Chris Franco’s Precise and Simple $740M Capital Management

At National Instruments, Franco leads the charge on financial reporting in an increasingly complex, international business

Chris Franco, Director of Treasury, National InstrumentsPhoto: Allie Verlander

Like a circus high-wire acrobat, Chris Franco knows the value of precision and balance. The director of treasury for National Instruments, a publicly traded multinational company, Franco and his team must produce accurate, timely financial reporting while striving to streamline and simplify processes.

This proved especially challenging following recent amendments to the US Generally Accepted Accounting Principles’ (GAAP) standards for revenue recognition, which heavily affected software companies like National Instruments, a producer of software-defined automated-test and automated-measurement systems. The GAAP amendments pushed Franco and his team to change, streamline, and automate the company’s processes to account for and report revenue.

“They basically took multiple rules-based pieces of accounting guidance and boiled it down to one very conceptual-based standard,” Franco explains. “My team is responsible for ensuring compliance and effective outcomes, and as the business changes, our processes need to change along with it.”

To ensure there were no delays or errors in reporting, Franco and his team worked closely with business leaders, external auditors, and systems groups.

“When the governing body makes such a transformational change, you have to make sure you fully understand how it might impact the company,” he says. “For example, if it changes how you recognize revenue and you’re incentivizing employees on US GAAP-based revenue, you have to adjust incentive plans and account for whatever impact it will have on the company as a whole.”

Franco first joined National Instruments in 2005 as director of internal audit. This came after he earned his master’s in professional accounting from the University of Texas at Austin in 1995 and gained experience as an audit manager at Ernst & Young and as a controller at a tech start-up.

In his current role, Franco oversees the company’s external reporting, revenue accounting, and treasury teams. His group is central to National Instruments’ success: They manage a sizable amount of the company’s working capital, about $740 million, of which about $531 million is cash and cash-equivalents and a portfolio of about $240 million of worldwide trade receivables.

“Investors will pay a higher multiple for companies that produce timely, accurate reporting—it’s simply a function of being a well-run business.”

For a publicly traded company such as National Instruments, financial reporting can have real implications for the bottom line.

“We have to disclose information to our key investor community, and when that disclosure is clean and not subject to amendments, it influences investor confidence, which facilitates our ability to raise capital or increase the company’s value in the marketplace,” he explains. “In theory, investors will pay a higher multiple for companies that produce timely, accurate reporting—it’s simply a function of being a well-run business.”

Streamlining complex processes is hard enough, but the challenge becomes even more difficult when you’re working within a large international company which does business in more than fifty countries. “As the company and the complexity of our systems continue to grow, we’re working toward achieving more consistent practices across the globe,” Franco says. “As finance administrators, we need to make sure we can support the business consistently across the globe.”

One of the ways his team is doing this is by designating one global point of accountability, instead of having team members report to a regional controller. “We’re aligning where some of those resources are reporting to make sure we can focus and continue to drive consistency and efficiency,” he notes.

One tactic Franco uses to keep his team motivated and thinking strategically about the big picture is to help them connect the dots between the work they do every day and the success of the company. “This helps them take a different perspective of the work we do and feel more invested in it,” he says. “We’re having a real impact on National Instruments’ success, and not just processing transactions to no particular end.”

He also believes strongly in the value of delegating work and helping his reports develop their skills. “As a leader, it’s important to delegate, because if you keep the hard stuff for yourself, then your team doesn’t get to participate and learn from those experiences,” he says. At the same time, he says it’s important to stay involved in the day-to-day. “Otherwise you won’t know what’s going on and won’t be able to step in and help if needed—it’s a balancing act, one you learn through experience.”

“When you’re operating within a global company, it’s important to be well-versed on the impact of doing transactions in more than forty different currencies. You need to prove you have the technical knowledge but can also get things done and think strategically.”

Franco strives to be trusted as a subject matter expert whom his team and the company’s leaders feel comfortable approaching with questions or ideas. He accomplishes this through involvement in his team’s work, and through classroom training sessions on technical matters.

“When you’re operating within a global company, it’s important to be well-versed on the impact of doing transactions in more than forty different currencies,” he says. “You need to prove you have the technical knowledge but can also get things done and think strategically.”