Become Your Own CFO

Courtney Leimkuhler is the co-founder of Springbank Collective; an early-stage investment firm focused on building the infrastructure to close the gender gap. By investing in companies creating the tools, platforms and services that address the themes of care, career and household consumer, Springbank's goal is to catalyze the new care economy and the future of inclusive work. Courtney also serves as a board member and advisor to several young fintech and insurtech efforts, including Wellthy, Coverwallet (sold to Aon in 2020), Betterment, The Commons Project, and Asta Capital. Courtney spent nearly 20 years in the financial services industry. Prior to starting her firm, she was the Chief Financial Officer of Marsh, the world's leading corporate insurance broker and the largest operating company of Marsh & McLennan Companies. Here, she provides a landscape overview of common financial terms and shares valuable advice targeted both at business founders and those running divisions of larger companies.

What would you say to executives who feel embarrassed about their lack of financial knowledge?

When I took the job at Marsh as the CFO, I had never been a CFO before. I'm not an accountant. I haven't come through an accounting firm. I went in there as someone who was a strategic person who did a ton of M&A. When I ran the budget for Marsh, it was the first time I had ever run a budget. I made it very clear that I had not done this before and found people in the organization that I could trust. One of them was a woman named Diana who came to my office, took out a P&L, and walked me through it.

It's okay not to know. There are many trusted people in the organization who have a lot of technical knowledge and respect you for your strategic insight. They recognize your value and respect you as a leader. They will not have diminished respect for you because you're willing to ask technical questions or ask them to be your guide. It will not compromise you to be nervous when it's time to talk about financials in a board meeting. Asking questions and getting insight from technical people inside your company or in your network is not a weakness.

I think we can all identify a point in our careers when we felt like we missed our chance to ask the finance department certain basic questions. What are the fundamentals we should know?

Right, so here's what's in that stack of thick paper your finance person is running around with.

  • Profit and Loss Statement/ Income Statement (P&L): A financial statement that summarizes the revenues, costs, and expenses incurred during a specified period.

  • Balance Sheet: A financial statement that reports a company's assets, liabilities, and shareholder equity.

  • Cash Flow Statement (CFS): A financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company.

These three statements are all interrelated and talk to each other. Whether you're running a business or starting a business, you'll find that secrets lie in all of them.

My advice to those running divisions is to understand at least some of how operating income turns into net income because at the end of the day, if you are running a public company, net income and EPS are what matter.

  • Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA): EBITDA is an important valuation metric used to measure a company's overall financial performance. It calculates the income of the company before paying the expenses, taxes, depreciation, and amortization.

  • Operating Income: Operating Income is an accounting figure that measures the amount of profit realized from a business's operations after deducting operating expenses.

  • Net Income/ Net Earnings: Net income is gross income minus general expenses, taxes and interest. It translates directly into earnings per share if you're a public company.

  • Earnings Per Share (EPS): EPS is calculated as a company's profit divided by the outstanding shares of its common stock. It is the net income that the business has generated. It's revenue minus all your operating expenses, minus all the other costs, taxes, and interest. It's not necessarily an operating cost but based on how you finance your business it is a part of running it.

  • Working capital: Working capital is a fancy term for payables and receivables. Anyone who's run a small business knows that this is your lifeline.

My advice is to have very high expectations of what finance can do for you. If you don't have good financial support that gives you insight into the business and helps you develop that intuition, ask for more.