The CFO's Guide to a Continuous Improvement Culture in Finance

Megan - 0:50: Today, my guest is Dan Wheaton. Dan is the leader of Cherry Bekaert's CFO advisory practice and also leads the technology and life sciences industry at the firm. Cherry Bekaert is ranked among the largest and fastest growing accounting and advisory firms in the US. Cherry Bekaert creates shared success by helping thousands of clients solve their toughest business challenges and advance their strategic goals. Dan has over twenty five years of strategy and management consulting experience with organizations ranging from Fortune 500 companies to high performing private equity backed middle market organizations. He has significant experience advising C-suite executives on value creation initiatives with a focus on solving complex, strategic, financial, operational, and technological challenges. He has worked with clients across multiple industries to develop transformative solutions aimed at driving top line growth, cost reduction, and EBITDA improvement. He has a broad range of experience in helping organizations define best practice business processes and developing leading class technology solutions that differentiate themselves in the marketplace. Dan has a passion for client service and has a long and successful track record of advising clients and leading strategic initiatives. In addition to Dan's client delivery responsibilities, he has significant experience in building high performing consulting practices. Dan has led successful consulting practices through geographical expansion, through building new offerings, and by bringing on industry led operational focus to client delivery, and by bringing an industry led operational focus to client delivery. The scope of these leadership responsibilities has included the development of service offerings and go to market approaches, marketing strategies, business development, recruiting and hiring strategy, development of various consulting methodologies, staff development, and ownership and management of a practice P&L. Dan, thank you so much for joining me today on this episode of CFO Weekly.

Dan - 2:54: Thank you, Megan. Thanks for having me. I'm really excited to talk to you today.

Megan - 2:57: Yeah. Over the course of your career, you've seen firsthand how finance can be a catalyst for transformation, not just a back office function, but a true driver of performance, insight, and innovation. Today, explore how modernizing finance operations can unlock that potential and what it really takes to lead that kind of change from the inside out. So let's start at the beginning. When in your career did you first see the power of modernizing finance operations to transform a company's performance, and what did that look like?

Dan - 3:31: Great question, Megan. Early in my career, I started my career as an auditor. I'm a CPA by trade, and I spent a lot of time with controllers and CFOs sort of looking backwards and kind of understanding, hey, from a financial statement perspective, how do things operate and how does numbers ultimately get onto a piece of paper? And what I realized very early in my career was that the level of effort and the time and hours from all accounting and finance personnel in some of these organizations was significant in really gathering information to kind of report the news. So I was always kind of an inquisitive kid and always somebody who asked a lot of questions and was very curious as to how things worked and really took a step back. And at that point, my career very early on and said, like, there's really got to be a better way to do some of these things. And so that question really started me on my journey of trying to help CFOs and finance organizations drive performance through technology, through process, through enhanced organizational strategies.

Megan - 4:53: And before we get into the meat of a conversation, let's just take a moment for you to kind of walk us through your career and how you got to where you are today and where you are today.

Dan - 5:04: Sure. So I'll start at the end and work backwards a little bit. So I'm a partner at Cherry Bekaert. I am the leader of our CFO advisory practice. I've been in the advisory space for north of twenty five years. I was a partner for roughly fifteen years at a very large international firm prior to my time here at Cherry Bekaert. And very early in my career, worked at some of the largest professional service firms in the world. So have been at this for quite a while, have done work across pretty much every industry from Fortune 100 companies all the way down to pre revenue life science companies. I've seen quite a bit over the last twenty five years. And what I can say that has been consistent over that period of time is that change is pretty constant. We're obviously in the time of everybody talking and being focused on AI and automation and things of that nature, but fifteen years ago, it was a different trend. So, but really, I think what we see on a continuous basis with our clients is the ones that really truly perform are the ones that are constantly thinking of how do we continuously improve our process and our organization.

Megan - 6:29: I guess it's, so it's an evolution and not just a journey with an ending point.

Dan - 6:35: Absolutely. Absolutely. Constantly thinking of how we can do things better.

