March 24, 2025 • 14 mins
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Most companies get stuck in operating finance, but the real power lies in strategic finance where financial insights drive big decisions and long-term growth.
In this episode, Steve breaks down the key differences and why mastering both can make you a powerhouse in business.
Disclaimer:
BYFIQ, LLC is a wholly owned entity of Coltivar Group, LLC. The views expressed here are those of the individual Coltivar Group, LLC (“Coltivar”) personnel quoted and are not the views of Coltivar or its affiliates. Certain information contained in here has been obtained from third-party sources. While taken from sources believed to be reliable, Coltivar has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.
This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendations. The Company is not affiliated with, nor does it receive compensation from, any specific security. Please see https://www.byfiq.com/terms-and-privacy-policy for additional important information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
If you can help companies make better decisions
on how they allocate resourcesso they can invest in high value
opportunities, you will be apowerhouse in your career.
This is BYFIQ.
Wealth and success come fromunderstanding how finance works
in business, and together we'llexplore the most important
topics to 10X your financialresults.
My hope is that we can worktogether soon.
(00:21):
Please share and enjoy.
Let's talk about strategicfinance.
Okay, because there's a bigdifference between strategic and
operating finance in companies,and I want to share with you
the difference.
And I want to also get youexcited about strategic finance,
because that's the world I livein, that's what we do at
Coltivar and I can tell you itis so fulfilling for me.
(00:44):
All right, so strategic financewhat is it, you may be
wondering, and how is itdifferent from operating finance
?
And is it just a buzzword?
No, it's not a buzzword.
There's major differences.
So let me just explain firstwhat strategic finance actually
is, and I'll say finance.
I should say finance more, Iguess, because my kids always
give me grief.
They're like dad, it's finance,not finance, but finance just
(01:04):
got stuck some years ago, and soI'll just go back and forth.
You can say finance, you cansay finance, you can say potato,
you can say potato.
You could judge me, you couldthink that I say it in a weird
way, but nonetheless, here we go.
Strategic finance here's what itis.
It's the practice ofintegrating financial planning,
analysis and decision-makingFP&A with a company's overall
(01:27):
business strategy.
Why?
To drive long-term growth invalue creation.
And throughout my content I'mvery consistent with this.
I'm consistent in my financialpro program.
I'm all about helping companiesto leverage financials right
the world of finance and combinethat with strategy to drive
greater firm value right.
(01:49):
So strategic finance goesbeyond traditional finance
functions like accounting,reporting, compliance, the
transactional stuff We'll getinto that.
That's operating finance.
And instead it focuses onfinancial insights to shape
business direction, allocateresources effectively and
maximize profitability and cashflow.
(02:10):
All right.
So let's compare and contrastthe two.
And if you can visualize withme a triangle, and at the very
bottom of the triangle, at thebase, is operating finance.
And the reason why that's atthe base is because that's the
foundation of any accounting andfinance department in a
business.
In the middle, at the core, isstrategic finance and at the
(02:31):
very top is firm value.
That's the pinnacle of all ofit.
That's what we're trying to do.
Is we need operating finance.
We need to combine that withstrategic finance to ultimately
drive firm value.
I could tell you from experienceworking with a ton of companies
that the majority of businessesout there are stuck in the
world of operating finance,which isn't a bad thing.
(02:52):
No shame, no harm, no foul.
You may be listening to thisand this may be you as a
business owner, and that'stotally okay, all right.
The thing is, you don't want tostay there and it's really easy
to get stuck in operatingfinance because it can be
overwhelming.
I know this as a CFO because Iwent into a business we're doing
a billion dollars a year inrevenue.
We had over 40 people on ourteam and one of the first things
(03:15):
I did I wrote up on thewhiteboard.
I wrote simplicity, simplify,right.
And that was my whole mantrabecause my team, they were
working their butts off right.
It's not like they weren'tworking.
It's not like they didn't wantto be more strategic.
