What They Don’t Tell You About Becoming a CFO - Part 2

TRANSCRIPT

The path to the C suite is rarely linear, and the challenges don't stop once you get there. I'm Wassia Kamon, and I'm taking you with me on my journey as a newly appointed CFO, sharing the hidden challenges, unspoken rules, and lessons I wish I had known. So whether you're in finance, working finance, or just trying to get your budget to pay, Prove faster.

There's something here for you. The purpose of this podcast is to make better leaders and help leaders be better at life. Welcome to the diary of a CFO. Owen. Welcome back to another episode of the Diary of a CFO.

I'm super excited to go over part two of what they don't tell you about becoming a CFO. And that is that you will spend most of your time talking to non finance people.

Now the title is chief financial officer, right? Financial finance. But in reality, you have to keep in mind that once you become a CFO, you are now the face of financial communication, both internally. And externally, internally with the other seats with member and throughout the company departments about where are the budgets, where are we going and externally with people like the board, investors, funders, and the like.

So you have to be able to master how to simplify complex concept, how to make them clear, actionable for that. You will have to know how to adapt to different audiences. by understanding their motives and their perspectives. Now, this is where I think people who are business partners or in FP& A have an advantage over accountants and people who are in the controllership pipeline.

Here's why. When you're in financial planning and analysis, FP& A, by default, at least 50 percent of your time is probably spending with people outside of finance and accounting because you're helping them putting their budget together. Working on their forecast, helping understand the trends in the numbers.

So you already used to some of that, that is to break down complex financial concept for them to understand. You are probably communicating with a head of sales, somebody in operations or in supply chain and helping them put together the budget and their forecast. So they can in turn be able to better plan their numbers for the coming years.

Now, when you're in accounting, this is where I think controllers, accountants, when they want to become CFOs and being finance leadership at higher level in the organization, not even CAO or VP of finance, VP of accounting, you have to do the extra work because in your daily routine, this is not part of what you do.

For example, because I've been a controller for quite some time, you are a controller, you're talking to auditors, internal or external, which means that you are explaining technical stuff to technical people that are in your field. So they get it. You actually expected to know the technical accounting side.

And so you talking technical accounting to people that are in technical accounting. So great. You don't have to explain what is a reserve. You don't have to explain what's the ASC standard. Actually, you may even feel smart about being able to understand that ASC 606 is about revenue recognition. OASC 842 is about how you do leases.

You know the latest technical guidance, and it may impress your finance and accounting people, but it will not impress a CEO or somebody on the board because that's not what they're looking for. When you think about the CFO level, VP of finance, that will not impress anybody. You will confuse them. And that is not the point.

As a CFO, you are reporting typically directly to the CEO. And CEOs often comes from COO's positions. Even though now we say most CFOs are stepping into those roles, but traditionally they may come from investment banking. They can come from sales and marketing from operations. So a lot of CEOs are not coming from finance and accounting background.

And that is even if you work in a financial services industry. That is just how it is. So they will not come and help you solve your revenue recognition problem. They're trying to understand where's the company going. And so you have to adapt, you have to adapt in how you are leading and communicating with non financed people.

It has to become second nature because you will likely spend more time with non financed people, the higher you get in the hierarchy of your organization.

How can you start preparing now? Because that is often. What is the main obstacle when you're trying to break through certain ceilings in your career is understanding that some of the things that help you get to where you are may not be enough or may not be the right thing that will help you move ahead.

So, yes, for example, when you knew all these Excel's formulas as FBNA analyst, and you were able to build all this scenario, all these skills maybe got you promoted to senior financial analyst or senior finance manager. Now to break into director of finance, VP of finance, you have to master storytelling.

Not just complex Excel scenario and all that, you have to be able to break it down, put it in stories that will resonate with the people who need that information for decision making. Same thing for accounting. Maybe you knew how to do prepaids. Maybe you knew how to do all these accruals, how to do the formulas, to tie to the GL, how to reconcile your subledger.