Megan - 6:42: And when CFOs talk about modernization, it often starts with the desire for clarity, better data, faster insights, more confident decisions. So in your experience, what are some of the biggest day to day challenges that CFOs run into when trying to get clear, timely insights that they can actually act on?

Dan - 7:01: You kind of said it there, right? I think what we continuously seen for many years is ultimately the timeliness, accuracy, completeness of data for the organization. I'd say a lot of times is like CFOs have a tendency and tend to be in many organizations, especially in the middle market, which is really the market that we serve. CFOs are really the data stewards of the organization. I think every leader, every person in an individual organization is always looking to the CFO for answers around numbers. That puts a lot of strain on the finance function over time, and it kind of really forces CFOs to really think very strategically and determine how they can really provide better information faster, more accurately. Because I always say the last thing you want to do is walk into a boardroom meeting and have one person have one number and another person have another number, and then you spend the entire time arguing about whose number's right. So that consistency, completeness, accuracy is so important in really having good financial processes.

Megan - 8:27: And once finance leaders recognize those gaps, the next question becomes where to start. So for CFOs who want to modernize their finance function, where's the best place to begin, especially if they want to avoid overwhelming their team or disrupting the business?

Dan - 8:45: Right. And again, going back to the middle market, the market that we serve, our clients, most of our clients are south of about $250 million in revenue across several different industries, but I think the middle market provides different challenges. Right? You've got you don't necessarily have the ability to invest as much capital as a big Fortune 1,000 company, and you're not trying to drive these massive transformational initiatives at the end of the day. So really, where I'm advising my clients every day is to start small. And how I think about things is where are there specific use cases within your organization that you have a continuous problem that you see over and over and over again? Like, as an example, in the manufacturing space, you see many of these $100, $200 million manufacturers having challenges with inventory visibility and managing inventory. And they have a lot of working capital kind of tied up in that, and that can have a pretty significant impact on cash flow. Right? So CFOs in that space really need to have a very good, solid understanding of what's going on there. So start with that specific use case that's solving a specific problem and then build from there. So, typically, what we guide and think through with many of our clients is kind of in three steps. Right? And this is the most basic things that you can think of from a finance perspective. Number one, fix the close, get your data right. We sort of alluded to that a little bit earlier, but that is kind of the core piece that every finance organization has to have is close your book fast, do it accurately, get good data. The second piece is really building what I would call a financial planning and analysis capability. Once we have that data that's clean and good and timely, I can take that data and I can analyze it now. I can develop KPIs. I can use it as inputs from a forecasting and planning perspective. I can start to try to be somewhat predictive with some of that data to determine what's going to happen versus what has already happened. And that truly becomes a strategic differentiator for many of our clients. And then really the third piece, once you've got the data right, once you analyze the numbers and you know where the problems are, then you can fix the problems. Right? And that's where we see a lot of organizations really modernizing finance. And even beyond finance, having finance be a bit of that quarterback for driving performance improvement throughout the business.

Megan - 11:48: And of course, transformation is a balancing act. So how do you find the right balance between pushing forward with digital transformation and keeping processes practical, aligned, and genuinely valuable to the business?

Dan - 12:02: You're right. It is a balance. As I mentioned, the goal for us is, and many of our clients, is we're investing capital, investing time, we're investing dollars in individual process or trying to fix a problem that we have. You really want to focus on what outcomes am I trying to get to? So if I'm targeting digital transformation around XYZ process, how do I actually measure the effectiveness of what I'm actually doing to transform that process? So that's kind of such a critical piece that I think many times people don't necessarily focus on, but what are the outcomes that I'm trying to achieve? What type of ROI am I looking to get? Going back to what I was talking about before from a KPI perspective, how does this particular digital transformation improve some of those KPIs to really drive performance at the end of the day? And how do we then use that platform from a finance and accounting perspective to then be able to sort of scale the business without necessarily having to incrementally add heads year over year over year. So we've built a platform for the business that we are confident that we can scale the business on and ultimately driving a lot more performance for the organization.

Megan - 13:36: And can you maybe share an example of when taking a more holistic approach to finance modernization move the needle on decision making or financial performance?

