CFO Corner: Dealing with a revenue drop; monthly financial reviews
Craig Handley, CEO of Spanish-language communications center Listen Up Español, discusses dealing with a short-term drop in revenue and the importance of monthly financial review meetings.
What was the biggest challenge your company faced over the last 12 months and how were you able to overcome it with financial leadership? Listen Up Español is a market leader in the Hispanic direct marketing space, and our industry moves at a fast pace, fueled by technological development and globalization. Financial leadership must be in tune with operational and marketing leadership to provide the operating data that allows our managers to make fast and informed decisions. For example, 18 months ago, our team response to a short-term decline in revenue resulting from the loss of a large customer and slower growth than previously anticipated, was overcome by leadership. Financial leadership helped obtain a working capital loan to fund operations, as well as obtain analytical support to right size overhead to the new revenue levels. Marketing and operational managers made quick and decisive changes. Since that decline, weekly operating benchmarks and strong monthly financial closes have allowed addition of overhead in response to revenue growth that allows the company to grow responsibly and maximize cash flow. The company is now in a far better place as a result of this process and is poised for its best year in 2012.
What has made your company stand out and be successful financially? Our ability to see opportunity and take action quickly is what has allowed Listen Up Español to flourish and achieve significant financial returns.
What is the most important thing you’ve learned in your position? What has been reinforced in working with Listen Up Español is the need to envision financial information as an energizing force in the organizational decision-making process. Monthly meetings by shareholders and managers to review on a detailed basis the prior month’s performance and our performance to budget, is a critical discipline and a foundation of our ability to stay right sized. Our monthly financial review is a meeting that nobody is allowed to miss, it is that important.
How do you prepare for board meetings and what information is most important for you to present? At Listen Up Español, we prepare for board meetings by understanding performance from prior months and by having a strong monthly accounting close process. What is most important from a presentation standpoint: simply the bread-and-butter routine financial statements, the balance sheet and income statement, and understanding why a positive or negative performance occurred.
What’s a common error in cash-flow forecasting, and what advice do you have? The most common error in forecasting is excessive revenue optimism and assuming that everything is going to occur as planned. This can result in excessive overhead spending in response to planned revenue levels. The world is not linear; stuff happens. Blindly following a predetermined plan can lead an organization to a difficult financial place.
What do you do to retain your strategic vision despite the crush of day-to-day operations? We don’t. At Listen Up Español, we try not to be too beholding to our prior determined strategic vision. It’s important to let strategy evolve, rather than adhere to a rigid predetermined one. In a fast moving world, strategy evolves, and management teams should be always ready to throw out the old.
What’s your favorite book? (For business or escape) “The Sermon on the Mount,” by Emmett Fox.
Headquartered in Portland, Maine with a call center in Hermosillo, Mexico, Listen Up Español employs over 800 native Spanish-speaking call agents and provides teleservices to reach the U.S. Hispanic market. Handley is co-founder and CEO. He also leads sister enterprise Revenue Enhancement Consultants, which offers innovative programs to help direct-response merchants, service providers and affiliates boost sales and revenues, both online and offline. Handley previously served in the U.S. Army and studied music as a vocal major in college.