Scaling Up: How a Few Companies Make It...and Why the Rest Don't (Rockefeller Habits 2.0)

by Verne Harnish

Hiring just one additional person to either support the CFO or carry some of this executive’s workload enables him or her to provide the following: 1. Better cash and cash-flow management 2. Waterfall graphs, which we will explain shortly, to share more granular accounting data for better decision-making 3. Trend analysis and early-warning systems to support better prediction 4. Two sets of books — for the right reasons! Waterfall Graphs A key accounting activity is to slice and dice a company’s financial data as granularly as possible. This lets the leadership team view the gross margin, profit, and cash flow by categories, such as individual customer, location, product line, salesperson, etc. Accountants do this by creating a series of waterfall graphs (see the diagram below).