Key Takeaways 

• Typical Career Path for a CFO 
• Education certifications
• Professional experience
• Network or connections
• Leadership and soft skills

A day in the life of a CFO 

• During acquisitions, it is meeting with the management of the company that one merged with, working with a private equity sponsor, dealing with the lenders, and getting the financing locked up.
• On normal days, it is collaborating with other executives.

Qualities CEOs or investors or Board of Directors look for in a CFO

• Constant vigilance on compliance, environmental controls, spend and capitalization, reporting with our lenders. 
• Sound and trustworthy, ideally not racing Formula One, or leading a super risky lifestyle.
• The ability to be really thoughtful, forecast, understand the industry, advance the ball.
•  Find and close out on acquisitions, raise capital, and lead business through an IPO.

Taking the leap from a VP to CFO 

• Ability to do financial modeling
• Understanding how to budget and forecast
• Information analysis

What makes a good CFO?

• Checks all the boxes in the job specs
• Closes the books on time, stays compliant
• Gets the annual budget approved by the board and drives its adoption
• Guides the company on a path toward achieving its goals.

Qualities of  a great CFO

• An innovator, an adviser to the CEO, a partner in crime
• Someone who brings ideas to the table and uncovers opportunities
• Provides the ability to exploit those opportunities

Influence of CFO on revenue 

• Instrumental in determining the budgeting process
• Has their hands on everything in the business - all the material numbers that measure a business
• He/She is involved in planning how many people you hire. Also involved in the sales cycle and its closure
• Approvals around payment terms or discounting. CFO is also an executive sponsor on certain deals.

Hiring a CFO 

• Hire the right person for the role of Director of Finance or  VP of Finance and give them a path to CFO
• Course recommendation for CFO 
• Executive leadership training
• Early entrepreneurial courses or VC-style courses

Future of the CFO role 

• The CFO is meant to be the forecasting guru
• The next wave of CFOs is very tech-savvy. The CFO should look to leverage technology at every single opportunity to automate manual tasks, so the company can spend its time being smart. 
• Perform analysis and surface that analysis to customer success leaders and product managers to provide them with opportunities to get smarter at their job.

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Transcript 

Introduction to Planful and Spendflo

Dan: 

I'm Dan Fletcher, CFO of Planful. Planful is a platform that actually serves CFOs and their teams. It's a financial planning and reporting platform. And so if you're curious, and want to get out of spreadsheets, you find us. I'm a relatively new CFO, I've been a CFO for four years. But in that time, I've had quite the experience. If you think back at the last four years, we had one period of incredible growth from 2019 to March 2020. And then one black swan event and the fallout from the terrible pandemic that's sort of still around. Then we again rebounded for great growth in 2021 through March 2022. And then we saw the markets experience significant turbulence, geopolitical instability, inflation, the rapid interest rate increases. And so I've had quite the ride as a CFO across two companies - I’ve done acquisitions and rebuilt two teams. I’m here because any of you hoping to be a CFO, it is helpful to speak to someone who recently went through that transition because it is fresh in my mind.  This webinar is for the ones who are hoping to be a CFO. I've had a little bit of an interesting career as a CFO being the turbulence of the last four years. So I'm really happy to be here. 

Nivas:

Welcome to the webinar on the “Journey to CFO”, this is being brought to you by Spendflo. What we really loved about Dan’s career is that he’s been with multiple high growth and PE-backed companies, being a CFO, and also leading companies like MarkLogic through acquisitions. Planful had a recent acquisition too.  

The path to becoming a CFO

Nivas:

What do you think is a typical career path? Or how do you accelerate your career path to get to the CFO? What is needed? What are the skills? 

Dan:

The classic CFO answer depends on the industry and the company size. Is it public? Is it private? Is it a manufacturing business? Is it a software business? What's the quickest, most high-probability path to becoming a CFO? Let me break it down into four aspects - 

1. Education certifications
2. Professional experience
3. Your network, or your connections
4. Leadership or your soft skills.

Nivas:

How has your career journey been? What took you to the CFO level? What were pivotal moments in your career that made it happen for you?

Dan:

I established this framework across four factors that influence how quickly and the probability with which you can get to become a CFO. I earned an undergrad degree, a bachelor's in finance and accounting, and then got my Master's in accounting. I also got my CPA certification. In terms of profession, It's all about being well-rounded. 

The CFO has a role that's multiple disciplinary, both within finance and without. There's no one track that you can commit to whether it's accounting or finance or ops, that will get you there. You have to cross-pollinate.

