Category: Nature of the Job
You Are the Most Knowledgeable CFO EVER… How sad!
Let me explain to the handful of readers who actually noticed my absence from these virtual pages that this is what it takes for a small business to close a $20 million three-year capital financing deal with a global bank (such as Citi): You basically have to put your entire fucking life on hold.
That is, of course, if you are someone like me - a CFO who rolls up her sleeves and plunges herself into the nitty-gritty of negotiating every single definition, every single term, every single condition, and every single covenant of the Term Sheet and then the Credit Agreement in a pursuit of getting the best deal possible; someone who has the grasp of a fox terrier, who can shove pushy bankers and lawyers right back where they belong, who is not afraid of the ambiguous formulations, obscure terminology, and legal jargon.
But that's it, isn't it? In order to be able to get exactly what you need out of any deal that involves money-holders and their supporting infrastructures you need to know your business better than anyone else and their business better than they do. You need to speak their language and your comprehension of it must be more nuanced than theirs. It's nothing short of a battle for the business survival, and if you don't prevail you and those who rely on you lose. It's like in Game of Thrones: Tyrion's Champion, Prince Oberyn, mortally forfeits the battle to The Mountain, and that spells really bad news for Tywin Lannister's youngest son.
The problem is that most corporate financial executives don't see it that way: just like many other salaried employees, they don't care to know anything beyond bare necessities and they don't feel fiscally responsible for their companies' wellbeing. Hence, the low levels of professional awareness and circumvention of sophisticated issues is observed in most CFOs and Controllers today. And it ends up costing employers a pretty penny in unnecessary legal, accounting, and consulting fees.
Hey, you don't have to take my word for it. By the way, all numbers below are real and quotes are taken verbatim from various communications.
Let's see. When the bankers presented us with the Term Sheet back in March, I did not get either our corporate attorneys nor independent CPAs involved at all. The bank's credit risk group and I spent two months going back and force, until I got the document into an acceptable shape (estimated savings on legal and financial consulting fees - $50K). As a part of the Term Sheet, I insisted on the bank's due diligence and legal expenses (changeable to us) being capped (estimated savings – $35K).
The Citibank people, stuffed to the gills with data and reports I've provided to them during this process, kept telling the other members of my Board of Directors things like, "Oh, that Marina, she is amazing! She is the best! She is so tough!" They would write emails like: "Thanks, Marina. This is very helpful, plus your expertise is tremendous!" As if I was performing some magic tricks – I was just doing my job… thoroughly. When the Term Sheet was signed and sent to the bank my future relationship manager asked me in confidence (referring to the owners), "Do they understand that the only reason they are getting this deal is you?" Hmm…
After successful due diligence and final approvals from the bank's Credit Committee, the Agreement package (186 pages of documents) was emailed to me by Citi's lawyers. The lead attorney asked me in the cover email to provide him with the contact info of my legal representation, so that lawyers could start dealing with each other directly. I was like, "Fuck, no!"
You see, as soon as you officially appoint a lawyer as your representative, the other side is not allowed to discuss anything directly with you. Here's what happens: Let's say the bankers propose an additional clause or some adjustment; they call their lawyer; their lawyer contacts my lawyer; my lawyer, who doesn't know much about the intricacies of my business and is not allowed to make any decisions on his own, delivers the request to me. And then in the opposite direction: I formulate my response; now I have to explain to my lawyer all details in a digestible format so that he can deliver them to his legal counterpart; the latter than communicates them to the bank.
Are you counting the connections? We are talking quadruple billable hours on both sides! And it's like that for every single issue and point. I'm not doing that! I say, "Excuse me, sir, but for now you will be talking directly to me – at least until all business and financial kinks of these documents are ironed out. Okay?"
Professionally lawyers are just as obnoxious as doctors – they think that their diplomas make them better than other people (yet, they discuss economic matters with me as if they too had a PhD in the subject and an MBA). So, at first the bank's attorney bristles, but, as I start beating him up on one point after another, he gets quite tamed and develops respect. He actually says, "I hold you in high esteem," which is very nice, because the majority of these assholes don't ever want to admit that you are their equal (estimated legal fees savings – $30K).
Finally, I was satisfied with the contract and introduced my attorney into the mix. He literally had ten comments on the legalese and after that the process turned into technical preparation of documents between the two legal firms.
