The First 90 Days Agenda: Which Areas Do CFO Services Start With

Agenda for the First 90 Days

For an executive who takes on the finance management role in a company, the first three months are the period that sets the direction of the work. In this period the current state of the company is understood, priorities are set and an orderly working structure is established. A finance executive serving within CFO Services also begins the work with a defined agenda. Sharing this agenda with company management at the start makes clear which outputs are expected at the end of the first 90 days.

In practice, the first 90 days are usually planned in three stages. The first 30 days are devoted to establishing the current state. Between days 30 and 60, priorities are set and the first arrangements are made. Between days 60 and 90, the reporting order settles in and the plan for the following period is prepared. These stages may progress over different durations depending on the size of the company and the matters on its agenda. The sequence, however, remains largely similar.

This article covers the areas addressed in the first 90 days of CFO Services, the work carried out at each stage and the outputs presented to the company at the end of the period. It aims to give shareholders and executives who are preparing to receive this service a clear idea of the process.

CFO Services in the First 30 Days: Establishing the Current State

The aim of the first 30 days of CFO Services is to understand the financial position of the company and the operation of its finance function in every respect. At this stage the finance executive usually gathers information, asks questions and reviews existing documents. The information obtained forms the basis of the priorities to be set in the following stages.

The work begins with interviews. The shareholders, the general manager, the heads of sales, production and purchasing, and the finance and accounting team are heard one by one. These interviews reveal what each department expects from the finance function, the information it needs when making decisions and the way it uses existing reports. Introductory meetings with the certified public accountant, the independent auditor and the banks of the company are also held in this period.

Documents are reviewed alongside the interviews. The financial statements of the last three years, the monthly trial balances of the current year, the budget, existing management reports, loan agreements and the collateral list are examined. This review shows the revenue and cost structure of the company, its level of indebtedness and its capacity to generate cash. The frequency and date on which financial statements are prepared during the year are also learned at this stage.

The cash position is the priority matter of the first 30 days. Bank balances, available credit limits, payments due in the coming weeks and expected collections are gathered in a single table. A 13-week cash flow forecast is usually prepared in this period. This table allows company management to see the cash requirement of the coming three months in advance and makes it possible to plan financing discussions on time.

The areas reviewed in the first 30 days are usually as follows:

→ Cash position: Bank balances, credit limits and a 13-week cash flow forecast are prepared.

→ Financial statements: The latest balance sheet and income statement are reviewed in terms of revenue and cost structure.

→ Debt structure: The maturity, interest rate, currency and collateral of loans are gathered in a single list.

→ Working capital: Collection period, payment period and inventory level are assessed by customer and supplier.

→ Reporting order: The content of existing reports, their preparation date and their recipients are identified.

→ Finance team and processes: The division of duties, the monthly closing steps and the software in use are reviewed.

→ Calendar of obligations: Payment dates arising from tax, insurance, loans and contracts are entered in a calendar.

Working capital items are examined in detail. The receivables ageing table shows which collection is expected from which customer and at which maturity. The payables ageing table sets out the calendar of supplier payments. The inventory list makes holding periods visible by product group. These three tables help in understanding the composition of the resources tied up in the operations of the company.

In companies with foreign currency transactions, the currency position is also measured in the first 30 days. Foreign currency receivables, payables, loans and bank accounts are considered together, and the open or surplus position carried in each currency is determined. We assessed the decision dimension of this matter in detail in our article on the balance between foreign currency income and TL expenses from a financial strategy perspective.

At the end of the first 30 days, the findings are gathered in a short assessment note. This note summarises the financial position of the company, the strengths of the finance function and the areas that can be developed. Reviewing the note together with the shareholders and the general manager helps in reaching a common view on the priorities of the next stage.

CFO Services Between Days 30 and 60: Setting Priorities and Making the First Arrangements

In the second stage, CFO Services focus on prioritising the matters identified and making the first arrangements. The items in the assessment note are ranked in terms of their contribution to the company and the time required for implementation. Arrangements that can be completed in a short time and that directly support management decisions are placed first.

The cash management order is usually the first area of arrangement. The cash flow forecast prepared in the first stage is turned into a piece of work that is updated weekly. A short weekly cash meeting allows the payment and collection plan to be reviewed together with the relevant departments. The payment approval process and authority limits are put in writing. This order contributes to the company taking its cash decisions in a planned manner.