I started out at PwC in a classic advisory audit role, right in the teeth of the great recession in 2008. I pivoted from that after three years into investing for five years across at the GP level, and then also at the PE level, and then shifted into an operating role. I did a bunch of work for PE back companies and sort of VP finance, and director of FP&A roles, and that teed me up for becoming a CFO. I was able to get the right accounting experience, and the fundamentals of the CFO role. I was also able to get M&A experience, which is a big part of many CFO roles, and then finally able to get broad finance, forward-looking, planning, forecasting, and budgeting analytics experience. That allowed me to shift into a CFO role as a first-timer. And it gave the confidence to the people hiring me because I had covered all those disciplines. 

Highlights

• The CFO has a role that's multi-disciplinary, both within finance and without.
• There is no one track that you can commit to whether it's accounting or finance or ops. You have to cross-pollinate. 

Nivas:

What does your day look like at Planful as a CFO. Then what do you manage? Or what do you take care of?

Dan:

At Planful, I have the classic accounting, and finance teams. I also have legal and I also run our corporate development. We just did an acquisition back in September of a marketing performance management company. Over the summer while we were dealing with that acquisition and it was highly confidential at the time, probably up to 70% of my day was spent meeting with the management of that company that we merged with, and working with our private equity sponsor, and dealing with the lenders and getting the financing locked up. 

But on a normal sort of day, when we're not in planning season or doing an acquisition, it's going to be largely collaborating with other executives. And that's one of the things that I think a lot of people mistake when they think about what it means to be a CFO. They think a CFO is sitting with their hands on the keyboard, being highly analytical, and working through different scenarios. But the vast majority of my day is spent in meetings and on calls, whether it's with customers and prospects or my other executives in Boston.

The CFO job description

Nivas:

What do CEOs or investors or board of directors look for in a CFO. You said something about being well-rounded, there's a lot of communication with the other execs. But apart from that, how does a CEO or the board pick the CFO?

Dan:

I think this is an area where the business community can get better. Over the past 10 years that boards and CEOs have gotten very enamored with CFOs that come from the finance side of the house i.e. CFOs, who have an FP&A background. And while that is unquestionably valuable as a CFO, but we've lost the thread on the fundamentals of accounting, tax and compliance. Fundamentals of accounting, tax and compliance is tablestakes. 

If I'm looking as a board member, to hire a CFO, I want to map out my job spec and my requirements - very near the top are the things that are going to make me sleep well at night. Does this individual have what it takes to be constantly diligent and vigilant on compliance, on environmental controls, on spend and capitalization, on reporting with our lenders on covenants, on all these things that matter and can tip the company into the courts or worse to bankruptcy! And that's very real. 

The CFO is one of maybe two employees that on a daily basis, could kill the company. And I say that and I know it's extreme, but you could really screw up intentionally or unintentionally enough along with the CEO. Such that the company would be in risk. 

That individual has to be fundamentally sound, and trustworthy, ideally not racing Formula One, or leading a super risky lifestyle. And then all the rest of it is additive. The ability to be really thoughtful, forecast, understand the industry, advance the ball, go find and close out on add-on acquisitions, raise capital, and lead us through an IPO. These are all things that kind of depend on your thesis for the business and your growth plan.

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“The CFO is one of maybe two employees that on a daily basis, could kill the company.”

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Highlights 

• Constant vigilance on compliance, environmental controls, spend and capitalization, reporting with our lenders. 
• Sound and trustworthy, ideally not racing Formula One, or leading a super risky lifestyle.
• The ability to be really thoughtful, forecast, understand the industry, advance the ball.
• Find and close out on acquisitions, raise capital, and lead business through an IPO.

Nivas:

What would a VP of accounting or controller need to make the leap to CFO? 

Dan:

If you're an accountant, you feel exposed that you don't have FP&A experience. If you're an FP&A person, you feel exposed that you don't know how to close the books, deal with compliance and sales and use tax and all that stuff. 

What are the critical skills that an accountant needs to become a CFO? It's divided into 3 buckets. 