They were just putting in allthis time and energy just to
close the books and to get thefinancials out in time and
therefore they didn't have timefor strategic activities, and
(03:39):
that's what makes up strategicfinance.
So the majority of companiesthey're engaged in operating
financial activities and, sadly,too many businesses are just
struggling with the basics, withoperating finance, so they
can't even get into the world ofstrategic finance because they
don't even have the numbersright.
So let's talk about this In theworld of operating finance.
Think of these activities asthe core, the foundation of
(04:03):
FinOps, right, and suchactivities may include
bookkeeping and accounting,financial reporting, budgeting
which is a whole other issue andtopic in itself cashflow
management, cost control andcompliance and risk.
And when I mentioned compliance, think of taxes, right, and
other things that organizationsmust do to file reports, et
(04:26):
cetera, with government entitiesand other regulatory agencies,
right.
So that's operating finance.
It's just the blocking andtackling, it's dotting the I's
crossing the T's and it's justdoing the transactional side of
the business collecting receipts, entering these into the system
, doing debits and credits,reconciling bank accounts,
(04:48):
producing the income statement,the balance sheet, the statement
of cash flows, managing costs,controlling a budget, measuring
variances.
All these things make upoperating finance.
Now, in this episode, what Iwant you to hear is that it's
not like operating finance isbad and strategic finance is
good.
It's not that, because youcan't have strategic finance
(05:08):
without operating finance Ifyour financial operations aren't
running smoothly.
Guess what?
You're not even going to haveaccurate financial statements to
then take and analyze and doall these other cool things that
we do with strategic finance.
So you have to have thefoundation down and things have
to be right when it comes tooperating finance.
All right, if you're working inoperating finance, it's not
(05:29):
like it's a bad thing.
It's not like it's a bad thing.
It's not like it's a bad career.
You could be very successful inbusiness just by mastering the
activities in operating finance.
Don't hear me wrong Like, oh,you're not cool enough, you're
not with the cool kids.
If you don't play in the worldof strategic finance, all right.
But what I want to do iselevate your thinking, because I
(05:50):
spent a lot of years studyingaccounting and finance.
I worked on the operatingfinance side right For a while
and I was in the transactions.
I was doing all the compliancework, which was great because I
learned how to do debits andcredits, how to work with trial
balances and general ledgers andchart of accounts and just do
(06:12):
all the fundamentals ofaccounting.
And if you don't have that down, you're going to struggle to
just jump right into strategicfinance.
So I had to put that work in,and I spent thousands and
thousands of hours buildingmodels, doing the grunt work, to
learn how it all came together.
In fact, that's why I got myaccounting degree in addition to
(06:32):
my finance degree, like I'mmore of a finance guy.
I love finance, but I got myaccounting degree because I
wanted to learn how thefinancial statements were
compiled.
In fact, a few months ago I wastalking to one of my friends.
He reached out he's younger,he's in his twenties and he's
like Steve.
I need your advice.
I just finished myundergraduate degree in finance.
I'm thinking about getting adegree in accounting, but I
(06:55):
don't know.
I want to get stuck inaccounting, and what I said to
him I was like you have to learnhow the financial statements
are compiled.
Sure, you could have asuccessful career in finance,
but when somebody gives you afinancial report, like an income
statement or a balance sheet ora statement of cash flows, and
you have to analyze it and youhave to build a forecast on it
and you have to put in placeKPIs, if you don't know where
(07:15):
those numbers are coming from,that could be problematic.
It could be limiting in yourcareer.
That's why I decided to go theaccounting path and combine that
with finance, so I knew howeverything fit together.
So that's what I'm saying.
With operating finance is likeyou have to know the
fundamentals in order to besuccessful and effective with
strategic finance.
So if you haven't gone throughmy free financial pro program,
(07:39):
this is a great opportunity foryou to learn the fundamentals of
both operating finance andstrategic finance.
At the very beginning of theprogram, I'm teaching you how to
read financial statements, andthen we move from operations
into the strategic side ofnumbers, so be sure to check
that out All right.