The monthly closing calendar is the second area of arrangement. Bank and current account reconciliations, the inventory count, period-end entries and the preparation of reports are tied to specific dates. A person responsible is named for each step. Completing the closing on a set day of the month allows management reports to be presented on time. Reviewing the accounting record structure at this stage allows the detail required for reporting to be taken directly from the records. Reorganising the accounting systems can support this work to a significant extent.

The third area of arrangement is working capital. Customers with long collection periods, maturity terms and the collateral structure are assessed together with the sales team. Supplier terms and inventory levels are addressed with the purchasing and production teams. The aim of this work is for the company to use the resources tied up in working capital efficiently while preserving its commercial relationships. The first results usually begin to be seen at this stage.

The first draft of the management report is also prepared in the second stage. The content of the report is defined according to the needs learned in the interviews of the first 30 days. Sales and profitability trends, cash position, indebtedness indicators and budget performance may be included in the report. The draft is reviewed together with management and adjusted according to the views received. The intention is for the report to be short, clear and focused on the information required for decisions.

The status of the budget is assessed at this stage as well. If the company has an approved budget, tracking against actual results begins. If there is no budget, a forecast may be prepared for the remainder of the year. This forecast also serves as preparation for the budget process of the following year. Cost and pricing information may be addressed in the same period: Calculating costs by product or service with current data provides the sales team with reliable information for price discussions.

The working order with the finance team is established in this period. A weekly team meeting, an updated division of duties and the identification of the development needs of team members are the elements of this order. The working order with the certified public accountant also becomes clear: Filing dates, period-end transactions and the timing of information sharing are planned together.

CFO Services Between Days 60 and 90: The Reporting Order and the Plan for the Following Period

In the third stage, CFO Services turn to the settling in of the order that has been established and to the planning of the following period. The cash forecast, the closing calendar and the management report prepared in the first two stages begin to operate regularly in this period. The finance executive monitors whether this work is carried out by the team in a sustainable manner.

The management report takes its final form at this stage and becomes a regular agenda item of the monthly management meeting. Presenting the report on the same date every month allows management to base its decisions on current data. In companies with a board of directors, the content of the financial summary to be presented to the board and the calendar of presentation are also set.

Performance indicators are defined in this period. Indicators such as gross profit margin, operating profit, collection period, inventory turnover period, net debt level and cash conversion period are selected according to the operating structure of the company. Keeping the number of indicators limited and naming a person responsible for each contributes to effective monitoring. These indicators form a fixed section of the monthly management report.

The financing plan is another area of the third stage. The investment, working capital and debt repayment needs of the company over the coming 12 months are brought together. The sources through which these needs will be met are assessed. Aligning loan maturities with the cash generation calendar of the company and diversifying financing sources may be among the matters of this plan.

The design of the budget process is addressed at this stage. The calendar, the participating departments and the assumptions for the budget of the following year are set. The participation of the sales, production and purchasing teams ensures that the budget is owned by the whole company. The method for assessing investment decisions may also be defined: The payback period, the financing requirement and the effect on cash flow are calculated for the investments on the agenda.

The core output presented to the company at the end of the first 90 days is the finance plan covering the following 12 months. This plan includes the order established in the first three months, the work completed and the areas to be addressed in the coming period. A target, a person responsible and a date are set for each area. Approving the plan together with the shareholders and the general manager keeps the priorities of the finance function aligned with the targets of the company.

At the end of the period, the scope of the service is reviewed together. The knowledge gained in the first 90 days allows the scope defined at the start to be updated. Some areas will have been completed, and some new areas may be brought onto the agenda. We addressed the areas that make up the scope and the models through which the service is delivered in our article on the scope of CFO Services.

What the first 90 days bring to the company can be summarised under three headings. The first is visibility: Management tracks the cash position, profitability and debt structure through regular reports. The second is order: The closing calendar, approval processes and meeting calendar are put in writing. The third is a plan: The priorities, responsibilities and dates of the following 12 months are set. These three gains form a reliable basis for the budget, financing and investment work of the following period.

In conclusion, CFO Services begin in the first 90 days with establishing the current state, continue with setting priorities and making the first arrangements, and are completed with the reporting order and the plan for the following period. Sharing the agenda in writing at the start and assessing each stage together with management helps the work progress in line with the expectations of the company.

As NT Finans Partners, we plan the agenda of the first 90 days of CFO Services together with you according to the priorities of your company, and we support you in establishing an orderly structure across cash management, reporting and financing; you can contact us via ntfinanspartners.com.