You knew all that and that probably got you promoted to maybe accounting manager. Now you're looking for Director of Accounting, Controller, VP of Accounting, CAO role, CFO role. And now you realize that all this technical knowledge you knew was great. It got you to a certain point, but now you feel stuck.

Because you may not be understanding what you need to go to the next level. And one of them, whether you came through the FP& A route or through accounting, Is that you have to understand and start getting ready for spending most of your time with non finance people.

I'll give you a few example of things that you can do and start doing so you understand and you start building those communication skills, storytelling skills, so that you can be comfortable.

Whenever you place in those type of situation. So for example, let's say you are communicating with the chair of the finance committee. Do you know what the finance committee is? Hopefully yes, if not Google, because within a board of directors, there are different committees. Typically the ones that the CFOs tend to work with is a finance committee or the audit committee, depending on the size of the company.

They are tasked to review the financials and they are focused on ensuring compliance. long term sustainability and risk management. So some of their concerns typically revolve around things like Are we liquid enough to meet our short term debt? Are we allocating our resources wisely for the future? Are there any red flags in those financial statements that get us in trouble as we look into the future and a strategic plan?

Sometimes the chair of your finance committee may not even have a finance and accounting background. They may not have one and still be your chair. Which means you won't be able to come in and again, think that you can talk technical stuff to a technical person. You will have to break down that technical jargon to them and you also have to articulate your ideas so you're not too much in the weed, they get the big picture of what's going on.

And you're also addressing the concerns that they may have. So let's say you're presenting this quarter financial statement to them. You always want to start with a high level executive summary. I actually script mine. I come in and I'm ready to say this is at a high level without even any numbers in that first one or two sentences.

I'm not quoting any numbers. I just giving them the high level summary. And it could look at something like this. We are maintaining strong cash reserves despite some fluctuations in revenue, and we have enough liquidity to meet our coming obligations. What I just said, I didn't say anything about numbers, okay?

But I addressed some of their concerns, which is yes, there may be a dip in revenue, but we have strong cash reserves. So we are not worried about liquidity, even though the revenue this quarter went down. So however you want to say it, you just have to keep in mind that you don't want to get too deep in the weed.

You don't want to get too deep into actual numbers to the penny. But you want to be able to give them that high level view before you dive in and present your financials. Use language that is clear and show that you consider their priorities without overloading them with data. So I'm always very careful about the number of numbers I use in my communication with the board or with high level executives.

Are we 50 percent down? What are the top numbers they need to know? They don't need to know every single variance number on your P& L. They just need to know the top things that will allow them to make the top decisions. Another example is trying to explain financials when an investor or a funder, a funder or an investor, they're concerned about profitability.

They're concerned about things like how quickly can I expect returns? Is your company positioned to grow? And how well are you using the funds you already have? Like, how well are you using my money? Okay, that's when they want to get deep into what's going on here. Always want to start with a high level executive summary.

So something like, Hey, this quarter's profitability is slightly down due to increased marketing spend, but it's driving significant customer growth in the next two quarters. Are you basically saying, yes, our PNM may look wacky because we're spending too much on marketing, but trust and believe that this will be felt in the coming quarters.

However, you are comfortable talking to them because again, different investors, different areas, you could talk differently, use different terms, but the idea is the same is about providing a high level executive summary before you dive in. And again, don't dive in too deep in your business. Because at the end of the day, you want to be able to read the room.

You want to be able to anticipate the questions that are going to come from non financed people because non financed people do not think like finance people. In an organization, we're typically not rewarded the same. Our pay packages are not even the same. The way a salesperson is compensated is different than the way somebody that they consider in the back office position, like a HR accountant are compensated.

So we coming from different, different angle. And you have to understand when you in finance and accounting, there is another layer we often don't talk about. In our finance and accounting education, there is little to nothing about customer service, soft skills, sales, marketing, psychology. Think about it.