Dan - 13:46: Yeah. So as I said, I've been doing this for over twenty five years. I've got lots of examples. I'm sure you do. A couple that really come to the top of my mind is I'm a Boston guy. I grew up in Boston. I live in Boston now. So two industries are very prevalent here are tech and especially in life sciences. Right? So the life science industry is a super dynamic industry, and you see a lot of startups coming up and somebody's got an idea for a great new molecule that can really do some amazing things in the medical world. I'm not going to pretend to be a science person. I'm a finance person. Right? But ultimately, what you see with many of these organizations is they go from this smaller R&D shop where they're not generating revenue, they're incurring lots of expenses, they've gone out to the public markets and they raised a lot of capital, and they're burning down that capital, trying to find a cure for something. And that FDA approval process is very long. It's very arduous. It's very difficult. But when those companies do get through that process and that drug is going to go to market and start to generate revenue. So now you've gone from a pre commercial business to a commercial business almost overnight. And what we've seen there is and that creates a lot of chaos, as you may imagine. So the organization goes from got 20 people to 500 people and it's and it seems like it's almost overnight. And so being a little bit boisterous in my discussion here, but ultimately just trying to articulate the point that it's a tremendous amount of growth very quickly and the infrastructure needs to be there because most of these businesses are publicly traded companies. So I've worked with several companies that have gone through that transition. What we always kind of focused on is early on, you kind of have to think about that plan. So many times we come in and we would do that three to five year plan from a finance and accounting organizational perspective to say, alright, well, today you only need whatever it is, a handful of people. But as you go commercial, as you're starting to drive revenue, you're going to need this entire finance organization. So you may go from five to 50 people in the matter of twelve to eighteen months. And ultimately, that's the people side of it. Now, you also need the infrastructure, the technology components there. You need the processes in place. You need to have the appropriate controls in place. The level of scrutiny over your financial reporting and your forecasting capabilities go through the roof. All of this change happens very quickly. Ultimately, what we're looking to do and how we're working with our clients is, A, let's kind of understand the plan. Let's lay out the plan for that three to five year period. And let's just be prepared for when the business and the FDA approves the drug, we are ready to be able to flip the switch and turn on all of this infrastructure that's going to be needed in order to run this business effectively into the future.

Megan - 17:27: That's pretty difficult, like being two steps ahead of where business is going, but not over investing, and that's got to be quite a balancing act.

Dan - 17:37: Very much so.

Megan - 17:38: So as with any transformation, culture can make or break success. So how can CFOs build a team culture that not only embraces modernization, but stays engaged and motivated throughout the journey?

Dan - 17:52: People drive culture, right? Leadership drives culture. And I think from a modernization perspective and finance organizations that are truly modernized and have a very forward looking view of the world and of the finance world. It all comes down to the people and the types of people that you have. And what I've seen over the last several years is almost this convergence of technology with financial skills. Right? So being able to bring those two together, train your people to be very comfortable with technology, to be able to lead technology initiatives, to really be able to understand how a piece of technology can help drive performance through my finance organization. That is such a critical skill set to have. And to me, then that skill set drives a little bit of that culture. Like we are a culture of, as I mentioned before, Megan, this continuous improvement concept. This is how we do things today, but we all accountants I'm an accountant, so I can criticize accountants. Accountants have a tendency to be somewhat backwards looking. And just by nature, it is a little bit of a challenge to get that forward looking accounting and finance professional. But it's either you're bringing the person into the organization with those skill sets, or the second piece of it is you're bringing just good people into the organization and articulating a vision and a strategy for how we think technology can drive operational performance and ultimately modernize the office of the CFO. So it's really a mindset. I really think that continuous improvement mindset is so critical to really try to push down through the organization to say, okay, well, this is how we do this today. These are the KPIs that we're measuring. This is where we want to get to the next six months, the next year, the next three years, and really set those targets and goals, and then have the right people in your organization focused on the outcomes, not the process, but the outcomes.

Megan - 20:29: And with so many different technologies competing for attention from AI to advanced analytics to automation, prioritization becomes key. So how can CFOs identify and invest in the right tools to achieve strong ROI while still keeping people and efficiency at the center of the equation?