1. You need to be able to do financial modeling. Financial modeling is a multidisciplinary activity. It could be something as simple as an ROI or a rent or at least buy or a sales capacity model. But you need the ability to ask questions and answer them by manipulating data into an answer. 
2. The second thing is understanding how to budget and forecast. These are things that happen on a monthly basis in most businesses, annual for budgeting. And if you're unable to lead a company through that, it's primarily a human task, primarily a political collaboration task, then you're a little bit exposed. 
3. And then the last thing is just analysis, analysis of information, on a daily basis. I’m served, and I also ask for - a bunch of data. I’m looking across those and I identify patterns that might impact decisions we make in the coming week/ quarter/ year. When you are sitting in the controller role or the accounting manager role, you are 100% maxed out and overworked on month-end close, ensuring you get vendor accrual right. So you might feel that it is hard to get exposure to the other things. But if you want to be a CFO, you need to carve out the time and the space to get exposure to those other activities. That could be by taking a course at Stanford at night online. Or it could be by asking your CFO telling them, “Listen, I'm not a flight risk here. But years from now, I want to be a CFO. And so I want to get involved in the budgeting cycle. Give me a simple task. Let me wrangle CapEx for this budgeting cycle. Let me participate in the workflow meetings of the budgeting process”. 

Slowly, but surely, you get to speak the language, the battle scars, and the cycles under your belt, which I'll be hugely valuable when you're interviewing for a CFO role.

Highlights 

• Ability to do financial modeling
• Understanding how to budget and forecast
• Analysis of information

Nivas:

As a CFO, do you ever get downtime?

Dan:

I would say, yes. Anybody who tells you they get no downtime is lying to you. We all have the ability to create space for ourselves. You just have to be intentional about it. I do work on weekends and I do work at night. But I think it's important to say that when I need the time to carve it out. The benefit of being a CFO, is you've really just got one boss, it's your CEO. And if you have the right relationship with your CEO, you've established trust. It's a demanding job. Any one of those things finance, accounting, legal or corporate is really a full-time job. And so it's heavy.

The benefit of being a CFO, is you've really just got one boss, it's your CEO, and if you have the right relationship with your CEO, you've established trust.

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Audience Question:

Is CPA required?

Dan: 

Yeah, I believe I found it in the journal of accountancy, The journal of accountancy publishes all the stats about the profiles of CFOs. Something like 44, or 45% of CFOs are CPAs. So the simple answer would be no, it's not required. But it is very helpful, no question. Especially if you're someone who comes up through FP&A, if you can also have a CPA that covers that blind spot in your experience. That's hugely valuable.

Responsibilities of a CFO

Nivas:

What differentiates a good CFO from a great CFO? What do you do better?

Dan:

So the question is how to go from a good to great CFO. It’s a fun question. I would say a good CFO is someone, a girl, or a guy who checks all the boxes in the job spec. Who closes the books on time. Who stays compliant. Who gets the annual budget done and approved by the board and drives it here. Guides the company and shepherds the company on a path toward achieving its goals. That is a good CFO. And that is hard to do. Just to be clear, that is a big job. I’m not denigrating someone who’s a game manager.

A great CFO is an innovator, an adviser to the CEO, a partner in crime, someone who brings ideas to the table uncovers opportunities and provides the ability to exploit those opportunities. So that would be someone who can help you buy a company and get that done without needing to hire an investment banker. Someone who alerts you that you have an opportunity in the Asia Pacific. 

Listen, the ability to open up a business in the Asia Pacific is a skill. It is complicated and there’s a lot of red tape. If you have a CFO who can tell their CEO, “You want me to do it, I'll do it. I'll get it done in a month and a half.” That's a huge skill. So someone who's an innovator, breaks down barriers. 

But critically a great CFO must also be a good CFO - who must still close the books must still keep complying, and must not suddenly have a big whammy because you failed to collect sales tax in Georgia for five years. 

Highlights

• A great CFO is an innovator, an adviser to the CEO, a partner in crime, someone who brings ideas to the table uncovers opportunities and provides the ability to exploit those opportunities. 

Nivas:

How much influence does CFO have on revenue which is driven by sales?

Dan:

A significant amount of inputs. First of all, revenue is driven by how much product you have to sell and how many people you have to sell. These are things that the CFO is instrumental in determining in the budgeting process. And so, fundamentally, the CFO has their hands in everything in the business - all the material numbers that measure a business. The CFO will have been involved in, even if it's way upstream. In terms of planning how many people you hire. On a day-to-day basis, in terms of closing, in terms of being involved in the sales cycle, it really depends on your industry. I'm involved with certain approvals around payment terms or discounting. I'm also an executive sponsor on certain deals. I'll get involved in deals where it's a big multinational, and they want to understand the financial profile of Planful. I enjoy those calls, I get on and talk them through our finances and our plans. So it's really dependent on your industry, but I would say the CFO is quite involved.