Total closing fees savings upon signing: $115,000.
I am his client, so my attorney feels free to make a frank comment: "I have to say, you are the most knowledgeable CFO I've ever met, and I'm not even talking about your understanding of the contracts. It's everything. Most of the time I talk to your peers and they are like… I'm sorry… They don't know shit."
On the day the deal was closed one of the shareholders wrote to me: "…Your performance transcended what could reasonably have been expected from a typical CFO."
Well, that' nice, isn't it? Except that all these praise-singers probably think that I'm flattered by their compliments (as if I live for their approval). But I am embarrassed: I keep thinking how all those ignorant CFOs and Controllers taint the image of my profession. And everybody thinks that you are just like the rest of them until you prove otherwise.
People say to me, "What difference did it make for you personally? Did you get a deal-completion bonus?" And some ask, "Why try so hard? You don't even care about 'business' things as much as you do about art!"
They are absolutely correct: Yes, some music passage, or a scene in a play, or an image, or a hand-written poem will make me cry; yet, most people with whom I work can't even imagine tears in my eyes. And no, I didn't get an extra bonus. And I don't consider this my personal vocation. But the circumstances of my life made this into my paying occupation and I have to measure myself by my own standards: as long as I must waste a huge chunk of my life on making other people rich, I'd better do it to the best of my abilities. Why other CFOs don't feel like that? Well, everyone probably has her own story, but mostly it's that plunging-quality-of-everything effect I like to write about so much. It's pervasive.
The Frustrated CFO Presents: The FedEx Man Cometh
A Treatment for a Feature Short Film:
The present.
Brightly lit business office suite. The camera moves out of the reception area, along a large sign on the wall "ALISP International," and into the open-design space in the middle. There are a lot of boxes of various types around – file storage, heavy-duty cardboard with foam padding, etc. Some are sealed and others are half-packed. Office workers of both genders and different ages are busily occupied: most of them are at their desks, either working on the computers or talking on the phones, while a few are transferring files and folders from desk drawers and cabinets into the boxes. The company is obviously packing up.
PAIGE, 30, an accounting manager with plain but soft facial features, gets up from her chair, takes a huge pile of checks she just printed and walks into a private office with an open door.
Inside the office, the CFO, a middle-aged woman with an almost visible weight of responsibilities and problems on her shoulders, is at her desk. She is a hardened veteran of the professional work-force; one of those bitches who are said to have bigger balls than their male peers. A permanent scorn for humanity is set deeply around her mouth.
It looks as if her right hand is glued to the mouse, moving and clicking the thing in a seemingly erratic pattern, which causes rows and columns of data on the computer screen appear, disappear, reproduce, and rearrange themselves. There is a tower of empty boxes in one of the corners. Clearly, she didn't have a chance to start packing. The CFO doesn't stop her manipulations of cells even when Paige comes up to her desk.
The desk's surface is completely covered with documents and reports, yet appears to be in a sort of a neat order. Failing to find an empty spot, the younger woman asks, "Is it okay if I put them on this contract?" The CFO is her mentor and Paige feels guilty for giving her something else to do, as if those checks were intended to pay her personal bills.
The CFO stops torturing the mouse and looks up. "Actually, it will be great if you do that, because right after I finish this bullshit for the bank and sign the damned checks I will have to read that damned contract to make sure that our esteemed attorneys didn't miss anything," she says without any irritation, just matter of factly.
"Those RingCentral, guys, did they finally got what you wanted them to do with the phone system in the new office? I heard you spelling it out for them."
The CFO produces a funny sound – a combination of a sad sigh and a bristle of disgust: "People rarely disappoint me – most of the time they are exactly what I expect them to be."
In a gesture of a female camaraderie, Paige lightly rubs the CFO's shoulder and leaves the office.
The CFO goes back to her computer and continues manipulating the database at the same high speed. Her phone rings. She hits the speakerphone button without taking her eyes off the screen.
"Yes."
The reciptionist's voice singsongs out of the phone, "Gary from LinkNet for you."
"Okay."
The CFO keeps working, while a man's voice comes on after a click, "Hi, M."
"Hi, Gary. What's up?"
"We just checked the tracking information - the boxes are on a FedEx truck, out for delivery to your new address. I'm a bit concerned about nobody's being there. It's a bunch of pretty expensive stuff: uninterrupted power supply unit, firewall, network switch, backup…"
"Don't worry – I have a standing order with the building's management to keep all our packages in the mail room until we collect them. And I will be there Monday morning."
