Leadership Q&A: Finance at the Forefront

Douglas R. Oberhelman, a group president at Peoria, Ill.-based construction and mining equipment manufacturer Caterpillar Inc., was formerly the company's CFO. Oberhelman explains to Business Finance editor Laurie Brannen how a finance background can pave the way to the executive suite.

Laurie Brannen: How did your stint as CFO prepare you to move up in the organization?

Douglas Oberhelman: I served as Caterpillar's CFO for four years. My experience during that time was tremendously valuable to me in several areas. Most notable was the broad perspective you must have as a CFO to view the company as a shareholder does. Cross-functional activities and thinking are important as a CFO, and this carries directly into my current position as group president. In a big, public company, shareholders rule, and the enterprise results are critical. External relations are also important as a CFO, including those with banks; shareholders; some large customers; and, of course, the board of directors. The CFO is really the first opportunity to get to know and understand the board and its function. This has proven invaluable as a member of the executive office and being a group president.

LB: What do you see as Caterpillar's biggest business challenges this year, and what will be the role of the finance function in meeting those challenges?

DO: In 2006, Caterpillar should continue to enjoy robust growth. Our outlook calls for another 10 percent top-line growth, which will nearly double the company's sales compared to sales and revenues over the last three to four years. Cash management inventory levels are important in 2006, as are asset turnover ratios. We simply have to work harder than ever to implement improved cash-to-cash cycles. The finance function plays a key role in this as the cash flow manager as well as the group that can see across all units to not only measure progress but to stimulate thinking and improvement. At Cat, our CFO forum is a perfect group to drive these improvements. It is the CFOs of all of our major businesses within Caterpillar who meet frequently to review this kind of broad topic.

We'll also spend considerable time this year planning for the trough that we know will confront us in the future. One of the greatest challenges is to keep a close control on costs in a time of meeting high demand and producing record earnings. We remind our employees that it's easier to manage costs in the up cycle than to cut costs in the down cycle. If we keep a continued focus on cost now, we will be preparing ourselves for a time in the future when larger economic factors may cause a slowdown in our business. The finance group can lead this type of planning across our businesses.