Highlights

• The CFO is involved in all the materials numbers that measure a business
• CFO is involved in approvals around payment terms and discounting
• CFOs are involved during big multinational deals

Nivas:

One major area is finding a really good mentor for yourself, and probably learning from them, asking them the right questions, and working with them pretty closely, right? How do you go about identifying if you did have one? What would you recommend for the VPs or finance controllers on identifying good mentors for themselves? 

Dan:

When we look at the framework we discussed in the beginning, we looked at four factors, I mentioned network. This would include mentors. I can’t stress this enough but it is highly likely that your first job as a CFO will come from someone who is in your network. You are very likely to get your first CFO role from someone who knows you, knows your past and trusts you. That’s because a CFO is one of the two people who can ruin a company. I had worked as a VP of Finance under a CFO in a business in medical device manufacturing in North of Atlanta. We had a great experience, worked there for a year and a half together, and built deep trust. That individual subsequently went to work for an investment firm that would ultimately own Planful. I was brought in at Planful, from an introduction through a mentor of mine. You can call it luck, but I refuse to call it luck. It is really about investing in your relationships, keeping an open door, meeting people, shaking the right hands, and giving back your time when someone wants to chat through their own career. These things do have sort of a pay-it-forward impact on your career. That work, as cheesy as it sounds, is not just collecting business cards but it is investing in relationships. They really do bear fruit. 

You are very likely to get your first CFO role from someone who knows you knows your past and trusts you

Highlights

• It is highly likely your first job as a CFO will come from someone in your network
• Invest in your relationships - keep an open door, meet people, shake the right hands, and give back your time when someone wants to chat through their own career. They have a pay-it-forward impact on your career.

Nivas:

When should a company hire a CFO vs a head of finance in an early stage? What are the real differences between the roles or is it mostly a level or scale difference?

Dan:

You can start with the head of finance or VP Finance.  A CFO is someone who I would say has to have like 10 to 15 minimum years of real war experience in the trenches to deserve that title. If you're a startup, you probably don't want someone, very seasoned, conservative CFO. Get someone who fits into the mental energy of what you're trying to do as a startup, which is often scaled rapidly, be creative, disrupt, work long hours, and underpaid at least from a cash compensation perspective. And that lends itself to people earlier in their careers. It is smart to hire someone as VP or Director of Finance in an early-stage business and give them a path to the CFO role. Tell them here’s what the roadmap looks like in two years, “We will do the Series A, then Series B and C. And right around Series C we want to name you CFO. Here are the things that are going to have to happen - we need to go triple/ double.”

I think it is smart to hire someone as VP of finance in early stage and then give them a path to the CFO role. 

Everybody wants to earn the role. It's smart to hire someone as VP, Director of Finance in an early stage business, and give them a path to the CFO role.

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Highlights

• A CFO is someone who has to have like 10 to 15 minimum years of real war experience in the trenches. 
• If you're a startup, you probably don't want someone, very seasoned, conservative CFO. Get someone who fits into the mental energy of what you're trying to do as a startup, which is often scaled rapidly, be creative, disrupts work long hours, be underpaid.

Nivas:

In your experience, what do you think the proportion of internal focus on month-end process improvement vs external focus on organic growth or industry analysis in the CFO role is? 

Dan:

Internal focus - closing the books vs external - analysing the market. It is a tricky one because it is super dependent on the company's situation. Are you acquisitive? Are you international? It's still probably 80-20. 80 internal - closing the books is not a huge portion of that 80%, maybe only 20% of it. And then you spend a lot of your time meeting strategizing, iterating on plans, making investment decisions and making decisions about your strategy. That's the lion's share of your time. And as a part of that, you're looking outwards, certainly at the competitive set at markets, you're monitoring interest rates, you're monitoring the demand environment. It's a heavy emphasis on the internal focus, and that you care about the metrics of your business. But in order to contextualize those metrics, you're very often looking outward to understand, to benchmark and to contextualize them.

Recommendations for CFOs

Nivas:

If given a chance, What's one certificate, or course you'd like to do from which B School from a finance leadership perspective? Is there a course that you'd recommend or would you take yourself?

Dan:

Right now I don’t need it. Since the job is spent so much time looking down at your computer screen, financial professionals don't develop good muscles for collaboration for interacting with other executives and for making tough decisions and trade-offs - the soft skills basically. So whatever courses you can get in executive leadership training are extremely helpful. That's across all the disciplines - across presentation, being confident in the boardroom, but also listening to your executives, learning to manage your emotions, and using things like the communication wheel, which is something you can look up. I got all that from an executive coach and I do attribute my development in those areas to her. And I know I maintained the progress because I got 360° feedback. 

