Title: Navigating Challenges with a New finance Director: A Cautionary Tale
In my recent experience with a new finance Director at our manufacturing firm, I encountered some unexpected challenges that I believe deserve highlighting. About six weeks ago, we welcomed her to our team, impressed by her extensive 20-year background in corporate finance, her experience with a Big 4 firm, and her MBA from a well-known institution.
However, during a routine walkthrough of our monthly closing procedures, I found myself in a rather perplexing situation. As I explained the intricacies of our financial practices, she expressed confusion about the concept of depreciation. She questioned why we were incurring “wasted money” monthly on depreciation expenses, seemingly failing to grasp that these are non-cash expenses that allocate the cost of capital assets over their useful lives.
Despite my efforts to clarify the rationale behind depreciation—that it aligns expenses with the benefits derived from the asset—her response was one of disbelief. She wondered, “But we already paid for the equipment. Why are we expensing it again?” After spending 30 minutes addressing what are typically introductory concepts in Accounting, I suspected she might have been testing my knowledge. Yet, the continued lack of understanding left me questioning her expertise.
The conversation took another turn when she questioned why we couldn’t simply expense a new $50K server to receive a tax write-off in the current year instead of amortizing it over time. When I explained the relevance of capitalization thresholds and how asset classification impacts financial reporting, she suggested we consult with our tax advisor, expressing concern about the integrity of our practice.
In addition, she inquired why our cash flow statement did not align with the profit and loss statement, appearing genuinely perplexed by the difference between net income and cash flow.
For context, I work at a well-established manufacturing company with revenue around $15 million. This is not a small startup where one might expect to encounter foundational financial misunderstandings.
As I reflect on these interactions, I can’t help but wonder how someone with two decades in finance could lack such fundamental knowledge. It raises a crucial question: Is it possible that she has advanced through positions without fully engaging with the core responsibilities, or might her resume have undergone an exaggerated embellishment?
Navigating these discussions with our new Finance Director serves as a reminder of the importance of solid foundational knowledge in finance, regardless of one’s past experiences. While we all bring different strengths to the table, a
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