Secret CFO

Hi 👋 I’m The Secret CFO.  I just crossed 10k followers on here, so it’s a good time to re-introduce myself. Here’s my story👇 I’m a career corporate CFO (10 figure + revenue biz). I’ve been in the finance profession (starting in the Big 4) for over 2 decades. With almost half of that time as CFO, in big multinational businesses. Through a combination of luck and hard work I got up the ladder quickly. I had a few mentors along the way, but I mostly worked it out myself. The path to CFO felt a bit like a mystery. Even after I’d walked it. Being one of the lucky ones, I feel a responsibility to make it simpler and clearer for others to climb the ladder. In August 2022 I started sharing my thoughts on Twitter about how you might do that. I assumed no-one would read it. I was wrong. Very wrong. It blew up. I grew to over 100k followers in less than 12 months. My goal is to get real life insights to as many current and future CFOs as possible. And where better than LinkedIn? Most content written on the CFO role is sh*t. Based on textbook theory, written by people who have never done the job. Often by those with something to sell (Big 4, technology companies, etc). I promise to be different to that. I bring my decade of experience in the top finance job, and a willingness to share. Writing is a hobby for me, and this is my way of sharing it. I have specialized in complex situations; turnarounds, refinances, exits, M&A, transformations, etc. I’ve been lucky to work with super-entrepreneurs, outstanding public company CEOs, and experienced boards. Not to mention all of the accounting and finance pros I’ve worked with and for along the way. I enjoy documenting my ever changing views on what I’ve learnt. And by remaining anonymous, I can be more interesting and helpful to more people. You can expect content on: - simple summaries of finance concepts - insight into the CFO mindsight - skills leading large teams - broader business skills relevant for CFO - how to make great finance career decisions - hot takes on hot finance topics. - silly jokes and memes Make sure you follow my page, so you never miss a beat. Please say “hi” below and introduce yourself👇🏼

It's Wednesday, which means its time for another question from my audience. Trevor from Los Angeles, USA asked: "I’m often the youngest person in the room, sometimes by over 30 years. Some of my colleagues have more years of industry experience than I’ve been alive on this earth. I’m sharp, and they’ve shown appreciation for (and agreement with) my ideas/input, yet I still find it difficult to challenge their views and opinions. It’s primarily out of respect for those on the committee but I am not doing myself, the company, or the committee any favors by choosing to stay silent so often. Any strategies or tips I can use to effectively manage and influence upwards (executive committee, board of directors, etc.)?" Here's my answer... what would you add? Have you ever been a baby in the boardroom?

It's Tuesday. Grab a coffee. It's tough out there... not every business is going to make it. If your business is one of the unlucky few, it'll be for one of these three reasons:

If you want cashflow to get a seat at the table, you as CFO will have to make it so. McDonald's delivers $5-7bn of free cashflow a year. That's a lot of $2.49 hamburgers. So many variables. So many people. So many opportunities to fail. Just one CFO to make sure it doesn’t.

Most under-rated tool in finance: standard costing. Great businesses understand P&L variances in the greatest possible detail. And then attack the red variances every day. The more you can break down performance - with short interval controls - the more you understand what is happening in your business. You must make sure those nice shiny break even charts, actually make their way to reality on the shop floor. It won't happen by accident. Standard costing is how you do it. Yesterday in CFO Secrets, we walked through standard costing in detail. Using the example of a luxury belt manufacturer. Here is the piece if you missed it: https://lnkd.in/eFiD3fsQ

Apologies in advance to all the accounting purists I’m about to trigger with my liberal use of ‘maintenance’... Capex should get classified into one of two buckets… Maintenance Capex = recurring capital expenditures required to maintain the current level of operating, and market position Growth Capex = capital expenditure to increase its operating cashflow, or grow the business Allow me to explain myself… Let’s use a coffee shop example. You have 10,000 coffee shops, each with 2 machines. 20,000 machines in total (quick math 😎). Those coffee machines get replaced on a 5 cycle. i.e. you need to replace 4,000 machines per year. You are also opening 1,000 new shops per year. So, you need to buy 2,000 machines to fit new stores per year. Therefore, You are buying 6,000 coffee machines per year, 4,000 replacements, and 2,000 for new stores. The 4,000 replacements are Maintenance capex. That spend is needed to maintain the existing asset base. And current operating cashflow. The 2,000 machines needed for new stores are  Growth Capex. Expanding the asset base, and future cash generating capacity of the business. Any spend to repair or maintain existing equipment, is NOT capex at all. That’s a repairs and maintenance expense in the income statement. The decision to build new stores is a capital allocation decision. It should be evaluated alongside paying a dividend. Or paying down debt. Or buying back shares. Etc That is not the case with the decision to replace end of life assets. If you don't replace those assets; you don't maintain your operating cashflow. I hope that’s clear. Please stop writing to me about it… .. but do go sign up for my free weekly newsletter to unlock all my insights from the trenches (not the textbook). Click the link to sign up for free: https://www.cfosecrets.io/

Every CFO has to to work for one of these guys at least once.

I'm gonna try something different. I get so many great questions in private, it feels a waste to not share them. So every Wednesday, I'm going to publish a Question from my audience (with permission), with my answer. Here goes ... Lance from the UK asked: "I have recently been promoted to divisional CFO for a large engineering division. However, I have learnt that the division's pricing decisions are made at a group level, separate from the division. This causes an absolute sh*t storm as you can imagine. The pricing teams are making decisions that contradict capacity plans, e.g. offering promotions on products we can't meet demand for or increasing prices on ones where we need to increase demand. How do I bridge this gap? It feels like it is worth a fight (perhaps a big one) to get pricing under mine (and the Divisional CEO) remit…" My answer is below. What would you add? Should Lance have the fight?

It's Tuesday. Grab a Coffee. This is The Secret CFO Guide to the finest cashflow measure there is. Enjoy:

Them: “A high-caliber, strategic governance team, synergizing diverse expertise to steer corporate vision, maximize shareholder value, and ensure robust compliance.” Me: “Oh, you mean a board of directors?” You will find a lot of fluffy words about the purpose of the board. But the reality is clearer than that. The BoD is there to make sure management is doing what they should be doing. In practice this means: - Hiring and firing the CEO (+ often the CFO) - Setting exec pay - Safeguarding against conflicts of interest Please stop overcomplicating it. One of the goals of my free weekly newsletter CFO Secrets is to cut through the noise. Join 35,757 current and future CFOs. Subscribe for free at https://www.cfosecrets.io/