company? If your peace of mind is derived strictly from the knowledge of your company’s profit, are you missing some of the gremlins hiding under your financial bedcovers? Three Cerius interim CFOs helped us unearth questions that CEOs might want to ask to uncover signs of weakness early in the game – before they morph into monsters that might devour resources, and hinder prospects for future growth or M&A opportunities.

Do you have a robust strategic planning and execution process?

Strategic planning is time-consuming and usually enlightening – yet too often, companies go through this arduous process and then end up putting the plan on the shelf. Finance and accounting are important aspects of strategic planning that help focus your company’s limited resources on defined objectives, and contain initiatives that should be included on personnel scorecards. You then hold employees responsible for executing on those initiatives. Companies that have taken advantage of Cerius’s exclusive Company Snapshot found that the planning process scores the lowest – when, in fact, it should be driving your company’s key processes.

Why it’s important and what it suggests:

A strategic plan covers all of the important basics in your company, and allows you to monitor progress and review on a regular basis. Once it’s up and running, you can use it as a maintenance plan. But break down the goals and objectives so key executive solutions know what they need to do, and so you can hold them accountable for actually doing it. The best plan – which you spent hours developing

– is meaningless if not executed properly.

Do you utilize cash flow reporting? What about budgeting and forecasting? How accurate is it?

If you did an Internet search on “13 week cash flow,” you’d be rewarded with pages of results. Why? As two of our financial experts point out, it’s considered a “best practice.”

Why 13 weeks? That’s your quarter. A 13-week rolling cash flow allows you to see your cash on hand, usage, receipts, and disbursements. Then you update it the following week. This, points out one CFO, gives you a very good indication of where you are, and is one of the first things he does when he’s called in to help companies in trouble.

But guess what? “If companies did it all the time – when things were going well – they could avoid getting into trouble,” he says.

Why it’s important and what it suggests:

If your financial staff is not being diligent about cash flow reporting, budgeting, and forecasting, it is not on top of its game. There is a high probability that a lot of other things are not being done properly.

Are your internal controls documented?

We expect public companies that have compliance issues to have proper documentation and internal controls. But you have a smaller, private company. Your finance or accounting department may consist of just a few people – maybe even just one. Is it really a big deal if you don’t have your internal controls documented?

Maybe, and maybe not. Maybe as the CEO, you do periodic reviews of procedures and controls. Perhaps you bring in an interim or part-time CFO on a weekly or semi-weekly basis to review the financials, adding another level of control. Documenting the procedures, as well as these controls, adds another level. It’s just good practice.

Why it’s important and what it suggests:

If these processes are not identified and understood, it doesn’t give a lot of confidence in how your policies, procedures, and financial books are done. If you walk into a company and ask for a simple written description of the procedures, who is responsible for specific tasks, and no such description exists, it should raise your antenna. You – or someone else

– may be asking: “Can I really rely on your financial statements?”

Do you know if you have hidden waste? And if so, do you know what it is, or where to find it?

Our CFOs identified areas in which they see the most waste. They might be worth a closer look:

• Travel and entertainment expenses
• Overtime
• Lost-time injuries
• Inefficient use of systems and manual processes
• Supply chain waste
• Product failures in manufacturing
• Process disconnects
• Office supplies
• Warranty costs
• Product returns
• Customer credits
• Telecommunications

Why it’s important and what it suggests:

Uncovering hidden waste shows prudence, but in some cases, it’s also indicative of culture. In the case of lost-time injuries, for example, one CFO says this is the first thing on his radar when he walks into a plant. Are safety posters clearly visible? Is there a display of pride in having few injuries? For production failures, are you as the CEO getting to the root cause, looking everywhere in the organization and not just the manufacturing floor?

Final Observation:

• Most small companies don’t grow into big companies. They structure themselves from the outset to get profitable as soon as possible, and stay profitable. Change your mindset: Structure yourself from the beginning as though you expect to grow, making timely investments in people. Big companies that have rapid growth sized and structured themselves to be big right from the beginning. Get expert help in managing costs, potentially burdensome infrastructure, and access to unlimited capital.

Everyone has monsters to slay.

The keys to finding them before you need them. Cerius Interim Executive Solutions is the leader in delivering interim executive solutions with the innovation and speed that small to medium business needs to tackle their business opportunities or to mitigate risk. Cerius leverages the skill and experience of its deep pool of Interim Executives, who bring the broadest array of industry and functional experience, to deliver best-in-class leadership on-demand to our customers.