CFO’s in 2018
We are all well aware that business keeps changing …and changing more rapidly than it has in the past. And by changing we are talking about everything including every procedure and strategy that has been a constant for the last 20 years. I believe they call it disruption. And all of you have seen or felt disruption which supplied both pleasant and not so pleasant results.
The disruption in the material handling business revolves around technology, robotics and maintenance expertise in terms of having qualified technicians to service both customer and rental fleets.
Companies that do not adopt the disruptive forces and do nothing to change the way they operate will eventually fine themselves short of cash because they lack adequate volume to support the fixed costs of the business.
Keeping these disruption forces in mind, management has to create a strategy to meet disruptive forces head on, including individual programs for each department in the business. And this is especially important in terms of what your CFO will be doing in 2018. CFO’s, in general, are finding themselves not only providing financial data but also input regarding margins, pricing, cash flow, tax planning and overall risk assessment. CFO’s do this by tweaking systems and procedures as well as diving into data and industry stats to see where the industry and customers are heading and how your company can help them get there.
Does your CFO have to be a shining star to deliver all of the output described in the previous paragraph? Hell no, he/she only has to stay aware of what it going on in the industry and company and then have a menu of service providers who can help you get to where you need to be. In fact, you are probably better off having various professionals available to your staff who specialize in the services they provide.
I myself am a CFO and follow this menu theory because I have neither the time nor brain power to provide expert advice for all of the current technical topics we deal with. I also maintain a list of industry leaders who can lead me to the professional I need when I need them. I don’t care what kind of problem comes up because I have a contact who can help me deal with it. I do this all the time. And I have no problem sharing my “experts” as long as you are not my direct competitor.
I would encourage each and every CEO to push their CFO’s into industry associations and meetings supplied by both MHEDA and OEM’s. I have had the privilege of attending industry CFO meetings and find that the trip pays for itself from what you learn during the two-day program. This doesn’t need to be complicated because you can make some calls to other dealers selling your brand and see if they would be interested in paying you a visit for such a meeting. Compare notes, procedures, accounting issues, state and local tax issues, banking arrangements, methods to increase margins, and anything else you can think of. Then do it again to see how the others implemented what they learned from the first meeting. I can guarantee you will want to follow through with a standard program to get together on a regular basis.
So what should CFO’s be doing in 2018?
- Participate in MHEDA’s DiSC Report each and every year. Set up a template and get it done.
- Spend some time digesting the new tax bill. It is more complicated than you think. If you are a flow-through entity spend the time to determine how the 20% deduction works and the reasons it could be reduced in your situation. Also know the rules related to depreciation, interest deductions, entertainment deductions and other major parts of the bill. Be especially vigilant regarding state and local taxes because some of the federal rules may not apply in your state. Prepare a pro-forma tax return for both 2017 and 2018 and have it checked by your tax advisor to assure you are in the right church and correct pew.
- Spend time with management thinking about disruption. What could happen this year, next year, in the next five years? What if Amazon decided to get into the lift truck business using a list of local talent to service the units? Not impossible. We all know the business is different from what it was five years ago, with more rapid change to come. Better be prepared to deal with it.
- Good at what you do. Really? If you believe that raise your prices and have the CFO provide analysis on what the results could be. $ are always better than volume and if you have the products and horsepower to get the job done you should be paid for it. Every time we raise prices….they seem to stick without getting much pushback.
- Forget the income statement and provide more data regarding cash flow…..which is all that matters. If the bank account is growing it doesn’t get much better than that.
- Investigate financing alternatives in light of contemplated interest rate increases. Are you using swaps to fix your interest rates? Can you use more revolver notes as opposed to term loans to finance your rental fleets.
- Get more pure rental training. Lift truck dealers provide both short and long-term rentals. Learn what it takes to maximize cash flow from rental.
- Really investigate technology to provide better service as well as improve communication between staff and customers. If you are still killing 20 trees a day …you have a problem. Start by calling Winsby and they will get you started for a very reasonable price.
- Ask your staff and employees for ideas to grow the business. For ideas to improve margins. For ideas to better serve customers. You will be surprised and the ideas are FREE. But it would be nice to show your appreciation with $ and recognition.
- Review internal systems and procedures to find ways to reduce time and cost of a transaction. Time is money. And cost reduction falls to the bottom line. Finding ways to lower cost generates higher margins.
- Investigate joining a peer group or performance group such as those provided by Currie Management and learn what potential your company has to MAKE MORE MONEY.
Review this list and select the top two or three items that you believe could make a difference in your business and ask your CFO to follow up on them and report back to management with options to consider. It is time to make use of CFO’s beyond number crunching. I suggest you give it a try.
And, if anyone wants access to my menu of service providers……be glad to help.
Garry Bartecki is a CPA MBA with GB Financial Services LLC. E-mail [email protected] to contact Garry.
