CFO Studio Magazine with Alison Cornell

Q1 2017 WWW.CFOSTUDIO.COM 23 a plan that is very calendar-year focused,” which forces everyone to be constantly thinking ahead. While it sounds positive, he called the process of creating a rolling forecast an “arduous, but important task” that takes a huge amount of time and resources, as “every organization within the company has to sit down about once a month to think through the plan and project out.” A fair deal of grumbling is often the result of such “reforecasting,” but Mr. Mulliner opined that “only good can come from repeatedly going back to the drawing board during unclear periods.” Michael Muccio, Partner at CFGI, a finance and accounting consulting firmwith offices in Boston, NewYork, and Philadelphia, and a CFOStudio Business Development Partner, discussed his dilemma over whether or not to slow hiring in the NewYorkmarket or change the strategic direction. “Our NewYork office is experiencing rapid growth, including an increase of more than 200 percent in head count over the last 18months.”Mr. Muccio said that while there is concern about the growth trajectory of this market, “it’s difficult to pump the brakes and pass up good talent.” Responsible for growing CFGI’s New York office, Mr. Muccio admitted his nerves were calmed by the overall sense of optimism in the room for sustained growth: “CFOs in attendance felt an economic slowdown or significant change were not likely on the horizon even with a new president, and more of the status quo is expected.” Globally Speaking Mr. Mulliner moved the discussion to a global focus. “It’s been a very interesting time, as the U.S. dollar has had one of its largest moves ever in terms of strengthening against all currencies.” However, for global companies based in the U.S., “this has added incredible volatility to their financial statements.” He explained: “As you’re selling in other countries in different currencies other than the U.S. dollar, you’re basically getting fewer dollars for every foreign currency that you sell, so on your financial statement it looks like you’re selling less or contracting as a company, but that may not be the case at all.” For companies with both sales and expenses (manufacturing, salaries, etc.) overseas, a shift in the currency can also “artificially take away growth” on their financial statements. Mr. Mulliner said financial instruments like forward hedging contracts can help preserve natural growth, and can remove volatility from the reports. “Such agreements allow businesses to purchase a foreign currency at a pre-established and fixed rate based on the current market.” He continued, “So if the currency moves during the prescribed period in the hedging contract, the hedge will mitigate the actual financial gain or loss occurring in the company resulting from the currency move.” This will decrease volatility in the company’s financial statements, he said, “which is typically a good thing.” The Bottom Line In the end, the group agreed with Mr. Mulliner that “if you want to grow, despite currency swings and economic uncertainty, you have to fund growth.” To do this, he said, “Companies typically need banks.” Elaine Cheong, Senior Vice President and Senior Relationship Manager at Bank of America Merrill Lynch, and a CFO Studio Business Development Partner, offered: “Part of a company’s risk-management strategy should be negotiating with their lenders realistic covenants that reflect earnings fluctuations due to cyclicality of business conditions.” In terms of a budget plan, Mr. Mulliner said the banks understand that it’s just a plan and it will change, but “they like to see that some rigor, thought, and strategy have been put into it, and that it’s consistent with past performance and you’re not just making things up.” And he added: “Don’t surprise your banker.” Constant communication and “a good relationship with your banker can help a business weather most any kind of storm.” Whether you know one is coming or not. C BUSINESS DEVELOPMENT PARTNERS Jason Mulliner Chief Financial Officer Edmund Optics Discussion Leader Catherine Adams Baldry Senior Client Manager and Senior Vice President, Bank of America Merrill Lynch Elaine Cheong Senior Vice President, Global Commercial Banking, Bank of America Merrill Lynch Michael Muccio Partner, CFGI Matthew Pantera Partner, CFGI Curt Allen Vice President & CFO, Subaru of America William Curnan Chief Financial & Operating Officer, Advancing Opportunities John Foody Finance and Operations, Double H Plastics John Hagan CFO, Procacci Brothers Sales Corporation Dennis McGrath President & CFO, Photomedex, Inc. John (Jay) Roberts CFO, VirMedica, Inc. CFO Studio hosts the Executive Dinner Series, including World-Class Companies CFO Dinners and Middle Market Companies CFO Dinners quarterly in New Jersey, Manhattan, Philadelphia, Chicago, San Francisco, and other markets around the U.S. CFO Studio hosts the CFO Breakfast Learning Series in multiple markets, as well, and hosts online Diginars, CFO Studio Receptions, the annual CFO Innovation Conference and the CFO Innovation Awards. The comments made by these guests are their own and may not reflect the opinions and/or policies of their companies or of CFO Studio and/or its promotional partners. CFO GUESTS