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Managing Corporate Finance in Multinationals as a CFO – 1

When I started my financial manager career several good years ago (almost 15), I entered the ranks of the commercial finance professionals very idealistically. I thought:
a) everything is according to the books or even better
b) there is no room for politics or hazard in decision making and
c) I will change the world, even in a small way.

It turns out that I was wrong in all these 3 accounts:

a) According to the books
We all know the theory. And even if you requalify forever and take 100,000 exams in finance, there is plenty of room to ignore it. What I saw in practice very often was that (despite the high amount of knowledge), professionals are biased, tired and never have enough time for a proper decision making. Ideally we can all take the perfect decision on whether or not we should launch a product. Ideally only. Because we all have bad days, are cruising from one meeting to another – or simply have to give an answer in 2 hours, most of the finance professionals and CFO’s simply do the best with the limited information and financial modelling tools they have available. And remember this is you are a finance director – an imperfect number-based decision is better than a perfectly justified decision implemented after everybody on the market acted on it (see the fantastic case of Nokia).

b) No room for politics
Hahaha… I was so naive. In corporate finance especially, 90% of the decisions are political: depend on what banks are favoured by the CFO to borrow from, whether s/he likes or not the concept of shared services for the organization, whether the finance director is keen to follow the WACC methodology or not, how many emails somebody needs to justify their decisions etc etc. Multinational companies are especially political beasts with hundreds of heads, and very often a financial decision is taken based on where the balance of power sits. Dixit.

c) Changing the world
I did it, really. But the problem is that we all finance leaders do it by reacting to the environment which has become incredibly turbulent in the last 5 years or so. We the finance directors or managers or controllers do not any longer have the luxury of setting aside one week just to think about the future and re-design the accounting organisation or the ERP’s. We have to act quickly – and very often we change the world without a proper understanding of what outcomes will most likely occur. As a scientific type of CFO, I strongly dislike that. But the pressures are as they are, so we the finance leaders often succumb to the sudden death of instant decisions of the online meetings.

Well, so much this far. Please feel free to comment and let me know what you would like to see on these blogposts. Have fun!IMG_6499

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