Aug
03
2022

Managing Your Boss for Finance Professionals

Vive la difference!

Finance people (and this is a sweeping generalisation) tend to be disciplined, structured, organised and concerned with rules & procedure. CEOs (and it’s even harder to generalise here) are normally commercial people with an action focus, often extroverted, impulsive and uninterested in routine or procedure. Quite often, they wouldn’t have got into their positions if they weren’t able to push against the boundaries a little.

How then, do you make this relationship of opposites succeed? Like any relationship, it needs to be worked on. Every situation is different, but there are some ideas you can follow to give yourself the best possible chance

(I refer to the CEO as ‘he’ in this guide for brevity, but am well aware that CEOs can also be female!)

Speak the language

Put yourself in the position of your CEO & think how your communication will sound to him. Your CEO is concerned with markets, sales, profits & cash flow. His financial understanding is likely to be quite strong, but he’ll have no interest in the detail of your work. If you talk to him about Annual Returns or IFRSs, he will soon lose interest in what you are saying.

So, whenever you’re talking to your CEO, talk in business language and stop yourself whenever you lapse into financial jargon. A few examples will help illustrate the point.

What you mean

We have accelerated our depreciation rate from 20% to 25%

What you say

We have decided to write computers off over 4 years rather than 5.

What you mean

We are adopting IFRS 75 which requires additional disclosures, but has no impact on earnings.

What you say

There’s a change in the accounting rules, but it only concerns what appears in the notes and doesn’t affect profit.

What you mean

We should apply full absorption costing.

What you say

When looking at product margins, we should take overheads into account.

At the same time, you should be checking your CEO’s understanding and be careful not to be seen to talk down to him if he does understand financial concepts.

You need to get his views on what the business requires from your department. The closer you can work with him the better.

Convince him he needs you

You need to demonstrate to your CEO that you are an essential part of his team.

  • Take workload from him. Look for things that he does that you could do for him. Examples might be shareholder relations, meetings with the bank, writing monthly reports.
  • Delight him. Under promise and over deliver. If you think you can deliver the monthly results in 8 days, offer to do them in 12, and then actually deliver in 10.
  • Find ways to demonstrate your competence so that he can be satisfied he doesn’t need to intervene in your area. Ensure tax returns are made on time, update staff appraisals, improve debt collection and ensure you publicise what you have achieved. You need to be known as someone who can get things done.
  • Work closely with him in developing business plans and forecasts.
  • Deliver insights using your financial expertise. You may get the chance to do this during your normal interactions. If not, find a problem within the business; analyse it in an original way and propose a solution.

A common problem in many businesses it that they don’t fully understand their cost structure and therefore the margins they are making on different product lines. This could be fertile ground for you.

Earn respect

The actions described so far will enhance the respect in which you are held by your CEO. Beyond this, you need to show integrity and strength.

As a professional person, ethics and integrity are important to you. You may be faced with an ethical issue which allows you to demonstrate this, but if not, you should take any opportunity to display your strong ethical code. Eg:

– ‘We could just add fifty thousand to inventory value, but professionally I couldn’t do that.’

– ‘Obviously, we can’t tell lies to our customers’.

– ‘That won’t happen as long as I am CFO of this business.’

This article talks about strengthening your relationship with the CEO but, paradoxically, one step towards doing this is opposing him on something. Find an issue on which you disagree. It should be important, but not a resigning matter. Put your case forcefully and cogently, but politely. Stick to your views in the face of opposition. You may end up being overruled, but your CEO will respect you more if he sees you are strong enough to fight your corner.

Timing is important for this. If you argue at your first meeting, the relationship may never recover. You need to have built some credibility by other means first.

Set and meet expectations

You need to be clear about what the CEO is expecting from you. Ask him about this at an early meeting. If he doesn’t have a clear or complete view, you should give him a statement of what you are planning to deliver. Eg

  • Ensure all tax, reporting and regulatory requirements are completely met.
  • Provide management accounts and board reports within 10 working days of each month end.
  • Within 3 months of appointment perform a complete review of business processes and make recommendations for improvements.
  • Improve management of the finance team by performing regular appraisals and monitoring customer satisfaction.
  • Provide financial and commercial support to the board as required.
  • Take responsibility for relationships with shareholders and banks.

