Is Your CFO Like a 747 Pilot?

All of us have peeked inside the cockpit of big, modern, commercial aircraft and, if you're at all like me, you see every available square inch covered with dials, knobs, toggle-switches, and warning lights, and you wonder how on earth the pilot keeps track of it all.

The answer is, if he's good, he doesn't.  The three big things that matter are airspeed, altitude, and the artificial horizon.  Everything else is programmed to "speak up" if it needs attention.

Now analogize this to your financials.  You don't really need to view realization rates on  paralegal billings office by office every month (although this information is surely available today).  What you need to keep an eye on is trend-line growth of revenue vs. expenses.  These in turn are driven by only a very few variables:  Billable hours, hourly rates, realization/write-down rate, number of fee earners and fixed overhead. 

Sit down with your CFO and this article, if you haven't already had this conversation.