So once you've masteredoperating finance, then you can
(08:01):
get into some really cool thingswhich make up strategic finance
, such as data-drivendecision-making, which involves
using financial metrics andanalytics to inform strategic
choices.
The next thing you do iscapital allocation, which is
really important becauseorganizations they have these
resources, and if you can helpcompanies make better decisions
(08:23):
on how they allocate resourcesso they can invest in high value
opportunities, you will be apowerhouse in your career.
Or if you're running a businessand you have cash, you will be
a powerhouse in your career.
Or if you're running a businessand you have cash, you need to
know where to put that cash inorder to maximize your return on
invested capital.
Profitability and cashflowmanagement is also another
aspect of strategic finance.
Now, cashflow managementsometimes falls under operating
(08:45):
finance, like doing the basics,but I could tell you most
organizations struggle withcashflow management.
That's why, really, it becomesa strategic finance activity,
because it requires a differentview and a different skillset to
manage cashflow and tocalculate it and to learn how to
deploy it effectively.
Another aspect of strategicfinance is business growth and
(09:08):
valuation.
So it's taking strategy,understanding the levers of
growth right A profitable growthof sustainable growth and
combining that with valuation,so you know what levers to pull
in order to maximize firm value.
Performance management isanother big part of strategic
finance and this includes beingable to look at a company's
income statement, balance sheetand statement of cash flows and
(09:30):
act with precision right.
Precision is the key in orderto improve performance very
quickly.
That's what we do at Coltivarwe go into companies, we can
look at their financialstatements, we monitor their
KPIs and we'll know exactlywhere to focus Versus.
If you don't have thisexperience, you go into a
business and you're all over theplace.
(09:51):
You're like, hey, let's focuson our mission, vision and
values and let's strengthen ourbrand or you know, let's do this
.
We need to put in place a newtraining program for our
employees, and you just startdoing things that are like
popular culture in businessinstead of focusing on the areas
with the greatest upside.
Investor relations is a big partof strategic finance.
Being able to communicate toinvestors, get them what they
(10:13):
need, provide them confidenceright In the business,
communicate strategy, et cetera,is really critical.
I did that a lot as a CFO.
And then the last is reallycritical.
I did that a lot as a CFO.
And then the last part is juststrategy playing a major part in
strategy and being able tocombine the financial side of
the business with the strategyand then formulate a plan, a
blueprint, to go execute.
So, when you think aboutstrategic finance, it's taking
(10:37):
operating finance and it'selevating it in order to drive
more firm value.
I can't tell you how manycompanies I work with where they
leave so much money on thetable and they say to me oh my
gosh, steve, where were you fiveyears ago, 10 years ago, et
cetera.
And so, as a business owner, Iwant you to hear this, because
you don't have to stay stuck inthis area.
(10:58):
You may have a bookkeeper, youmay have an accountant, you may
have an accounting team, andthey may be great, you may love
them to death but they may notbe focusing on strategic finance
because they're so bogged downin the day-to-day transactional
and compliance side of thebusiness.
But guess what?
If you neglect these activitiescapital allocation, business
(11:19):
growth and valuation,performance management, investor
relations and strategy all thethings I just talked about your
business will stay stuck and,worst case, they'll start
declining.
That's why strategic finance issuch an important topic that
I'm just so passionate about.
And also you may be listening tothis, wondering which path to
take in your career.
Like I said, if you can masteroperating finance and then you
(11:41):
can move into strategic finance,oh my gosh, you'll be a
powerhouse.
But it's really hard to justskip over operating finance and
just be like all right, I wantto be strategic, I want to be a
strategic financial leader, andit's like, yeah, but you don't
even know how to do debits andcredits, you don't know how to
tick and tie a trial balance,right, so you have to know how
all this stuff works so youcould be highly effective in
(12:03):
this area.
Anyways, I just wanted to sharewith you what strategic finance
is and compare and contrastthat with operating finance, and
hopefully I was able to piqueyour curiosity, because there's
so much opportunity out therefor both business owners and for
people pursuing a career inthis area.
