Too many CFOs spend their time as financial gatekeepers and get tangled up in accounting, says Colin Human, financial modelling wizard and CEO of financial management consultancy Goalfix.
“It is infinitely more important to know what is going to happen or to have an ability to forecast in a flexible manner, than knowing with precision what happened in the past.”
After the sensational success of Colin’s financial modelling presentations at Finance Indaba Africa 2017, we sat down with the Goalfix CEO to discuss the need for CFOs to look ahead, the importance of financial modelling, and dealing with the lack of certainty.
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Goalfix is South Africa’s best provider of financial modelling training courses and also offers help with corporate finance, corporate performance improvement and corporate financial health assessments. At this year’s Finance Indaba Africa, Colin’s presentations about financial modelling were among the most popular seminars, with Boardroom 4 bursting at the seams on both 12 and 13 October.
Using Microsoft Excel, Colin started his modelling activities in the early 80s, building up vast experience and knowledge through the numerous corporate financial models he has crafted. “Let me tell you something about CFOs in this country,” says Colin. “As you know, the accounting profession dominates boardrooms in South Africa. There are many people, I say this respectfully, who are CFOs of companies who should still be in the accounting profession, because they don't really understand business and they are not really involved in directing the company.”
Colin believes there are many CFOs who just play the role of financial gatekeeper. “They are very good at reporting what has happened and producing monthly management accounts and all of that kind of stuff. But what has already happened is only of relative importance. History is important but it's only relatively important.” While customers, value chain and other stakeholders are important, it is the shareholders that ultimate decide the future of the business, he says.
“The key to taking care of shareholders is being able to forecast future performance with some level of reliability. That is why financial modelling is fast becoming a required skill in the finance profession.”
Demand for financial modelling experience continues to outstrip supply, he says. “About a year ago, one of the largest international accounting firms, Mazars, bought Corality Financial Group, which is the second biggest modelling company in the world. That tells you a huge story. It tells you that the accounting profession is recognising the need and importance of giving value-added services to their clients, helping them to look forward.”
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