"Okay, and the next day we will come to install and connect everything. Just in case, we included your contact information on the label."
"That's cool. Okay, bye."
"Bye."
Same day, early afternoon.
A FedEx truck is moving down Broadway in NYC's Financial District, rolling closer and closer towards the Bowling Green Bull; then turns left a few blocks before the statue.
The FedEx truck is parked at the entrance of a steel-and-glass 30-story office building. The driver, a man in his early 30s in FedEx uniform, unloads several heavy packages onto his hand truck and rolls it through the building's service entrance.
Inside the building's mail room a young man, late 20s, is behind the counter. He is wearing a standard navy blue jacket of the NYC Service Employees International Union. He stares intently into a computer monitor, which emits barely audible, muffled moaning sounds. He mutes it as soon as the driver walks through the door.
"Wussup, man! Cold outside?"
"How you doin? Too cold. I got boxes here all going to same place… Lemme see…" Looking at the label of the box on the top, "Al… Als… Ali… Al…"
While the driver is trying to figure out the name on the label, the guy behind the counter strikes a few keys on the computer keyboard. Tenants' directory appears on the screen in front of him. Within seconds he exclaims, "Aliyes! Sixth floor, man!" He sounds very satisfied with the fact that he managed to find the company before the driver could read the label.
As the FedEx driver rolls towards the freight elevator, the mail-room dude clicks the mouse and the very quiet moaning comes back on. About five inches away from the guy's hand on the mouse, a sheet of paper is affixed to the surface with a tape strip. The letterhead indicates:
"From the Desk of Joe Funk, Building Manager"
The header below states in bold letters:
"NEW TENANTS"
"ALISP – Floor 17: Keep packages in the mail room" is the first entry on the alphabetized list that follows.
Same day, late afternoon.
The CFO is at her desk. With her glasses on, she is now reading "that damned contract," marking it with a pencil every once in a while. The phone on the desk rings. Again, she hits the speakerphone button without looking.
"Yes."
The receptionist's voice is hesitant – she is obviously unsure whether she is doing the right thing by passing this call to the CFO instead of fielding it away.
"There is a person on the phone… He says that he is from a company… Aliyes… and that he got your packages, ma'am."
The CFO takes off her reading glasses and looks at the phone as if it was a curious living thing. You can hear amusement in her voice when she asks, "My personal packages?"
"Yes, it seems so. He asked for you by name."
"Okay, put him through."
In a second, a man's voice comes through the speaker.
"M.?"
"Yes."
"My name is Bill. My company is on the sixth floor here at XX Broad. Are you, guys, in the same building?"
"We are and we aren't. We are in the process of moving in – the 17th floor."
"For some reason your packages were delivered to us by FedEx, and my secretary signed for them. She started opening them up without even looking at the labels. All this equipment seems expensive."
"It is quite expensive. Your company's name is Aliyes? Well, the first three letters are the same – that's as far as an average attention span can go nowadays."
They both laugh.
The man says, "It's a good thing that your name and number were on the label."
"I have to thank my IT Administration service for that."
"Look, we already sealed the boxes back - as good as new. Why don't you call John, the building manager, and ask him to open your office for us. I will have my guys bring it inside and I will personally supervise that nothing gets screwed up again."
The CFO's face changes and her voice is very earnest, when she says, "That would be great! Thank you so much. I am so grateful."
Indeed, she is grateful – she got lucky that someone with the common sense cut this chain of events short. The whole thing could've turned out so much worse.
What is Frustration?
Well, what kind of a psychological animal is Frustration? Is it a cognitive and somatic ailment such as anxiety or a mental disorder such as depression?
Those exposed to your expressing the frustration would like you to think that there is definitely something wrong with you. But no, feeling frustrated because of legitimate agitating factors doesn’t mean that you are ill and need to seek medical attention.
As the matter of fact Frustration is nothing more than a normal emotional reaction to opposition, restriction, obstacles – anything that we perceive to contradict with our will, goals, purpose, plans, schedules, etc. It is sometimes referred to as problem-response behavior. There is a problem and the frustration is the first-response signal.