All right, all the best.
Feel free to reach out to meanytime you want.
(12:24):
Connect with me on LinkedIn I'dlove to hear your comments and
just to connect, and you couldalways reach out at coldfirecom
if you want to talk about how totransform your FinOps in your
business into more of astrategic finance operation.
All right, all the best, cheers.
If you can help companies make better decisions
on how they allocate resourcesso they can invest in high value
opportunities, you will be apowerhouse in your career.
This is BYFIQ.
Wealth and success come fromunderstanding how finance works
in business, and together we'llexplore the most important
topics to 10X your financialresults.
My hope is that we can worktogether soon.
(00:21):
Please share and enjoy.
Let's talk about strategicfinance.
Okay, because there's a bigdifference between strategic and
operating finance in companies,and I want to share with you
the difference.
And I want to also get youexcited about strategic finance,
because that's the world I livein, that's what we do at
Coltivar and I can tell you itis so fulfilling for me.
(00:44):
All right, so strategic financewhat is it, you may be
wondering, and how is itdifferent from operating finance
?
And is it just a buzzword?
No, it's not a buzzword.
There's major differences.
So let me just explain firstwhat strategic finance actually
is, and I'll say finance.
I should say finance more, Iguess, because my kids always
give me grief.
They're like dad, it's finance,not finance, but finance just
(01:04):
got stuck some years ago, and soI'll just go back and forth.
You can say finance, you cansay finance, you can say potato,
you can say potato.
You could judge me, you couldthink that I say it in a weird
way, but nonetheless, here we go.
Strategic finance here's what itis.
It's the practice ofintegrating financial planning,
analysis and decision-makingFP&A with a company's overall
(01:27):
business strategy.
Why?
To drive long-term growth invalue creation.
And throughout my content I'mvery consistent with this.
I'm consistent in my financialpro program.
I'm all about helping companiesto leverage financials right
the world of finance and combinethat with strategy to drive
greater firm value right.
(01:49):
So strategic finance goesbeyond traditional finance
functions like accounting,reporting, compliance, the
transactional stuff We'll getinto that.
That's operating finance.
And instead it focuses onfinancial insights to shape
business direction, allocateresources effectively and
maximize profitability and cashflow.
(02:10):
All right.
So let's compare and contrastthe two.
And if you can visualize withme a triangle, and at the very
bottom of the triangle, at thebase, is operating finance.
And the reason why that's atthe base is because that's the
foundation of any accounting andfinance department in a
business.
In the middle, at the core, isstrategic finance and at the
(02:31):
very top is firm value.
That's the pinnacle of all ofit.
That's what we're trying to do.
Is we need operating finance.
We need to combine that withstrategic finance to ultimately
drive firm value.
I could tell you from experienceworking with a ton of companies
that the majority of businessesout there are stuck in the
world of operating finance,which isn't a bad thing.
(02:52):
No shame, no harm, no foul.
You may be listening to thisand this may be you as a
business owner, and that'stotally okay, all right.
The thing is, you don't want tostay there and it's really easy
to get stuck in operatingfinance because it can be
overwhelming.
I know this as a CFO because Iwent into a business we're doing
a billion dollars a year inrevenue.
We had over 40 people on ourteam and one of the first things
(03:15):
I did I wrote up on thewhiteboard.
I wrote simplicity, simplify,right.
And that was my whole mantrabecause my team, they were
working their butts off right.
It's not like they weren'tworking.
It's not like they didn't wantto be more strategic.
They were just putting in allthis time and energy just to
close the books and to get thefinancials out in time and
therefore they didn't have timefor strategic activities, and
(03:39):
that's what makes up strategicfinance.
So the majority of companiesthey're engaged in operating
financial activities and, sadly,too many businesses are just
struggling with the basics, withoperating finance, so they
can't even get into the world ofstrategic finance because they
don't even have the numbersright.
So let's talk about this In theworld of operating finance.