Get this statement agreed in writing. As you deliver against it, ensure that your CEO is aware of what you have achieved.

Conclusion

The relationship between CEO & CFO can make or break both careers and businesses. There is no accounting for the personal chemistry of each relationship. But by behaving in a professional, business-like and respectful way you can give yourself the best chance of success.

Key Points

  • Finance people tend to have different temperaments from General Managers
  • You need to talk like an CEO
  • Convince him that he needs you
  • Earn his respect
  • Set and meet expectations

Jul
04
2022

Ways to Lower Your Homeowner’s Insurance Premium

Homeowner’s insurance is something that no homeowner can afford not to have. Just because having coverage is a must, it does not mean that you cannot find a good deal on your premium. Many people accept whatever their insurance company offers without doing any research before they sign. Unfortunately, many insurance agents are not looking out for your best interests, and will stick you with a higher priced plan. If you are purchasing a new policy and the price seems high, here are a few ways you can save.

1. Higher Deductible- Having a low deductible may seem like a good idea, as you will pay less out of pocket in the event that you need to use your insurance. Insurance company’s make money by assuming you will never need to make a claim. You can take a page from the insurance company’s book, and assume the same. Since your chances of making a claim are very low, consider raising the deductible on your plan. Obviously you do not want to set it so high that you would be unable to procure the funds in an emergency, but set it as high as you are comfortable with. This one minor adjustment can result in significant savings on your premium price.

2. Eliminate Unnecessary Coverage- Chances are if you live in Florida you will never need protection from an earthquake or heavy snowfall. Many insurance companies include these things in their policies to increase your policy’s price. Likewise, consider dropping your jewelry floater if you do not own expensive jewelry that you keep in a box. If your only expensive jewelry is what you wear on a day to day basis, chances are you will never need this coverage.

3. Combine Your Policies- If you have car insurance through one insurance provider and home insurance through another, you can often save up to twenty-five percent on your insurance if you combine policies. Likewise, taking out life insurance or other types of insurance with the provider you choose for your home’s coverage can save you quite a bit overall.

4. Avoid High Risk Factors- Many insurers will charge more for your premium rate if you have certain high risk factors. For example, trampolines and swimming pools as well as more aggressive breeds of dogs increase liability that you will have someone sue you for injuries on your property.

5. Do Not Let Your Policy Lapse- As is true with any type of insurance, letting a period of time pass between coverage can greatly elevate your price. Make sure all payments are sent on time and be proactive about renewing your policies.

6. Ask for Discounts- Very few people ask for a discount when they are given a quote. You would be surprised how many discounts can be granted, but you have to ask. The majority of insurance agents are not going to give you the bottom price first, as with any form of business there may be room for negotiations. This is especially true if you have had one insurer for several years.

Jun
02
2022

Why Your Realtor May Not Want to Sell You a Bank-Owned Home – Part II

Basically to have your bank-owned offers accepted you simply need to follow directions. What follows is a list of tips from REO agents on how to get more offers accepted.

1. Be realistic with your offer. If the property is priced right for its condition and location, do not offer fifty cents on the dollar, you’re only wasting your time, your realtor’s time and the REO agent’s time.

2. Make sure your offer was received in it’s entirety however, do not let your agent make more than 1 phone call to the REO listing agent regarding your offer. The best way to ensure your offer has been received is to hand carry it to the listing agent’s office or have your agent do it.

3. Do exactly what is asked for in the MLS. You can ask your agent to show this to you so that you know you are in compliance. The REO agents are only doing what the bank who hires them to sell the property wants. If you do not provide all the information listed in the MLS your offer will be ignored or tossed out. Typically banks want the following:

  • Pre-Approval from a direct lender and the lender required by the bank.
  • Bank Statements (proof of funds)
  • FICO Scores/Credit Report
  • HUD1 (closing statement)

4. Get a pre-approval from a direct lender as well as the REO agent’s or banks lender. If the REO agents lender is not listed in the MLS have your agent contact their office for that information. You will be able to get your loan from the lender of your choice but the bank simply wants to verify that you will qualify and can close the escrow.

5. Make sure all pages are correctly completed, initialed and signed where required. An offer with missing or incorrect information will not be considered.