Sometimes we are frustrated with ourselves. Procrastination and indecisiveness are the biggest causes of self-dissatisfaction for most people. However, overachievers who reach top level positions in corporate finance and accounting, the CFOs, Controllers, VPs, Directors, especially in smaller companies, are unlikely candidates for lazy postponements. And even if, for whatever reason, it happens to us, we are usually capable to control it and use the frustration with ourselves as a motivational tool.
No, our causes of frustration are primarily external. When you have allocated your already extended working hours to 10 urgent tasks that must be tackled today, and then your Boss wanders into your office and you have to listen for 2 hours to his blubbering about his workout regimen, the time loss is beyond your control and the frustration is further intensified by your inability to throw him out.
When you give an urgent assignment to your employee, explaining its importance and value to the company’s big picture, and an hour later come over to check the progress and provide further advice only to see her scrolling through boots on Zappos.com, the frustration makes your blood boil in your veins.
When you schedule a meeting with the VP of Sales to discuss the failure to meet volume targets for four months in a row and he is not there 30 minutes past the appointment, evil scenarios invade your frustrated mind.
So, feeling frustrated is natural. However, the way we act while frustrated depends on our personality, self-awareness, self-control and our psychological makeup.
The most frequent reactive mechanism is aggression. Whether we immediately explode at the source of frustration, or wait until we are alone and transfer our anger on an inanimate object, or get home and take it out on the innocent members of our families – it’s pretty much the same response.
In some cases frustrated people engage in a passive-aggressive behavior. You’ve seen it many times over: a person puts on a sullen expression and starts procrastinating, obstructing, failing to meet the expectations, etc. I am sure most of us not only observed it, but also had an episode or two ourselves.
It takes a lot of experience, self-control and tremendous will power to resist this behavioral patterns related to frustration and force yourself instead into constructive removal of the obstacle or resolution of the irritating circumstances. And, unfortunately, even if we can function reasonably on the outside, it doesn’t mean that the psychological disturbance inside goes away.
In the next couple of posts I hope to share with you few coping devices that I have accumulated over the years myself as well as discuss the relation of frustration to anxiety and stress conditions.
Tech-Savvy CFO vs. Technologically Inept Owners: A Boardroom Chronicle
Premise:
Based on true facts, this present-day farce unfolded right after the company at the center of the story signed a new office lease. The entity's CEO, an infamous procrastinator and a successful decision-dodger, has delayed the execution of the document to the point when only 60 days remained before the moving-in day.
Up until now, the fairly young business always occupied a full-service furnished office suite, where everything from pen holders to receptionists is supplied by the landlord, including all telecommunications and IT administration. However, by this point the successful business outgrew the little rooms and the shared common space of the suites – it was time for the company to obtain its own residence.
As all logical people know, lease signing is only the beginning of a relocation process. A lot of work needs to be done before a company can feel at home and be fully operational in its new place of business. And nowadays, the IT infrastructure becomes a prerequisite to everything else.
This flat-structured small business has a misfortune of having a board of directors that consists of three technologically clueless owners (the type who cannot connect a printer to a PC) and a CFO. The latter has been combining her financial and accounting responsibilities with those of a CTO throughout her entire career. Needless to say, she understands what needs to be done, knows how to go about it (nobody else does in this company), and is more than qualified to make all necessary decisions. Yet, the Board has a rule: anything that involves spending money must be approved by all four members.
So, here is the chronology of making a single decision under the described circumstances:
Motion 1 – 60 days till D-Day. Upon receiving the fully executed lease from the lawyers, the CFO writes an eMemo to the owners requesting a Board meeting in order to develop an action plan that would ensure successful and painless relocation. The plan should assign responsible parties and establish deadlines for each task.
The owners don't acknowledge that the issue was raised and two weeks pass in a complete silence regarding this matter.
(Side Note: All four executives are actually heavily involved in their day-to-day responsibilities. They communicate extensively every day discussing various commercial concerns, while avoiding difficult extraordinary topics.)
Motion 2 – 46 days till D-Day. Recognizing that the owners have fallen into their typical pattern of pretending that the problem doesn't exist (this happens every time an issue lies outside of their comfort zone), the CFO makes another attempt to mobilize the Board to set up an action plan. This time she speaks to each of them in person. They all nod in agreement - "Tomorrow," they say. The CFO squeezes a two-hour time slot into her crazy schedule.