Dan - 20:49: Sure. Great question. I think a question that many of our clients struggle with on a day to day basis and, typically, many times why I'm getting a phone call. Where do I start? Right? I know I need to do something. I keep reading about AI. I keep reading about automation. I'm reading about all these different things, and I feel like I'm falling behind. Right? Like, that's typically the form and substance of the conversations that I'm having. And my guidance to all CFOs out there and everyone that I talk to, again, as I mentioned before, starting small and starting with one of those evergreen issues that you just, as an organization, seem to continuously see over and over and over again? What is that use case that we can identify a singular or particular issue, and then we can deploy technology, modernize the finance function around that specific issue, and then we get outcomes out of it. Right? So it's almost kind of an agile type process where you identify the problem, I bring the technology solution to the table, I fix the problem, I show ROI, and then I communicate and sell that to the organization and articulate, hey, this is kind of what we were dealing with. This is what we did, and this was the outcome. And what that ends up doing to me is it really starts to change the minds of people in the organization around how we can use technology to modernize finance, to modernize even more than finance, modernize across the business. And again, if I go back to what I was talking about in our key market, in the middle market, I think a lot of organizations are almost scared by it because it sounds big and scary and expensive, but ultimately it's not. And I think that as long as you have a very good plan and you can really articulate where you need to make the changes in order to drive the performance, that's really the key, I think, to thinking about how you go on this journey.

Megan - 23:19: And it's clear that the CFO's role continues to evolve from financial steward to strategic architect, someone who really drives innovation, culture, and value creation across the enterprise. So looking ahead, how do you think the role of the CFO will evolve in the next three to five years, and what skills or mindsets will be most critical to the future for CFOs?

Dan - 23:43: I've mentioned a little bit before, it seems that there is a continuous evolution. We read a lot about AI. We hear a lot about AI. I mean, it really is changing the game, and you can see very, very tangible results of different tools and solutions that are out there that are just making life a lot easier for finance professionals, whether that's different types of data analytics tools that have conversational AI capabilities, and you can ask the solution questions around, give me my 10 most profitable customers and help me understand what my gross margins are by product line and what are my highest selling SKUs versus my lowest selling SKUs. And some of this information that historically it may have taken a project to actually get the answers to, Now it's like literally at your fingertips. And so it is changing the game. It's changing, A, as I was mentioning a little bit before, the types of people that you really want in your finance organization, very technology adept folks, people who can kind of harness these tools to improve how you do things, to be much more forward looking. I've kind of been talking about this concept for many years around the office of the CFO getting out of the business of transactions and getting more into the business of strategic decision support. So it's the rearview mirror versus the windshield conversation. How do we stop focusing on the rearview mirror and really start looking through the windshield as far as what are the opportunities that our organization has on the horizon to grow and be profitable and enhance how we do things, and then how finance can help to support that on an ongoing basis. So that will continue to change over the next three to five years. So I think that ultimately is going to kind of change the types of people that you really need to drive a good finance organization. I've mentioned a little bit before that convergence of finance and technology and finance professionals who are very, very skilled from a technology perspective and can understand how to apply some of these technology and automation tools to solve problems, those are going to be really the finance organizations that continue to kind of thrive into the future. So we don't all have a crystal ball. We can't all predict what's going to happen into the future, but I think just the rate of change from a technology perspective that we're reading about seeing every single day is going to have a pretty profound impact on the office of the CFO. And as I mentioned, I see it every day. I see it every day with our clients, and you can really understand and you can tell when you're talking to the clients who are the ones that are really going to take advantage of this and who are the ones that maybe will fall a little bit behind. And that goes a little bit to our culture of the conversation before and the types of people and the types of individuals and how you are building a capability, communicating that capability, and rallying around this continuous improvement mindset.

Megan - 27:29: Dan, thank you so much for your time today.

Dan - 27:31: Thank you. I really appreciate it. I really enjoyed the conversation, Megan.

Megan - 27:35: Appreciate you taking the time to share your insights and knowledge with us and wish you all the best. And to our listeners, please tune in next week, and until then, take care.