But to tug on more technical topics I am fascinated by all things venture and startup and early stage. So on a personal level, I would probably go to Stanford and take one of their early entrepreneurial courses or VC-style courses. But it really can help to make sure you are buttoned up on whichever disciplines - be it FP&A or accounting - that you don’t have a spike in. 

Highlights

• Executive leadership training, are extremely helpful.
• Go to Stanford and take one of their early entrepreneurial courses or VC-style courses.

Nivas:

Given the current overall macro situation and the economic downturn that a lot of companies are going through, how do you recommend CFOs prepare for this? 

Dan:

It is weird to say economic downturn. The markets are down, but we don’t know yet. Most of us are expecting somewhat of a recessionary environment here for 12 - 18 months at a minimum. But none of us have a crystal ball. I was talking to an exec and saying this is a weird planning cycle because for the first time in the last four years, we are aware that we don't know what's going to happen. At the beginning of 2020, we had no clue we did our plans. We thought we had a good beat on the year and then the black swan event hit right. Then in 2021, we had no idea how great that year would be from a growth perspective and a demand environment. This year we know. But I’ll disabuse you of the notion that we can actually predict the year and if you get it right you are probably lucky. So for me it is all about preparedness - that means running scenarios. You're going to have a plan that you bring in front of your board. We have also run three downside scenarios, and three upside scenarios for completeness. In the event that we missed Q1 or Q2 here are the things that we're going to do or not do to maintain our profitability targets. So that there's no drama out there in the wild when these things happen. So it is all about preparedness.

Highlights

• Navigating a economic uncertainty is all about preparedness. That means running scenarios. 

Nivas:

How do you think the future of the CFO role or maybe the future of finance looks like? What do you think is changing or going to change stronger?

Dan:

From a demographic point of view it is getting more diverse - more female. These are macro trends we are in support of. The typical profile of a CFO is getting more diverse. 

The actual role itself is shifting and has been shifting more toward, in a weird way, to CTO. There's a huge technology component to most CFO roles that is not talked about enough. Over the last decade or two, the role became more strategic. I myself have given talks on this. The modern CFO is someone who's more forward-looking, isn't a book nerd anymore, and isn't sitting there on their 10 key and I think that is bait. The CFO is meant to be the forecasting guru, the kind of the Merlin in King Arthur's court. Someone who sits there and looks forward and thinks about opportunities and risks. 

But the next wave of CFOs is very tech-savvy. Everyone in our generation grew up with an iPhone or android device. I and my teams look to leverage technology at every single opportunity we can to automate away manual tasks, so that we can spend our time being smart. What I mean by being smart, it's using your education and brain to think about the business to perform analysis, and then surface that analysis to our customer success leader, to our product manager, to provide them with opportunities to get smarter at their job.

Highlights

• The next wave of CFOs is very tech-savvy
• They use their education to think about the business - to perform analysis and surface that analysis to the customer success leaders and product managers to provide them with opportunities to get smarter at their job.

Nivas:

Do you have a recommendation for an executive coach? Would you be able to help them identify one?

Dan:

My executive coach is named Lori Ogden Moore. I can make an introduction to her if you drop me a mail on Linkedin. She's truly a tremendous, wonderful human being and a wonderful coach. Ask around, find out people who have used an executive coach that you think learn from it, and find their executive coach, which you whoever asked that question have just done, you've done the right thing. Don't just go online and Google executive coach or go on LinkedIn, find someone you know who is benefited from that individual.

Nivas:

I keep hearing CFO is getting renamed as Chief Value Officer, as most of taking the audit and compliance work is getting automated. What are your thoughts on that?

Dan:

I love it. It is a huge compliment to the folks out there in the role. Value is a great word. It points to what we’ve been talking today that the CFO's primary role is to create value for employees and shareholders, to make sure that the company achieves that goal. Which is why most companies exist right? So you could call it the Chief Value Officer.

Nivas:

Dan, thank you so much for taking time out of your schedule. And thanks, everyone for joining in. 

Dan:

It was my pleasure and Nivas great questions. And thanks, everybody who joined. Find me on LinkedIn, and say hi.

Nivas:

Yeah. Thanks, everyone. And we'll see you in the next webinar.

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