Think of these activities asthe core, the foundation of
(04:03):
FinOps, right, and suchactivities may include
bookkeeping and accounting,financial reporting, budgeting
which is a whole other issue andtopic in itself cashflow
management, cost control andcompliance and risk.
And when I mentioned compliance, think of taxes, right, and
other things that organizationsmust do to file reports, et
(04:26):
cetera, with government entitiesand other regulatory agencies,
right.
So that's operating finance.
It's just the blocking andtackling, it's dotting the I's
crossing the T's and it's justdoing the transactional side of
the business collecting receipts, entering these into the system
, doing debits and credits,reconciling bank accounts,
(04:48):
producing the income statement,the balance sheet, the statement
of cash flows, managing costs,controlling a budget, measuring
variances.
All these things make upoperating finance.
Now, in this episode, what Iwant you to hear is that it's
not like operating finance isbad and strategic finance is
good.
It's not that, because youcan't have strategic finance
(05:08):
without operating finance Ifyour financial operations aren't
running smoothly.
Guess what?
You're not even going to haveaccurate financial statements to
then take and analyze and doall these other cool things that
we do with strategic finance.
So you have to have thefoundation down and things have
to be right when it comes tooperating finance.
All right, if you're working inoperating finance, it's not
(05:29):
like it's a bad thing.
It's not like it's a bad thing.
It's not like it's a bad career.
You could be very successful inbusiness just by mastering the
activities in operating finance.
Don't hear me wrong Like, oh,you're not cool enough, you're
not with the cool kids.
If you don't play in the worldof strategic finance, all right.
But what I want to do iselevate your thinking, because I
(05:50):
spent a lot of years studyingaccounting and finance.
I worked on the operatingfinance side right For a while
and I was in the transactions.
I was doing all the compliancework, which was great because I
learned how to do debits andcredits, how to work with trial
balances and general ledgers andchart of accounts and just do
(06:12):
all the fundamentals ofaccounting.
And if you don't have that down, you're going to struggle to
just jump right into strategicfinance.
So I had to put that work in,and I spent thousands and
thousands of hours buildingmodels, doing the grunt work, to
learn how it all came together.
In fact, that's why I got myaccounting degree in addition to
(06:32):
my finance degree, like I'mmore of a finance guy.
I love finance, but I got myaccounting degree because I
wanted to learn how thefinancial statements were
compiled.
In fact, a few months ago I wastalking to one of my friends.
He reached out he's younger,he's in his twenties and he's
like Steve.
I need your advice.
I just finished myundergraduate degree in finance.
I'm thinking about getting adegree in accounting, but I
(06:55):
don't know.
I want to get stuck inaccounting, and what I said to
him I was like you have to learnhow the financial statements
are compiled.
Sure, you could have asuccessful career in finance,
but when somebody gives you afinancial report, like an income
statement or a balance sheet ora statement of cash flows, and
you have to analyze it and youhave to build a forecast on it
and you have to put in placeKPIs, if you don't know where
(07:15):
those numbers are coming from,that could be problematic.
It could be limiting in yourcareer.
That's why I decided to go theaccounting path and combine that
with finance, so I knew howeverything fit together.
So that's what I'm saying.
With operating finance is likeyou have to know the
fundamentals in order to besuccessful and effective with
strategic finance.
So if you haven't gone throughmy free financial pro program,
(07:39):
this is a great opportunity foryou to learn the fundamentals of
both operating finance andstrategic finance.
At the very beginning of theprogram, I'm teaching you how to
read financial statements, andthen we move from operations
into the strategic side ofnumbers, so be sure to check
that out All right.
So once you've masteredoperating finance, then you can
(08:01):
get into some really cool thingswhich make up strategic finance
, such as data-drivendecision-making, which involves
using financial metrics andanalytics to inform strategic
choices.
The next thing you do iscapital allocation, which is
really important becauseorganizations they have these
resources, and if you can helpcompanies make better decisions
(08:23):
on how they allocate resourcesso they can invest in high value
opportunities, you will be apowerhouse in your career.
