All Things Finance & Accounting: Managing Liquidity, Employee Financial Literacy, Capital Allocation, Macroeconomic Uncertainty, and Hiring Your First CFO

My Guest

Nicholas Andrews is the Founder of Aspen Consulting Group, a company that performs finance, accounting, and operations consulting for a wide range of small and medium sized businesses. Aspen’s services include technical accounting, corporate finance, valuations, operations planning and M&A due diligence, among others.

Prior to founding the Aspen Consulting group, Nick was part of a three-member founding team that grew an asset management business from $0 to $1.5B in AUM across the real estate and energy sectors in less than 4 years. Nick’s 20 years of experience includes establishing finance and accounting operations from non-existent states, as well as managing annual budgets of $200M+ for several publicly-traded entities.

Nick received his MBA from UC Berkley, and his BSBA in Accounting & Finance from The University of Denver. Nick is a CPA and resides in Denver, Colorado, with his family.

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Specific Questions and When They’re Asked

Cash and Liquidity Management

(3:55) How should CEOs think about how much cash to keep on their Balance sheets at any given time?
(7:10) Are there any rules of thumb that might further inform this question?
(9:29) How is your answer impacted by the current inflationary environment, where cash on the balance sheet loses value to inflation over time?
(12:55) Of all of the levers that CEOs can pull to shore up their liquidity position, which one tends to be most impactful?
(16:21) Should CEOs utilize early payment discounts as a tool to manage their liquidity positions?
(18:14) What variables should CEOs consider specific to the idea of increasing volumes during liquidity crunches?
(21:05) What are some less obvious drains/uses of cash that the average SMB CEO tends to be less frequently aware of?
(25:04) What are some tactical practices/exercises that CEOs should regularly engage in that would constitute “good corporate hygiene” with respect to cash management?

Employee Financial Literacy

(29:28) How much financial information do you think SMB CEOs should be sharing with their entire employee base? Why?
(36:43) Are there any metrics that everybody in the company should have a deep understanding of? Why? And what are they?

Capital Allocation & Budgeting

(38:53) What are some of the more common mistakes you see SMB CEOs making with respect to capital allocation decisions?
(42:52) How do you deal with situations where managers claim to be in desperate need of new hires, but those hires aren’t accounted for in the company’s budget for the year?
(46:17) For companies who are net-users of cash (i.e. have a burn rate), what metrics would you need to see in order to be comfortable with that fact?
(52:22) How should CEOs balance between the discipline and structure that budgets create on one hand, with the flexibility that the “real world” requires on the other?

Hiring for the Finance & Accounting Function

(58:40) What is the difference between a CFO and, say, a VP or Director of Finance & Accounting?
(1:02:07) How does a CEO know whether or not she needs a CFO versus, say, a Controller or a Director of Finance?
(1:04:15) What should CEOs look for in the resumes and interviews? And are there any red flags to be aware of that might be suggestive of a potential bad hire?
(1:09:42) How do you know that a newly hired Finance/Accounting leader is doing a good job? Are there any metrics that might better inform this question?

Conclusion

(1:13:58) Given the current macroeconomic volatility/uncertainty, is there anything else that CEOs should be doing that we haven’t already discussed today?