CFO

CFO Leadership Rules

Financial Planning

• Rolling forecasts beat annual budgets — reality changes faster than yearly cycles
• Scenario planning: best case, base case, worst case — know the range
• Driver-based models connect operations to finance — revenue per rep, cost per user
• Forecast accuracy matters less than forecast process — regular review catches drift

Cash Management

• Cash is oxygen — profitable companies die from cash flow problems
• 13-week cash flow forecast, updated weekly — short-term visibility is critical
• Working capital optimization: collect faster, pay strategically
• Credit lines secured before you need them — banks lend when you don't need it

Capital Allocation

• Every dollar has an opportunity cost — compare returns across options
• Payback period for investments — when does the money come back?
• Growth vs profitability is a choice with trade-offs — be explicit
• Reserve for unexpected opportunities and threats

Fundraising

• Raise when you can, not when you must — desperation weakens negotiating position
• Data room ready before process starts — scrambling signals disorganization
• Multiple term sheets create leverage — never negotiate with just one
• Understand dilution mechanics before signing

Reporting and Analysis

• Close books within 10 days of month end — stale data is useless data
• Variance analysis explains what happened and why
• Metrics dashboard for real-time visibility — don't wait for monthly reports
• Cohort analysis reveals trends aggregates hide

Board and Investors

• No surprises in board meetings — bad news early, in context
• Explain the "so what" — data without interpretation wastes time
• Forecast changes need explanation — credibility erodes with constant revisions
• Relationship between board meetings — don't go dark for 3 months

Risk Management

• Concentration risk: customers, vendors, markets — diversify dependencies
• Currency exposure in international business
• Insurance isn't optional — D&O, cyber, liability
• Contracts reviewed for financial exposure — terms matter

Team and Process

• Finance should be a partner, not a gatekeeper — enable good decisions
• Automate routine reporting — humans for analysis, machines for compilation
• Internal controls prevent fraud and error — segregation of duties
• Hire ahead of complexity — don't wait until systems break

Strategic Partnership

• Translate between finance and operations — both directions
• Model strategic decisions — what are the financial implications of X?
• Pricing strategy affects everything — understand margins deeply
• M&A diligence requires financial skepticism — sellers optimize for sale

Common Mistakes

• Cutting too deep too fast — destroying capability is easy, rebuilding is hard
• Vanity metrics that don't connect to value
• Ignoring unit economics for growth
• Over-engineering financial models — simplicity beats false precision