Proposed New Rules

As Seen in CFO Studio Magazine Q2 2017 Issue

-Interview by Andrew Zezas-

William Craig, CEO and CFO, Tarantin Industries, is a financial executive who has been on both sides of the street, as a lender and an investor, with companies such as GE Capital and Fifth Street Finance. He also has considerable experience in operations in diverse manufacturing and distribution firms, in the medical device, consumer products, industrial gases, and other industries.

(ANDREW ZEZAS) You have a pretty interesting background.

CRAIG: Yes, I had a funny start in the finance business. I started as a field representative for what is now known as the Motors Acceptance Corporation. Field representative is a euphemism for a repo man. This was in central Texas where the law was that you could shoot the repo man after sundown.

As an adjunct professor at the Rothman Institute of Entrepreneurial Studies at Fairleigh Dickinson University, what are your thoughts on the state of accounting and finance education?

CRAIG: What frustrates me is this: In the good old days you could be just a CPA and understand the rules because your accounting system was sort of batch processing. Now it’s all ERP. So you have to understand the business dynamics of how this information is flowing through the whole system.

Is the educational system teaching that?

CRAIG: I think not. I think what accountants have started to do in order to get people to pass the exam is they compartmentalize and they sort of create a lot of rules. So if you want to pass the exam today, you really have to understand your FAS statements, which is useful, but there are a lot of people out there that don’t necessarily need to understand the nuances of lease accounting to be able to tell somebody are we making money on this or not. Everybody in the organization should understand are we making money here and if not, why not, or how? [But in the classroom, finance is] too rules based.

Talk to me about the SEC in that vein: rules and the SEC and insider trading.

CRAIG: I have a somewhat off-the-wall thought on the insider trading stuff. When [the SEC was] started in the 1930s… it was a noble premise that we want to have information and be sure it’s fairly and properly disseminated to the public. Well, it’s 80 years later and we now have Twitter, we have LinkedIn, we have Facebook….

Everybody has a video camera in their pocket.

CRAIG: So, now we have information everywhere. I would almost push that in the other direction, which is to say…get less concerned about trying to keep a lid on the information and let it flow. Let it flow and then evaluate the companies on the basis of how well they disseminate their information. So, you and I can have the same business and investors might think I am…not only better at [disseminating information] but also I am clearer. My stock would trade at a premium to yours because they don’t trust your numbers. The SEC can promulgate a “restaurant model,” and become like the public health office: They rate you an A or I’m a B, or you’re a B and I’m an A, and the investor can see that. And then you have the Yelp or the Zagat view, which is the public information that’s saying “Zezas does a really good job of communicating the information,” or “There is no information.” So, it changes the whole dynamic of it.

The world is all about communication. You know, I like the idea. But we are out of time. You have shared some great ideas with us.

Finance in the Tax-Exempt Sector

As Seen in CFO Studio Magazine Q1 2017 Issue

screenshot-120Anna DeJesus, the Chief Financial Officer for the Family & Children’s Service of Monmouth County, joined Family & Children’s Service in 2011. FCS is the oldest not-for-profit service agency in Monmouth County, caring for 18,000 underserved individuals and families annually, from children to seniors. Andrew Zezas, Publisher of CFO Studio magazine and host of CFO Studio On-Camera, spoke with Ms. DeJesus about the role of the CFO in the tax-exempt sector.

 

(ANDREW ZEZAS) Your organization services the whole gamut, from young children to seniors. What is the most unique feature of FCS and its mission?

DEJESUS: Without us, our clients would have nowhere else to turn. It’s extremely unique because there aren’t any other agencies in Monmouth County that provide some of the services that we do. We have a “Rep Payee” program in which we manage Social Security monies for clients who may not be able to handle their own budgets. Going on right now is Operation Sleighbells. It’s a great program. It provides toys, clothing, and even gift cards for the parents of children in the Christmas season. Other programs are KIDS Corps, offering opportunities for teenagers to volunteer; and Reading Buddies, where seniors go into slightly underprivileged schools and read to children to spread literacy.

How do you think the role of CFO differs in the not-for-profit world vs. the for-profit?

DEJESUS: It is similar on the level of reporting finances, as my role is to be sure that the agency is fiscally sound. Management of revenue and expenses— that’s all very similar to what a CFO does in a for-profit.

But you’re not just a rear-view compliance officer.

DEJESUS: No, I am not. My goal is to keep this agency fiscally sound so that we can continue to serve our clients. I don’t have to worry about the bottom line, so to speak; or making sure that our stockholders get a dividend at the end of the year. I have to be sure that this agency stays in a position where we can continue to operate.

What are the most important steps that a CFO can take to have the greatest positive influence within their tax-exempt organization?

DEJESUS: When I first came into the agency, there were no reports. A lot of our departmental managers and directors are nurses and social workers—not businesspeople. So, it’s important to me, to explain to them how their departments are doing, but also how to keep everyone solvent.

Would you characterize your management style as aggressive? tough? You explain it.

DEJESUS: I think it’s a combination of a lot of things. I try to be fair and honest. I can be direct. I like to get to the point, especially with finances. What I strive to do is show a path.

Transforming an Old-line Company

As Seen in CFO Studio Magazine Q4 2016 Issue

 

After 15 years in public accounting, Robert Friedman joined BAMCO, Inc. 10 years ago as CFO. Despite having little experience in the building industry, he strategized a new future for BAMCO as an industry leader in the green-building space, designing, fabricating, and installing metal panel systems for commercial building exteriors. Andrew Zezas, Publisher of CFO Studio magazine and host of CFO Studio On-Camera, spoke with Mr. Friedman about making over an old-line company to be a profit machine.

(ANDREW ZEZAS) You arrived at the company and encountered some challenges, but it was a rock-solid company. What were the first objectives you set for the company?

ROBERT FRIEDMAN: To become financially best in class. The first thing I did when I came in was I sought to be a sponge, to learn anything I could about the company and everything I could about the industry.

You were brand-new to the industry?

FRIEDMAN: For the most part, yes. I had some exposure to the industry through public accounting, but I was not an expert by any means. So I interviewed everyone inside the company. I spent time in all the different aspects of the company to see how everything worked, the processes, the people, the capabilities, things like that. And externally what I did, which was one of the most helpful things, was I joined the Construction Financial Management Association. Each year they do an annual survey of their membership, and you’re getting high-quality, very deep data on financial ratios, balance sheets, P&Ls, and the structure of those.

And do they produce that report themselves or through an outside firm?

FRIEDMAN: It’s produced with the help of Mercer Consulting. What I did was basically model our financials in our accounting system after this benchmark information.

I’ve got to believe as you were starting to set the foundation to restructure things, you’ve encountered sacred cows and “you know, we’ve always done it this way and this is forged in concrete.” How did you deal with these issues?

FRIEDMAN: Oh, there’s no question. But as a result of setting up these systems, we got a lot of great information. We are in a business of running jobs, and what we found out was that 80 percent of our profits were really being generated by only 20 percent of our jobs. And the jobs that were generating the most profit were the jobs where we were using our proprietary product that we had developed, and we weren’t really promoting this product.

So, you were able to affect how they were thinking about their business?

FRIEDMAN: Yes, and over time, Andrew, what happened was that we flipped it: 80 percent of our business became working in this proprietary product, and we sought to become experts and the best in the business in this particular niche.

And where does the company stand today?

FRIEDMAN: Well business is competitive, but we’ve become, I think, a regional industry leader, and it’s a great company for which to work.

Copyright 2017