6. Make sure all the funds you are using to close the escrow are in your name. You will be required to show proof of funds to close as part of your offer. Many buyers receive a gift from a family member. This is often acceptable in a traditional sale but not with a bank-owned property.

7. In a traditional sale it is customary to include a letter of introduction so that the seller has a little information on the buyer. Often this letter is written by the buyers agent to inspire the sellers to consider the buyers offer. The letter will talk not only about the offer but also about how much the buyer loves their house, how they plan to raise their family in the home, etc. Banks do not care. They only care about the bottom line. I recommend including a closing statement (HUD1) as well as a cover letter from your real estate agent with only the pertinent points of your offer, e.g. purchase price, FICO scores, and down payment.

8. Once your offer is accepted, you or your agent may have some expenses. For example, you will want the utilities turned on for inspections, rather than waiting for the listing office to do it, just handle it yourself. It’s a small price in the big picture and will make the transaction move forward faster.

9. If there are major repairs, e.g. a hole in the roof or no kitchen make sure your lender is aware of this in advance so that a solution may be devised and your loan will not be rejected or delayed.

10. Keep in mind REO properties are sold in strictly “as-is” condition. The bank will not do repairs but they may also not be aware of damage, especially if it is recently. When dealing with damage I recommend that you also include photos of major repairs with your initial offer as the bank and sometimes the listing agent may not be aware of them. Having this knowledge may convince the bank to accept a lower offer.

If your offer is not accepted, don’t talk it personally. The bank is only interested in their bottom line. Unfortunately, there are plenty of bank owned homes out there so you will likely find another deal in no time.

May
01
2022

Getting a Car Loan With Bad Credit: Three Factors Considered by Lenders

There is a tendency for those of us with low credit ratings to become quite disheartened at the thought of applying for a loan of any type. Even when seeking a new car, the faith in the success of an application for a car loan with bad credit can be very low. But the truth is that so long as the right information is provided, approval is possible.

The fact is that lenders tend to be interested in only a handful of factors associated with an application, and the credit rating is just one of them. What is more, thanks to the arrival of online and low-interest loan providers on the market, car loans with poor credit are more easily accessible than ever before. So, there is little reason for such low expectations.

There are three principal factors that lenders look to before assessing the risks involved in lending to a particular applicant. Credit history is one of them, but so too is the employment history of the applicant and whether a cosigner is included. Car loans approved despite bad credit are only given the green light after balanced consideration of all three.

Your Credit History

The most obvious factors that lenders look at is the credit history of the applicants, though the reason that car loans with poor credit are available means it is not the most influential factor. What interests lenders with how the credit score became slow low.

For instance, is it because of a poor attitude towards their financial obligations? Or is it down to a run of bad luck, such as temporary unemployment or falling income? A car loan with poor credit can be approved if the lender believes the risk is lower that the credit history suggests.

Your Employment History

Having full-time employment and a dependable source of income is all important from the point of view of the lender. Confirming an ability to meet repayments is essential to get car loans approved despite bad credit. A lender will generally want to see at least a 6-month history with a current employer, as well as pay slips or bank statements confirming the income amount.

If the lender calculates that there is an insufficient debt-to-income ratio, with 40:60 the accepted maximum, then they will reject the application for a car loan with bad credit – even good credit scores cannot save applicants from this ratio.

A Cosigner is Included

The addition of a cosigner can make the application process a lot easier. A cosigner offers to cover the loan repayments should the borrower get into difficulties, a factor that effectively guarantees that a car loan with poor credit will be approved. The reason for this is that the risk factor associated with the loan is reduced dramatically.

However, it is important that the right person is chosen as the cosigner if an applicant is to get the car loan approved despite poor credit. Cosigners with bad credit histories are unlikely to provide the desired certainty.

Looking for the Right Lender

While it is useful to know what providers of car loans with poor credit look for, it is also necessary for the applicant to consider who they are going to apply to. Going to the local bank might seem the obvious move, but car loans from traditional lenders tend to come at high rates of interest and some very strict repayment conditions.

Online lenders tend to offer much better loan packages because they specialize on loans with poor credit. Therefore, it is easier to get a car loan approved despite bad credit online, and with manageable terms, than from more familiar lenders. Of course, the same three factors remain important as you seek approval on car loans with poor credit.