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Rash Of CFO Imposters Sweeps The Nation

Jun 10, 2011

Destroying Business Wealth and Owner’s Dreams

There is a dangerous epidemic of CFO Imposters sweeping across the nation.  The problem is endemic in small companies and has resulted in $ Billions of dollars of vanished business value, lost jobs, and failed dreams.  The problem is usually difficult to see and may require expert advice to diagnose and correct.  CFO impostors are often hiding in plain sight, and have adopted many of the mannerisms of real CFOs.  Wingtips, discreet ties, pocket protectors, calculators and pencil skirts are all flaunted by the imposters.  CFO Imposters have made note of the high salaries earned by highly experienced CFOs, and have effectively disguised themselves as CFOs in order to try and boost their market worth.  This is not a crime, but it does result in a wave of financial incompetency afflicting the nation’s small business backbone and it needs to be dealt with.

How have we got to this state of affairs and how can we stop the rot?

Many small and growing companies, with revenues under $50 million, have a very small accounting staff – maybe a few clerks for AP and AR, an accountant or book-keeper and a Controller or “CFO”.  Since few business people understand the difference (or really care) between an Accountant, a Controller, a CPA and a CFO – it is easy for an imposter to slip through the gaps and hide in plain sight.  So how can you flush out a CFO imposter?  I recommend you start with a simple questionnaire to see what you are dealing with.

1.       Does your “CFO” earn more than $130,000 a year?  If not it is unlikely you have a CFO.  Acquiring the skills, experience, business savvy and expertise of a CFO takes a significant career investment, and is typically rewarded appropriately.

2.       Has your “CFO” worked for any companies with more than $100M or $500M in revenue? If not, they are probably not a real CFO.  Smaller companies don’t typically have enough CFO work to keep a real CFO busy.  CFO Imposter will spend their time on transactional work: paying bills, reconciling accounts, booking invoices and office manager duties.  All vital – but not CFO level work.

3.       Has your “CFO” spent at least 15 years in a senior financial role at a mix of mid size or larger companies?  No? Imposter.  It takes time and experience to become a seasoned CFO – you have to walk the talk.

4.       Does your CFO come from your CPA firm? See Questions 2 and 3 above.  CPA firms have skilled tax and audit advisors, but may not have the CFO experience or time commitment you need.

5.       Do your lenders trust your internal financial statements? Obvious one.

6.       Are your statements issued in a timely fashion each month?  Late and chaotic is not good.

7.       Do you receive regular cash flow and leading indicator updates? You absolutely must.

8.       Does your “CFO” provide advice on product strategy, profit and cost analysis, funding options, growth plans, business value, and exit strategies?  This is the core of what a CFO brings to the table.

9.       Is your CFO continually working on your company’s operational performance with cost reviews, procedures set up, advice on management structure?  How else do you build value?

10.   Would you want your “CFO” to represent your business to partners, investors, customers and vendors?  Is your “CFO” an Employee or Business Partner? You need a competent delegate.

  So you maybe you have recognized that you may have a CFO imposter on board.  Is this bad?  Not necessarily.  As a small, but growing business, you really don’t need a full time CFO –especially a real one.  Of course, you have real issues such as lack of profitability, concern over weak cash flow, no time for driving the company forward, thoughts about future growth directions, and how to build value and exit your business profitably.  But you sure don’t want to spend $130K plus benefits to bring in a competent CFO who will not be kept busy.

That’s why you should explore hiring B2B CFO.  We are the nation’s largest CFO services firm.  Each of our partners is highly experienced and seasoned with 25 + years experience.  We can help you evaluate your current CFO, train and coach them to a higher level, encourage them to become your trusted partner in building your business, or explain why they won’t ever make the grade.  We don’t have big egos, so your “CFO” can remain the CFO.  We are just happy to help fill in the gaps and get your business on the right path to future growth and success.  Here’s a sobering thought.  Only about 5 – 20% of listed businesses actually will sell.  The market will be a buyer’s paradise for the foreseeable future as many boomers seek to sell their companies.  Can you afford to muddle through with an Imposter CFO, or is it time to get serious, get prepared and maximize the potential value of your single largest, illiquid investment by hiring a competent, experienced CFO to get to work.

Contact David Kirkup, Partner at B2B CFO for a free, confidential assessment of your company and accounting operation at 404 348 0326 or dkirkup@b2bcfo.com.

 

 

More from David Kirkup…

About the Author

David has over two and a half decades of business experience and is a proven financial management expert. Working in Europe and the USA, David has served as Divisional CFO at a number of Fortune 500 corporations: including Reuters, Marsh & McClennan, Zurich Insurance and ADP as well as numerous small and mid size companies. As part owner of a small software company, he was heavily involved in the marketing efforts and ultimate sale of the company. As CFO with a national PEO firm he dealt with the credit and financial issues facing hundreds of small business clients. David also spent 5 years in Bermuda managing captive insurance companies.

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