How to Evaluate Your Finance Department

Petite Croft & Barrow® Effortless Stretch Bermuda Shorts
Upgrade your warm-weather wardrobe with these petites' bermuda shorts by Croft & Barrow.

Mellow World Zelda Convertible Backpack
Tote your belongings in a chic way with this Mellow World Zelda convertible backpack.

Nobody knows your business better than you do. After all, you are the CEO. You know what the engineers do; you know what the production managers do; and nobody understands the sales process better than you. You know who is carrying their weight and who isn’t. That is, unless we’re talking about the finance and accounting managers.

Most CEO’s, especially in small and mid-size enterprises, come from operational or sales backgrounds. They have often gained some knowledge of finance and accounting through their careers, but only to the extent necessary. But as the CEO, they must make judgments about the performance and competence of the accountants as well as the operations and sales managers.

So, how does the diligent CEO evaluate the finance and accounting functions in his company? All too often, the CEO assigns a qualitative value based on the quantitative message. In other words, if the Controller delivers a positive, upbeat financial report, the CEO will have positive feelings toward the Controller. And if the Controller delivers a bleak message, the CEO will have a negative reaction to the person. Unfortunately, “shooting the messenger” is not at all uncommon.

The dangers inherent in this approach should be obvious. The Controller (or CFO, bookkeeper, whoever) may realize that in order to protect their career, they need to make the numbers look better than they really are, or they need to draw attention away from negative matters and focus on positive matters. This raises the probability that important issues won’t get the attention they deserve. It also raises the probability that good people will be lost for the wrong reasons.

The CEO’s of large public companies have a big advantage when it comes to evaluating the performance of the finance department. They have the audit committee of the board of directors, the auditors, the SEC, Wall Street analyst and public shareholders giving them feedback. In smaller businesses, however, CEO’s need to develop their own methods and processes for evaluating the performance of their financial managers.

Here are a few suggestions for the small business CEO:

Timely and Accurate Financial Reports

Chances are that at some point in your career, you have been advised that you should insist on “timely and accurate” financial reports from your accounting group. Unfortunately, you are probably a very good judge of what is timely, but you may not be nearly as good a judge of what is accurate. Certainly, you don’t have the time to test the recording of transactions and to verify the accuracy of reports, but there are some things that you can and should do.

  • Insist that financial reports include comparisons over a number of periods. This will allow you to judge the consistency of recording and reporting transactions.
  • Make sure that all anomalies are explained.
  • Recurring expenses such as rents and utilities should be reported in the appropriate period. An explanation that – “there are two rents in April because we paid May early” – is unacceptable. The May rent should be reported as a May expense.
  • Occasionally, ask to be reminded about the company’s policies for recording revenues, capitalizing costs, etc.

Beyond Monthly Financial Reports

You should expect to get information from your accounting and finance groups on a daily basis, not just when monthly financial reports are due. Some good examples are:

  • Daily cash balance reports.
  • Accounts receivable collection updates.
  • Cash flow forecasts (cash requirements)
  • Significant or unusual transactions.

Consistent Work Habits

We’ve all known people who took it easy for weeks, then pulled an all-nighter to meet a deadline. Such inconsistent work habits are strong indicators that the individual is not attentive to processes. It also sharply raises the probability of errors in the frantic last-minute activities.

Willingness to Be Controversial

As the CEO, you need to make it very clear to the finance/accounting managers that you expect frank and honest information and that they will not be victims of “shoot the messenger” thinking. Once that assurance is given, your financial managers should be an integral part of your company’s management team. They should not be reluctant to express their opinions and concerns to you or to other department leaders.

Naomi & Nicole® Shapewear Back Magic Torsette Bodysuit Bodybriefer 7081
This soft and smooth, revolutionary shaper incorporates Back Magic - our patented feature that comfortably eliminates muffin top, contours the waist, and supports the back using flexible stays in the garment's upper back. Two plies of fabric throughout most of the style's upper half deliver the s...

Marika Magical Balance Butt Booster Performance Pants
Marika active pants at Kohl's - These women's Marika Magical Balance Butt Booster performance pants feature contoured seams for lift, an elastic waistband and a stretchy cotton blend. Shop our full selection of women's Marika performance apparel at

Armitron Men's Two Tone Expansion Watch - 20/4591BKTT
With its classic design and timeless appeal, this men's watch from Armitron is the perfect way to dress up any ensemble.

Juniors' Saint Eve® Bra: Bandeau Bra 30020K
Saint Eve bandeau bras at Kohl's - This juniors' bandeau bra features removable padding, smocked details and a seamless design. Shop our full selection of juniors' Saint Eve intimate apparel at Kohl's.

Men's IZOD Swingflex Classic-Fit Stretch Performance Golf Pants
Play tee to green in ultimate comfort thanks to these men's IZOD golf pants and their stretch performance design.

Clarks® Sharon Gracie Women's Loafers
Comfort meets style with these Clarks Sharon Gracie women's loafers.

Anchor Hocking 3-pc. Glass Casserole Dish & Tote Set
Anchor Hocking TrueFit Glass bakeware products are designed with a flexible, easy open lid that seals in freshness and enables easy storage and transportation to potlucks and more.

You may also like...