How to speak CFO

CFOs are analytical, data-driven people who are typically looking for attributable, predictable, and efficient ways to add to the bottom line.  It may appear to be impossible to find common ground with a cost-cutting, control-spending professional.  Quite the contrary, LP executives have more common ground with these data-driven powerhouses than many might think.  To find this common ground, it is imperative to speak CFO.

An interview with some of the most successful LP executives yielded these three basic rules they follow when speaking to CFOs:

1. They explain the value of the loss prevention strategy or initiative using financial language,
2. They cover high-level strategies rather than technicalities, and
3. They are comfortable discussing goals and metrics from a 30,000 feet vantage point…the big picture.

While presenting, they are sure to use CFO-friendly terms as they make the essential connection between the loss prevention strategy and the company’s high-level business goals.

CFO Speak

Profit. Growth. Revenue. Efficiency. Attribution.

Any loss prevention program can stand behind and knowingly support these CFO-friendly terms.  The secret is to intertwine the loss prevention need with the CFO’s desired outcome…the bottom line.  For example, shrink reduction equals profit.  Profit leads to growth.  Growth leads to increased revenue. Another example: safety equals employee longevity, which equates to efficiency and improved customer service.  The same is true for solid, well-strategized loss prevention programs in which the ultimate deliverable is an absolute, measurable return on investment (ROI).  It is well known that the ROI is what CFOs and senior executives are most concerned with at the end of the day.  With measurable ROI, the most successful loss prevention programs shine the spotlight on the future and value of the company, the heart of a CFO.

Fluent in the Financials

Failure to speak CFO and make the connection between company goals and loss prevention programs decrease the chances of obtaining the funding loss prevention initiatives require.  Funding will most likely come from one of two financial categories: Capital Expenditure (CAPEX) or Operating Expenditure (OPEX).

• CAPEX describes funds used for purchasing fixed assets or upgrades to existing assets. For example, addition or upgrade to an EAS system to reduce shrink would typically be classified as a CAPEX.
• However, OPEX funds are used for running the day-to-day operations of the stores. These expenditures are typically categorized as either fixed costs or variable costs. Fixed costs would be overhead expenses, such as lease payments for a retail storefront, while variable costs could be the shipping costs per the amount of merchandise sold.

Conclusion

The most successful Loss Prevention executives are willing to discuss the justification of which option would best fund the loss prevention initiative that is being proposed. With three rules, two financial options, and one language, LP executives have the perfect combination to winning over their CFO.