If you had a degree in accounting and finance, how much time did you spend learning about soft skills? Sometimes I look back and I'm like, Oh man, I want my money back from all these degrees, all these letters behind my name. Because in none of them did I learn about communication, storytelling, like. I need at this stage of my career.

A lot of it is learned outside of the traditional degree on the CPA exam on the CMA exam. There is nothing about Oh, this is how you do storytelling on the CPA exam is how you can write a technical memo about a technical situation using the technical guidance. You just learned is technical, technical, technical.

And then you get into a point where now, as you are getting ahead in your career, you don't need all these technical skills because likely you will have people you can hire with those technical skills. If you are a CFO, came from the FBNA route, you will likely hire a great CPA to be your controller.

Highly technical, they can handle it. Because again, you will be spending your time anyway with people who are outside of finance and accounting, and you have to start being ready for that. Now, how do you get ready knowing that something like the CMA, the CPA may not necessarily help you with the kind of soft skills you will need in this area.

For me, it really started with understanding business operations. In my career, I learned it. If I can say accidentally, I'm an extrovert, got into accounting, realized most people in accounting are introverts. Didn't know that. And so I always found that the people in the sales and marketing team were more fun, quote unquote.

And so I would just naturally want to go for lunch with them. I will just go and sit with people that are in sales and marketing or software development. And we'll start talking, you know, you're having lunch, we'll talk about life, but you're also talking about work. Once on the plate, what is it like to be in marketing?

What kind of project are you working on? And in doing that, I realized that I was becoming a better business partner because I could speak their language, understand their concern and understand how, when they ask something from accounting, This is what they're looking for. This is why they need it. And so what I was providing was much more valuable than someone who didn't spend time with them.

So even when they ask for something like, Hmm, what do they want? And you're going through multiple iterations when, when you spend time with them, you quickly understand what's going on. My advice will be regardless of if you FPNA or in traditional accounting, like a staff accountant, senior accountant, and the like, Shadow other department, start connecting with people outside of finance and accounting.

You want to have friends in HR, even if it's not the HR department and your company, you want to find there is LinkedIn, there is different events that you can go to. Okay. You don't have to go to just finance and accounting conferences. There are a lot of good stuff that you can attend. If you are in the manufacturing industry, attend a manufacturing conference.

Even if you're in finance and accounting, understand where the business is going. These are the things that will help you connect better and be more comfortable with people who are not necessarily. In finance and accounting because your CEO likely will not be an accountant or somebody who came from finance.

Most CEOs come from COO positions or sales or marketing. We're seeing more CFOs becoming CEOs, but that's not standard. Okay. You will not have a boss who understand technical accounting. You will not have a boss when it's a technical finance and FBNA modeling and all that stuff. But they need you to be that person who will filter through all these numbers and tell them what they need to do, what they need to know for the situation at hand.

So that's one thing you want to build a solid understanding. So you're more comfortable about that.

The other thing you want to do is building a personal board of directors. I cannot emphasize it enough. I learned about the concept of personal board of directors, and you can Google it to learn more about it.

But I learned it from the book by Janine Brown called Unstuck Unstoppable, because I always thought, okay, you had one mentor and that was typically somebody in your field and you want it to be like them when you grew up or whatever. A personal board of director is having a group of people that are really speaking into your life and helping you accelerate your career.

They can help you see the blind spot. In my personal board of directors, for example, half of them are CPAs. I have an executive coach, a retired CPA, but I also have people like a lawyer who's now a CEO. Supply chain. Being able to talk to people like that once or twice a year, one on one in informal setting has increased my knowledge and accelerated my career in ways I couldn't even imagine.

For example, one of my personal board of directors that I always talk about is Carol Norton. Carol used to be on the board of the company I worked for, and that's how we met, actually. She's a CEO. And I wasn't a CFO at the time. And I asked her, I said, I know you're a CEO and you have a CFO reporting to you.

