Principles

The CFO's Four Rules

The difference between a setback and a crisis is usually preparation. These four rules turn scenarios into readiness.

Name the Trigger

Define the measurable signal that moves the business from observing to acting.

In practice

“If monthly orders are more than 10% below forecast for two months running, we cut discretionary spend and reforecast.”
“If any customer exceeds 20% of revenue, we start a diversification plan.”
“If overdraft use is above 80% for four weeks, we meet the bank.”

Decide responsibilities and the immediate response before a crisis occurs.

In practice

The finance lead builds the 13-week forecast within 48 hours of a funding trigger.
The owner calls the top three customers personally if a key account wobbles.
One named person verifies every supplier bank account change by phone.

Understand how cash availability and loan obligations affect the time you have to respond.

In practice

A 20% sales fall may still show a profit — but leave only eight weeks of cash.
Tax and loan repayments fall in specific weeks; put them in the forecast exactly where they land.
Know your weeks of runway before negotiating with anyone.

Review scenarios at least annually and whenever business conditions materially change.

In practice

Run a one-hour tabletop exercise: “Our biggest customer leaves tomorrow — what do we do?”
Refresh triggers after a price rise, new loan or major contract.
Re-run the Readiness Check every year and compare scores.