Three days pass without anything happening.
Motion 3 – 43 days till D-Day. The CFO feels the time pressure – at the very least she must start working on IT components, regardless of the owners' ostrich behavior. The business will be simply paralyzed without an adequate infrastructure. She really has no room in her schedule for all research, comparison, and optimization of various ISPs, telecoms, and IT administrators… But who else is going to do it? So, instead of pestering the owners again about the "action plan," she writes a very specific inquiry: "Please confirm your agreement with my taking charge of the groundwork for obtaining the Internet service, telephony, and IT administration support." Without waiting for replies, the CFO starts working on the subject of the highest priority, i.e. the Internet connection, by reviewing nine ISPs whose services are available in the new building.
Motion 4 – 41 days till D-Day. At different hours, the CFO receives messages from the owners – all three are worded very similarly: "Thank you for asking and forward thinking. Please go ahead with the projects." She can almost hear their sighs of relief - somebody else has made the decisions for them!!! The CFO closes her eyes for a second and thinks, "The same shit every time. I wish at least once I would let things run their course - just to see what would happen if I didn't worry about all of this, if I didn't jump in."
By carving little chunks of time in her schedule to deal with this shit, the CFO manages to come to her final ISP conclusion in 5 business days: to accommodate all of the company's needs (including VoIP) she needs a reliable fiber-optics broadband. She narrows down her choices to two ISPs – the award-winning Cogent with dedicated connectivity and Verizon's newest product FiOS Quantum ran through communal cables shared with all other users in the vicinity.
Motion 5 – 36 days till D-Day. She immediately gets quotes from both: Cogent values itself highly – $700/month with a three-year contract, plus $1,000 installation fees; Verizon's rate is only $129/month with a two-year contract. Even with such a disparity in pricing, it's a simple choice as far as the CFO is concerned – she knows that Cogent will provide uber-fast, uninterrupted connection, and if something happens, she can be on the phone with an engineer within 30 seconds. Verizon, on the other hand… well, we all dealt with Verizon at one point or another. Yet, for the owners all this technical staff is as difficult as Icelandic; the huge price difference, however, that's easy. So, the CFO goes back to Cogent's salesperson and dangles FiOS Quantum at $129/month in front of his nose (virtually, of course). He is taken aback – he had no clue that Verizon had started offering this brand new service in that building. He cannot stop himself from uttering, "That's a compelling alternative." The CFO doesn't dissuade him from this train of thought; she waits. And he says that he would go to his director and try to get her a better deal.
Motion 6 – Same Day. Cogent wants the business – the salesperson reverts in two hours, dropping the price to $500/month with a three-year contract or $400/month with a four-year contract. Both rates are exclusive of taxes and charges. With this reduction in hand, the CFO immediately prepares a presentation for the Board, breaking down her selection process step-by-step and making a strong case for Cogent through detailed comparison and scoring of all providers. She sends it out to the three owners and requests a board meeting to make the final decision.
Four days of silence passes. The CFO understands: it's too fucking much for them, they don't want to deal with this, they are hiding.
Motion 7 – 32 days till D-Day. The CFO has no choice but to write to the owners again: "Let me remind you that installing the Internet connection must precede all other IT and telecommunication actions, including setting up the phone system, the computer network, etc. – basically everything that we need for the business's operations. And it will not happen overnight!" This gets CEO's attention. She comes over to the CFO's office and says, "Let's decide by tomorrow the latest."
Two days passes.
Motion 8 – 30 days till D-Day. One of the owners (already in possession of the previously distributed detailed presentation) sends an inquiry, "Can you make a comparison for me between Cogent and Verizon?" as if he just woke up to the issue.
Motion 9 – Same Day. The CFO prepares a simplified comparison chart intended for a 4-year-old audience. Meanwhile, she tells Cogent that the decision is not settled yet and that she will appreciate if the provider gives up something else – like do away with the $1,000 installation fees and make rates flat, all-inclusive (taxes, charges, etc.) The salesperson conferences in his Director and they yield. The CFO simply cannot lose this deal: she goes around and collects the owners' consents in person.
Motion 10 – 29 days till D-Day. The CFO signs the contract with Cogent.
Curtains
And this is just Act I. Ahead, there are still decisions on a VoIP system, an IT Administration service, furniture, equipment…
The Frustrated CFO 