In a new role, one of the most challenging transition points can be moving from the onboarding process into the role itself. For CFOs, this can be particularly difficult as onboarding involves meeting numerous stakeholders, evaluating internal processes, understanding the business’s strengths and weaknesses, determining organizational data quality and more.
Richard Cowen, CFO of JMAN Group, a global data provider for private equity firms, now finds himself in this post-onboarding period. He took the position in August of last year after working as an independent consultant for the company for two years while working elsewhere as a CFO.
Now in a full-time capacity, Cowen’s initial goals have included leveraging some of the company’s client offerings in its own systems, slowly weaning off Excel in certain aspects and upskilling his team amid automation efforts. He also highlights the benefits of using flash reports to assess data quality and his thoughts on why private equity’s interest in public accounting in the U.K. is “brilliant.”
Richard Cowen
CFO, JMAN Group
First CFO Position: 2016
Notable previous employers:
- Cow Corner Investing
- Sionic
- Kingston Smith Chartered Accountants
This interview has been edited for brevity and clarity.
ADAM ZAKI: You’re eight months in now, so you’re no longer the new guy in the office. How are you approaching chapter two of your CFO role here?
RICHARD COWEN: You’re completely right. The excuse of being new can be helpful at first, but it sort of runs out at six or seven months. But as any leader knows, you’re only as good as your team, so for the past few months after my onboarding process, that is what I began doing. I was making sure I had the right people, which I’ve found I do. We’ve done some hiring in certain areas to strengthen some of our capabilities, particularly on the team in India. The focus for me is making sure my team is right.
Now that we have assured the team is a great fit, our focus is getting the system in place to support the growth we are having. It’s the little things, from where invoices go and who signs them as an example. These things need to be in place before the finance team can start being strategic and more forward-thinking.
As CFOs, we are the ones at board meetings with decision-makers and giving strategic advice, but we also can’t be worried about what’s going on in the engine room, so to speak, when we are making those decisions. So it’s not just about having the proper people in place, it’s about having the proper system and the confidence of your people to execute within that system. Sure, when you’re new, you’ve got the potential excuse for some mistakes, but it’s critical for us that there aren’t any surprises in our finance function.
Your product is about maximizing data for your clients. Internally, how is your finance function doing the same?
COWEN: We have recently started an internal project to deliver to ourselves the same types of data analytics that we provide to our customers. I have been walking around here for six months, looking at our products and the tools we offer to our clients and I’ve said multiple times, “Hey, I want one of those!”
But although we have a lot of offerings here that we can use to help us in finance, we’ve waited a bit on this because I want to get the spec right. It’s going to be pretty challenging if we become our own client. We’ve had a kickoff meeting and we are working on scoping out what types of offerings we have that can benefit finance.
I’d say we’re in a position many CFOs can relate to. We are a classic fast-growing finance function that runs systems that are probably too small for the type of business we have. We’re using a lot of Excel — probably too much of it — and part of my goal here as I get started is to help modernize the finance team a bit. The same way we do for our clients, we’re going to do for ourselves and I’m excited about what we can accomplish.
One year from today, do you envision your finance team being smaller than it is now?
COWEN: No, because I don’t think we will save by cutting headcount. Lots of CFOs make this exact mistake when they approach a new technology with a money-saving mindset. In my experience, I’ve always needed talented people to evaluate data. New tools make data more accurate, but good finance teams still need experienced people to interpret it.
If you automate entering invoices with something like machine learning, for example, that person working that role can move on to doing something more productive, as opposed to being cut for the sake of headcount. I don’t have a bloated team. I don’t think we will shrink at all, but I do believe we will be doing more interesting and valuable work that creates value for the business in new ways.
What are some indicators that tell you your data is clean enough to implement a new type of technology in finance?
COWEN: The word reconciliation comes to mind. When I look at the month-end process and still see adjustments being made, we have to address why the numbers are different and why the reconciliations are happening in the first place.
I enjoy running flash reports, which many people misunderstand. You can’t just do some accounting quickly and call it a flash report. You take the best data you have after a day or so — after payroll has been done and billing is in order, for example — and then you calculate your debits and credits at that moment. If the numbers are accurate, then you have a pretty good grasp on your data and you’re probably on top of it.
Flash reports can’t be deemed right based on a gut feeling about something like revenue. Whether it’s a simple transition or a complex software change like an ERP transition, the ability to have accurate data in real time is crucial. If your old system ran on rubbish, your new system won’t be any better.
How do you plan on making sure you’re globally available while also allocating time to your personal life?
COWEN: I am disciplined, but I am a bit of a 24/7 kind of guy. I don’t mind early mornings and late nights. As CFOs, we have to know when to turn our phones off, but working with teams around the world is a perk.
I try to go to bed at least with the notion that I’ve cleared my inbox and addressed messages. But we have large offices in the U.S. and India, so by the time I start my day in the U.K., their workdays are already well underway. When my day ends, New York is still up and running, so people are reaching out to me then as well.
My role is global. It’s not like a factory where we stop production at certain points — we are always moving. I don’t have an issue with it. It requires some management, but I try my best to deliver on the international demands of the role, and I really must say I quite enjoy it.
You previously worked as a CFO in private equity buying accounting firms in the U.K. Some have been critical of this experiment here in the states, given accounting’s shortage of talent and private equity’s impact on the equity incentives of the partner track. Do you think this is a sustainable business model for both parties?
COWEN: Here in the U.K., it is sustainable. Becoming a partner is all about succession planning, exits and buying into partnerships. In the U.K., what would happen is that partners at mid-tier accounting firms would try to sell their equity because they were looking for an equity exit.
A new partner would come in and be forced to take a loan or mortgage their house to buy into the firm. Because the partner who was selling their equity was retiring, their book of business and clients were also aging. So there were lots of questions about this system and the value new partners were getting at these firms. It’s always been a very difficult situation for new partners and has always been a question of proper succession planning.
From a private equity perspective, it’s a brilliant investment. Now, the partner doesn’t have to buy into the firm, and they get an equity stake through the equity strip. So now they’re a partner, they have equity, and they don’t have to write a huge check. Meanwhile, the exiting partners get to sell their shares and monetize multiple decades of work.
It creates a market where people can come and go. It’s not perfect, and I am not sure how it will end because many firms are now consolidating, but in my experience, succession planning has always been a key factor in a smooth transition in partnership positions in accounting.