I know you're a lawyer. And so I know that you don't know finance and accounting like your CFO and yet you're their boss. How do you lead someone who knows more than you in a critical area? And so being able to have those type of conversation is so enriching. It's amazing. Really. It's a major way to accelerate your career in ways that are just incredible.

It helped me so much. I can probably do a whole episode about that, but you want to be comfortable. With people that are not in finance, with people that are not like you, that do not think like you, because if everyone around you thinks like you, when you will be placed, no conversation, you'll be very uncomfortable.

You'll be very uncomfortable because again, that is working outside of your comfort zone and that in itself is a muscle. Working outside of your comfort zone is a muscle you can build.

Communicating with people that are not in finance when you are in finance is being outside of your comfort zone, where you realize that, Hmm, I'm saying this and not getting it.

And it's probably because I'm not explaining it like they would understand it. Once you know that, that's what You will be faced with like spending most time talking with non finance people. You can then start working on those skills. You can start learning more about the business operations, not just the finance numbers.

Not just how the financial statement come together or, or we have to close by business day five. You will know what's going on in the stories behind the numbers that you are presenting and predicting. Having a personal board of directors will also help in those conversations. And then third is what I said earlier.

Building the muscle of working outside of your comfort zone. Working outside of your comfort zone is a muscle. It's something that the more you do, the more comfortable you are. And the scariest thing you can do while scared. It's amazing. So in my case, one thing that. I didn't realize until recently was why am I so comfortable doing scary things like starting this podcast?

Like really? What's the, have you seen your job description? Do you have time? Well, I make time because again, I won't. To keep building and strengthening that muscle of working outside of my comfort zone, because that is really what a CFO does on a day to day basis. CFOs do not always have all the information.

There is no way you always have all the information that you always know everything that's going on. And yet you have to make decisions. When you only know, maybe 70, 80 percent of the data, you cannot wait to have 100 percent of the information before talking about it. You have to be able to do decision making under pressure and their uncertainty, because that's where most of your time will be spent on helping solve problem.

That's really what it is. That's why you'll be dealing with people that are outside of finance and accounting. It's all those things that your technical skills won't really help you with. You need to be comfortable. You need to build that muscle. So how did I build my muscle of working and operating outside of my comfort zone?

For me, a big one was. When I came to the United States, so my first language is French. I grew up in a former French colony, Ivory Coast, from the time I'm born to the time I graduate from high school, everything is in French elementary school. I did some classes starting in middle school, taking English, so I knew how to read.

I didn't know how to speak to someone else. Right? Because again, you in Africa, you know, your English is weird, especially in the French speaking country. And that's where you learn English. Okay, great. So it wasn't until I came here that I had to operate in a different language and that was operating outside of my comfort zone.

Whenever I'm talking, even now, because I am speaking in a different language, I am operating by default outside of my comfort zone. I'm vulnerable and I'm used to it. And so for me, when you bring another challenge, I'm like, shoot, if I could learn this, I can learn that. Sure. Let's do it. And so operating outside of my comfort zone, that muscle have been working for the past two decades being here.

It's been working hard. And then understanding that English is not my first language, I'm like, Ooh, I need to get better at speaking. So guess what I did? I became a speaker. Really? Was he a? Yes, because to me, you have to confront your fears. And then it's easier to conquer them. If you do not confront them, how would you conquer them?

Yes, I decided to become a speaker. I'm a speaker. I speak at different events. And now, now, speaking at this podcast with my beautiful mic. We having fun. And I'm able to share my knowledge and not letting, oh, I don't speak English as my first language be a barrier to what I want to do. Same thing. Being a CFO is what I want.

I need to start building my muscle because I will be placed in, in situations where my education may not have prepared me for this. My background may not have prepared me for this. But because I build the muscle of operating outside of my comfort zone, it's now easier to do it. You are able to embrace it, to confront it, to conquer it.

