Mark Neilson 05 December 2022 / 3 minutes read

CFO as the Chief FILTERING Officer

  • #CFO
  • #FilteringProcesses
  • #FinancialExecutives
  • Have you ever seen a swimming pool with no filtering system?  Bet not.  Who would even THINK of leaving out the all-important filtering system in a pool just to save a few bucks?  No one, that’s who!

    Yet it is more common than not to discover businesses that have invested millions (or tens of millions) of dollars while lacking a true, high-functioning “filtering system”. In a pool, dirty or cloudy water and other floating or pool floor debris is the evidence of a non-functioning filtering system. It’s easy to detect it with the naked eye. 

    The evidence of the lack of, or a poorly functioning, filtering system in a business is generally NOT as obvious as looking at a swimming pool. Yet make no mistake, at most every organization there is “dirty water” and “debris” in some, perhaps many, parts of the business “pool”:

     

    • Customers we regret doing business with (for any number of reasons)
    • Services or products we offer that we wish we had never offered
    • Locations that are underperforming we think about closing in time
    • Employees that we wish we hadn’t hired or who are in the wrong role
    • Suppliers/vendors/advisors we would not re-engage with for whatever reason
    • …and lots of other forms of “dirty water” and “debris”.

     

    So, how did we end up with some or all of the above issues, which make everyone work harder to offset the negative impact on financial results? Perhaps we lack the PROCESSES to filter out these issues before they eventually surface as expensive problems ($$).

     

    Enter the CFO – Chief Filtering Officer.   

    Great CFOs should, of course, be spending some portion of their time working ON (vs. IN) the business. Typically, CFOs are generally very involved in establishing PROCESSES in a business. These include areas such as sales-to-cash-collection and procurement-to-disbursement and numerous other routine business processes – all customary processes the CFO has some hand in designing and refining. 

     

    So, what about the FILTERING processes?  Do we have any? Who is responsible for them?

    • Do we DEFINE what revenue we want? Or are we willing to accept any and all revenue?
    • Do we PAY our sales team for any/all revenue? For revenue or profit contribution?
    • Do our recruiting/hiring/training/coaching processes prevent bad hires or allow the right employees to end up in the wrong seat on the bus? (Jim Collins)
    • Do we put serious effort into how we choose suppliers-vendors-advisors? How well do we communicate with them? Do we accept less than we expect?

     

    How might the CFO get involved in THESE processes to help reduce or eliminate the negative financial impact of what “slips through the cracks” in our filtering system?  Without these, we BECOME WHAT WE TOLERATE, and we (silently) declare that we are willing to sell more, work harder, spend more, etc. to OVERCOME the lack of a high-functioning filtering system in our business.  

     

    It is unusual to find any organization without any “dirty water” in one or more areas. Perhaps it’s time we engage our CFOs in perhaps one of the highest and best uses of their time and talents – helping establish the FILTERING PROCESSES that improve profitability by keeping the “dirty water” OUT of our pool.

    Mark Neilson Partner & Forum Leader REF