Serving as chief financial officer means much more than numbers-crunching these days, with executives increasingly charged with broader responsibilities, and recent economic volatility only accelerating the trend.
Traditional CFO roles involved preserving assets and keeping the books straight. Now, they also contribute to corporate strategy and risk-management oversight.
“More than managing financial aspects of the company, CFOs now have to carry a broader perspective of operational management and provide strategic guidance on a broad set of topics,” said Jatan Shah, chief financial officer at QSC Audio Products LLC in Costa Mesa.
QSC is a manufacturer of a variety of professional audio products. It had $150 million in revenue for the year that ended in June, a 43% jump from two years prior. It was ranked No. 62 on the Business Journal’s list of fastest-growing private companies last year.
Array of Duties
A modern CFO can get involved in product development, manufacturing, supply chain and pricing, Shah said.
“It’s as much an operating role as a finance role,” said Gary Roth, CFO of United Capital, a Newport Beach- based private wealth counseling services firm.
“The CFO needs to not just be reporting what’s happening but has to have a deep understanding of the business and know why the results that are happening are happening—what’s driving positive or negative results,” Roth said.
United Capital operates 35 offices around the country and has about 310 employees, with 35 in Orange County.
The firm has $6 billion in assets under management for about 10,000 clients.
“I actually started out as chief operating officer, with [the finance department] reporting to me,” Roth said. “Early 2007, our then CFO had to step down, so I took over the CFO responsibility.”
Roth was working with both titles until last year, when the company decided to remove the operating chief title.
The line between the duties of an operating officer and a financial officer tends to be even more blurred at nonprofits.
“Being a chief financial officer in a nonprofit organization … you wear so many different hats,” said Pat Johnston, who’s nominally the office manager for Santa Ana-based Casa of Orange County, which matches trained volunteers with abused or neglected children placed in foster care.
Johnston handles the organization’s financial affairs, event planning, human resources and office administration.
“If [a job] needs to get done, I’ll do it,” Johnston said. “I’m not really titled CFO, but now I’m taking that responsibility. I do everything that needs to be done. With nonprofits, it’s like that.”
Casa is dependent on a couple of big annual gala events for funding.
“An event like that can be very time-intensive,” she said. “I do that plus the office management, and the CFO jobs. I’ll do whatever it takes to get [the events] to be successful.”
To some, a batch of “back-to-basics” is in order.
“Yes, there has been an expansion of what’s expected of a CFO,” said Ron Warwick, chief financial officer of Sabal Financial Group LP in Newport Beach. “But also [there’s been] a re-emphasis of things we sort of already knew.”
Sabal Financial is a distressed-debt specialist, and it’s been busy the past year acquiring loan portfolios from the Federal Deposit Insurance Corp. and other financial institutions.
Fundamentals
Warwick puts the spotlight on fundamentals, such as an understanding of counterparty risk, monitoring liquidity and staying current with macroeconomic trends.
“In the prior decade, it was easy to become convinced that operation was good at what it did because it made a lot of money,” Warwick said. “Now, instead, we’re making real sure that [the way] our enterprise is making money is very real and sustainable and flexible. That’s an important lesson from the prior decade. Just making money is not a true iron-clad confirmation that you’re doing the right thing.”
The difficult recent business times have prompted many company leaders to pay close attention to their CFO hires, said Pam Wasley, chief executive of Irvine-based staffing firm Cerius Inc., which specializes in providing interim executives to companies.
“I didn’t see [the CFO’s role] start to change until about the recession,” Wasley said. “It’s really becoming very evident because they are definitely no longer looked at as numbers people. They’re now called ‘catalysts’ and ‘strategists.’ ”
Two Hats
Michael Mulroy of Questcor Pharma-ceuticals Inc. in Anaheim serves both as the company’s chief financial officer and general counsel.
“It’s interesting,” Mulroy said. “I was a lawyer, went into (investment) banking and went back into law.”
Mulroy was the biopharmaceutical company’s outside counsel when the company asked him to join as CFO about a year-and-a-half ago.
“When [the company] approached me … it resonated with me,” he said. “I had been exploring that professionally, jumping back and forth between finance and law. It’s a little bit of left brain and right brain. It’s fun to be able to shift back and forth.”
