In today’s episode of ‘From the eLearning Trenches,’ we asked one of our learners, a partner in public practice, to critically review 7 key steps for maximising the value of your input at client board meetings. Which of these do you do well? Do you feel that your clients accept your input as a board member? What needs to improve to add value?
The 7 key steps:
- A clear, concise and focused agenda, covering the right matters
- Documents available at least 24hrs prior to the meeting for review
- Special matters for discussion identified before the meeting
- Strong chairperson, good facilitation of the meeting
- Agreement on operational versus strategic focus
- Agreement on standards of team behaviour
- Formal minutes prepared and distributed within 24 hours
Step one is to ensure that discussion regarding accuracy of financial data and reports occurs before the meeting. Therefore, it is important to have adequate processing time to ensure accuracy and to issue the reports at least 24 hours before the meeting. From time to time some information may not be provided or there is a large difference that was not expected, where this is identified before the meeting time can be applied prior to the meeting to ensure the meeting doesn’t go off topic and spend too much time on detail rather than big picture strategy.
Step two is to focus on the meaning of the financial reports not just the numbers listed within the reports. This allows for big picture thinking and decision making. The meaning of the reports is to provide consistent and factual information that is relevant for decision making. Therefore, we don’t want to spend time analysing the figures in detail and rather use them to support effective discission, create alignment with direction and actionable items to meet goals and objectives.
Step three is to make sure that the CFO gets involved in the discussions about strategic and operational issues, as the role of the CFO is not just to present the financial reports and to also guide the decision making process, highlight KPI’s, business objectives, strengths and weaknesses and the impact not only financially but also to the success of meeting goals and objectives.
Step four, remain consistent in challenging the client. Ask questions that align with the organisational goals and objectives, challenge the balance score card the lead and lag indicators. For example, why has a particular KPI being applied when it is no longer effective in showing us what we need. Find out why success is being achieved or why things are not being achieved. Challenge in all areas of the business, including HR and culture.
Step 5 is to keep the conversation fresh through introducing new topics at board meeting. Additionally, creating a 12-month implementation program for different topics and items to be discussed. Items include, board review and governance, ESG, cyber security, policy and procedure and realignment of goal setting. There should be a set of topics that is explored annually along with new topics that arise to keep current. This ensures that the balanced score card can be adjusted to keep the business objectives aligned with strategic direction. For example, business financial reporting may be required within x period and the topic needs to be raised on how to shift and align with this external requirement.
Step 6, to facilitate more effectively the CFO must allow for time within the agenda for strategic discussions to take place. This creates space for structured debate and meaningful discussion that can shape the future of the business and keep efficiency within day-to-day practices.
Step 7, is to make sure that commitments are documented, timelines are agreed upon and established along with responsibilities. It is important that these are followed up with and completed within a timely manner. Documenting commitments creates direction and clarity in what needs to happen next, who is responsible and by when. Without this this meeting is less effective as there is no actions coming from the meeting. These meetings are designed to spark change and to ensure stability of the organisation whilst achieving desired goals and objectives.
What needs to change?
Currently, I do not facilitate board meetings. However, I do facilitate advisory meetings. At these meetings I do well with providing information before hand to allow the client to understand and ask basic questions before and also provides time for any corrections or missed data. I drive the meeting based off goals and objectives and use the data to create factual examples that can support actionable change and decision making. Follow up action items are also a strength, I see this as very important to complementing the meeting as this is where the change really happens, by making the actions and following up with them.
I can improve on communicating the scope of these meetings, creating a more structured approach and challenging the client more. By doing this I can create a regular meeting schedule with key topics for each meeting to ensure each topic has adequate attention and time to make good decisions. This will reduce information overload and help build a good business foundation overtime. This can add value to an organisation.
Moving forward I can add value to my client’s businesses through offering CFO services for facilitating board meetings. This can be an additional scope of service and will focus on the big picture of the strategic direction of the business.
Feedback from our experts
It’s easy to get into the pattern of presenting the same reports and making basically the same observations at each client meeting. External advisors need to understand that their role is to think outside the box and challenge clients to also consider business strategy in a changing external environment.
In this response, the learner has identified all of the key actions that external advisors or Virtual CFOs should consider ensuring clients feel they are getting value from the business relationship. It’s critical that reports are produced in an efficient manner so that sufficient time is available within the fee budget to engage on broader, and deeper, conversations about business performance and opportunities.
The 5 core areas of business focus for an external advisor are as follows:
- Financial Health and Cash Flow Management: The Virtual CFO would discuss the current financial health of the company, focusing on cash flow management. This includes reviewing revenue streams, expenses, and profit margins. The discussion would challenge the client on their approach to managing working capital, budgeting, and forecasting, and suggest improvements or changes where necessary.
- Strategic Planning and Growth Opportunities: This conversation would revolve around the long-term strategic planning of the company. The Virtual CFO would challenge the client to think about new growth opportunities, potential markets, product diversification, and business expansion strategies. They would also advise on the feasibility and financial implications of these strategies.
- Risk Management and Compliance: Here, the Virtual CFO would assess the company’s current risk management strategies, including financial risks, market risks, and regulatory compliance. They would challenge the client on their approach to mitigating these risks and ensuring compliance with all relevant laws and regulations.
- Investment and Capital Allocation Decisions: This discussion would focus on how the company is allocating its capital. The Virtual CFO would challenge the client on their investment decisions, capital expenditure, and return on investment. They would also discuss the balance between investing in growth and maintaining healthy cash reserves.
- Operational Efficiency and Cost Control: In this conversation, the Virtual CFO would analyse the operational efficiency of the business, looking at areas where costs can be reduced without impacting quality or productivity. They would challenge the client on their current operational processes, supply chain management, and overall cost structure.
Are you having ALL of these discussions with your business advisory clients from time to time?
Key takeaway: The external advisor or virtual CFO should be providing constructive challenges to the business client, helping them to think critically about their management decisions and strategies, and guiding them towards sustainable growth and profitability.
This assessment task and response is taken from the Virtual CFO Essentials eLearning course. Click here to explore this course
Also, take a look at the Virtual CFO advanced eLearning Course
Discover the pulse of our eLearning community as we unveil daily feedback from enrolled learners. Exciting times ahead as we share this valuable information with the accounting, advisory, and administrative experts in public practice!
- What Financial Reports Should I Provide to Business Clients? - 6 February 2024
- Why Don’t I Get More Referrals from My Clients? - 30 January 2024
- Are Job Turnaround Targets Realistic and Achievable? - 23 January 2024