So I'm all about understanding what's needed way ahead of time. So you can prepare yourself now. To conquer it. I want this podcast to be all about for me to be able to share, Hey, this is coming up, they're not telling you this, but now that you know, you can better prepare for it. And for me, whether it's understanding the business better, so that it's easier for you to understand.

What non finance people come from their perspectives and you can adapt your communication to them building a board of directors so that, Hey, I'm used to connecting with people like that. I'm able to learn from different angles. informal settings. And then third, what am I doing to get used to operate outside of my comfort zone?

Because that's really at the end of the day, that's a lot of what you'll be doing operating outside of your comfort zone, being in marketing meetings and talking about marketing strategy and like, shoot, I didn't even do marketing in college. What is this? But you define his voice. You will be in those rooms or you'll be with I.

T. What am I doing here? I don't even know how to code. Doesn't matter. Cybersecurity. You have to be careful. You have to know what's going on. There is A. I. You have to know what's going on. We don't have all the information. Doesn't matter. Once you start being used to operate outside of your comfort zone, all these things.

Become doable, become a tenable. And so my challenge to you today is how will you strengthen your muscle of operating outside of your comfort zone? You don't have to necessarily go and learn another language, but what are you going to do to put yourself out there? Something that you may not be comfortable doing.

That's weird. Couple of years ago for me was posting on LinkedIn. I was like, Oh my God, I'm going to post something and. People think I'm stupid or what is this? Now I have over 25, 000 followers, but yes, making that first post, I was scared as who you have no idea. I went through three LinkedIn courses. I spent money on the LinkedIn coach and all that.

I wasn't even posting, but I did all these things. But yet it took me about a year, but then I was like, yes, I'm going to post. And I did. And same thing with this podcast. Am I scared of putting myself out there like this and my ideas? Absolutely. But again, I'm building my muscle. And at some point you have to realize, well, I don't care what people are saying.

I'm building a muscle. I need, I'm getting comfortable at something I need to be comfortable with. And that is by itself an amazing thing. All right.

So let's wrap up this episode. Yes. Oh, oh, you want it more? Oh, I understand me too. But there's part three. There's part three. Okay. We talked about how you will spend most of your time talking to non finance people because you have a top finance leader.

You will be the face of the financial communication of your company, both internally with other department and externally with the board, investors, funders, et cetera. Having that in mind. You should start building a solid understanding of the business. You should build or extend your personal board of directors and make sure it's as diverse as possible in terms of gender, ethnicity, background, degree, all that.

And third, you're going to do something that will help strengthen Your muscle of operating outside of your comfort zone. I cannot wait to hear about number three, because building a sound understanding of business operations, having a person with a director. Oh yeah. You may have already identified people that yes, I should connect with them more.

But the third one is the one I want to hear about. So please email me or send me a DM to tell me what you are going to do. To strengthen that muscle if you haven't realized that you needed it, what are you going to do? Scared. What are you doing? That's exciting and yet scary. I'm already doing this podcast and a lot of other things, as you know, but what are you going to do?

Because one thing that's for sure is whenever that muscle is strong, you have so much confidence. A challenge may come and you're like, yeah, I got this. I did this before. It reminds me of a story in the Bible of David went against Goliath and he was like, yeah, I killed a bear. Shoot. I can do this. Same thing.

When you have been able to climb a mountain or do something crazy, it actually has a ripple effect in other areas of your life. And you're able to say, yeah, I did this. I can do this too. I can do this too. I have the confidence I need to tackle this new challenge, so that's my challenge for you. Let me know and I cannot wait to hear about it.

This is a diary of A CFO. If there's any other topics you would like for me to cover, please do not forget to send it at. Ask at the diary of the CFO dot Tom against. You can email me at ask at the diary of a cfo.com. That's it for today. See you next time. Cheers.