Things I learn from sitting with the CFO today

Today I have a fortunate opportunity to sit with the CFO of the company that I am working at. Because we are continuing to find the best way each department to work together and help improve the process. It is part of an experiment. The goal is to rotate each member of every department to understand what it take to make company runs.

My experience with accounting had been somewhat very limited, just a class in college. I never managed to make anything balance. For two hours or so, I got a rare opportunity to the went down the rabbit hole. Into the magical realm of the Chief Financial Officer. I feel like a dog who is watching a tv show. I see only movement, people and sounds but I have no understanding on what the story is about.

There is more than one of book

We start off learning the basic about the different type of accounting book. There are 3 types one for external use, one for internal management and another one for tax purpose.

For external use, This is meant for sharing with people that need to know such as shareholders, board member, audit and so on. Everybody has a boss/bosses somewhere. And those people will always want to know how their investment is being spent.

For internal use, this is also known as the budget. After the KPI for each department is set, each department will be allocated in some sort of number(s). Then they would then need to determine that would be spent in deeper detail such as training, salary and so on.

For tax, death and taxes — and since companies are consider people too so this is the inevitable in every company everywhere. The complication here is massive. It depends on the financial strategy on how the company will be funded, or how to will be recognized revenue and what expenses are tax deductible.

The devil is in the detail

There is nothing surprising to guess that all the numbers must be accurate. But why is that? Turns out that it’s not only at the end of the month or the end of the year. A good finance team must be able to supply the visual at any time. The more accurate and the more real-time the numbers are the better it is for the business to move and able to shelter more risk.

It would also be hard to make the forecast on future budget and spending. With so many delicate moving pieces, any inaccurate numbers, could have severe consequences.

This reminds me of a story from the Movie “The Fast and Furious: Tokyo drift”. In one of the scene when the Yakuza boss noticed that some of the money went missing. He said that there’s an old saying:

For want of a nail, the horseshoe was lost. For want of a horseshoe, the steed was lost. For want of a steed, the message was not delivered. For want of an undelivered message, the war was lost.

All roads lead back to Rome

After the session, I refectled back to the old days of Rome. No matter how you called it — financing, accounting or book keeping in some form or another, can be trace back to the time of the Rome. All the swords, all the shields, all the arrow, even the plunders, all need careful recording. An army might march to conquer the new world or to defend the motherland or even to liberate the oppressed. They are all to be funded.

Today I got to see the other side of the box. It is another good day — a day worth recording and reflecting. There are much else that I choose not to record here today but one only need to see a cover to remember the content of his favorite book.

-Pondd-