Can be narrowed down to three separate things:

It’s absolutely vital to grasp these 3 concepts as soon as possible if you’re a CFO. You can play a major role in the success of your company and their strategic plan once you’ve mastered those three things.

The CFO really needs to be in tune with the company’s cash flow (cash being, after all, the life blood of any business). The CFO must prioritize what needs to be paid when they’re trying to manage cash for troubled companies. The Chief Financial Officer should use a 4 to 6 week model to forecast cash needs, because this model has been shown to work best. With such a model the CFO can manage the cash according to what needs to be paid.

The business owner can find the land-mines in their business by assessing and identifying risk (an invaluable service CFO’s provide business owners). It’s the difference between a cloudy day and a rainy day, and if the CFO can differentiate between the two and let the business owner know, they will be worth their weight in gold.

Often people will ask me why a numbers guy needs to know about the industry in which they work, and the specific business for which they work. To them I say such knowledge is critical both to manage cash for your business and to identify risk for your business. With out first knowing about that business, trying to manage their cash or find any threats is like reaching for a light switch in the dark.

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