Or if you're running a businessand you have cash, you will be
a powerhouse in your career.
Or if you're running a businessand you have cash, you need to
know where to put that cash inorder to maximize your return on
invested capital.
Profitability and cashflowmanagement is also another
aspect of strategic finance.
Now, cashflow managementsometimes falls under operating
(08:45):
finance, like doing the basics,but I could tell you most
organizations struggle withcashflow management.
That's why, really, it becomesa strategic finance activity,
because it requires a differentview and a different skillset to
manage cashflow and tocalculate it and to learn how to
deploy it effectively.
Another aspect of strategicfinance is business growth and
(09:08):
valuation.
So it's taking strategy,understanding the levers of
growth right A profitable growthof sustainable growth and
combining that with valuation,so you know what levers to pull
in order to maximize firm value.
Performance management isanother big part of strategic
finance and this includes beingable to look at a company's
income statement, balance sheetand statement of cash flows and
(09:30):
act with precision right.
Precision is the key in orderto improve performance very
quickly.
That's what we do at Coltivarwe go into companies, we can
look at their financialstatements, we monitor their
KPIs and we'll know exactlywhere to focus Versus.
If you don't have thisexperience, you go into a
business and you're all over theplace.
(09:51):
You're like, hey, let's focuson our mission, vision and
values and let's strengthen ourbrand or you know, let's do this
.
We need to put in place a newtraining program for our
employees, and you just startdoing things that are like
popular culture in businessinstead of focusing on the areas
with the greatest upside.
Investor relations is a big partof strategic finance.
Being able to communicate toinvestors, get them what they
(10:13):
need, provide them confidenceright In the business,
communicate strategy, et cetera,is really critical.
I did that a lot as a CFO.
And then the last is reallycritical.
I did that a lot as a CFO.
And then the last part is juststrategy playing a major part in
strategy and being able tocombine the financial side of
the business with the strategyand then formulate a plan, a
blueprint, to go execute.
So, when you think aboutstrategic finance, it's taking
(10:37):
operating finance and it'selevating it in order to drive
more firm value.
I can't tell you how manycompanies I work with where they
leave so much money on thetable and they say to me oh my
gosh, steve, where were you fiveyears ago, 10 years ago, et
cetera.
And so, as a business owner, Iwant you to hear this, because
you don't have to stay stuck inthis area.
(10:58):
You may have a bookkeeper, youmay have an accountant, you may
have an accounting team, andthey may be great, you may love
them to death but they may notbe focusing on strategic finance
because they're so bogged downin the day-to-day transactional
and compliance side of thebusiness.
But guess what?
If you neglect these activitiescapital allocation, business
(11:19):
growth and valuation,performance management, investor
relations and strategy all thethings I just talked about your
business will stay stuck and,worst case, they'll start
declining.
That's why strategic finance issuch an important topic that
I'm just so passionate about.
And also you may be listening tothis, wondering which path to
take in your career.
Like I said, if you can masteroperating finance and then you
(11:41):
can move into strategic finance,oh my gosh, you'll be a
powerhouse.
But it's really hard to justskip over operating finance and
just be like all right, I wantto be strategic, I want to be a
strategic financial leader, andit's like, yeah, but you don't
even know how to do debits andcredits, you don't know how to
tick and tie a trial balance,right, so you have to know how
all this stuff works so youcould be highly effective in
(12:03):
this area.
Anyways, I just wanted to sharewith you what strategic finance
is and compare and contrastthat with operating finance, and
hopefully I was able to piqueyour curiosity, because there's
so much opportunity out therefor both business owners and for
people pursuing a career inthis area.
All right, all the best.
Feel free to reach out to meanytime you want.
(12:24):
Connect with me on LinkedIn I'dlove to hear your comments and
just to connect, and you couldalways reach out at coldfirecom
if you want to talk about how totransform your FinOps in your
business into more of astrategic finance operation.
All right, all the best, cheers.
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