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CFO Brew

Quarter Century Project

Natasha Piñon

cfobrew.com

You knew it was bad when a single container ship blocked almost $10 billion of trade 

In 2021, as people hunkered down and got weirdly passionate about sourdough starter, supply chain teams had a problem: American consumers were 

, contrary to fears that discretionary spending would halt as a result of the pandemic, and US ports were buckling under the pressure. Shipping container costs ballooned as a result, worker shortages became common, and component scarcities grew all the more regular. Oh, and as if we need to say it: Everything took longer to arrive.

In fact, the supply chain crisis of the Covid era, in which seemingly 

 fell down in perfect, worst-case succession, could probably turn even the most optimistic among us into Murphy’s Law converts. “Anything that can go wrong…”

Yet for all the perfect storm-iness of that time, the lessons for CFOs and finance professionals from the crisis still apply.

Rather than attributing all the disruption to just the pandemic, Lance Saunders, a professor of supply chain management at the University of Tennessee Knoxville’s Haslam College of Business, told CFO Brew, “you can even go back a little further,” pointing to the proliferation of a lean, just-in-time manufacturing mentality within many supply chain teams as the primary culprit behind the supply chain crisis of the early 2020s.

That type of production model, in which companies stockpile as little raw material as possible, only buying materials and parts as needed, was pioneered by Toyota in the wake of World War II. When it works, the system keeps inventory costs low, since manufacturers don’t have to pay for storage costs or deal with extra inventory on unfulfilled orders.

The issue, however, was that “companies called themselves ‘lean’ but they weren’t really lean in the way that, for instance, the Toyota system is lean,” according to Dan Pellathy, an assistant professor of practice at UTK’s Haslam College. “Real lean is thinking all the way from the end-to-end supply chain and making sure that the end-to-end supply chain is balanced. US companies were not thinking in that way. They saw ‘lean’ as an opportunity to squeeze inventory savings and to squeeze their suppliers.”

When the pandemic came around, it became clear just how minimal inventory was in a lot of companies’ supply chains, Saunders said.

“That strategy works great until it doesn’t," he said. “It works great when times aren’t really volatile, but as soon as you start introducing volatility—much less all across the supply chain—that’s when stuff starts to break down and you see the cracks in trying to get too lean, to be too efficient.”

 If the pandemic quickly revealed gaping cracks with certain supply chain models, it also shored up key relationships. The relationship between supply chain and finance teams was decidedly strengthened.

Before the pandemic, often when supply chain teams tried to make a business case for new investments, the finance side wanted “a nine inning, complete game of how we’re going to get these benefits,” Saunders noted. “And that’s not how it works, right? Because there’s a lot of hidden costs and things like that that could happen that we have to take into account.”

The lack of communication was largely a matter of opposing perspectives, Pellathy said. While finance teams were getting lost in spreadsheets, those on the supply chain side were “totally in the weeds” in operations.

“From an operational point of view [on the supply chain side], we know things could get better, but we’re not communicating that back up to leadership in a way that’s effective,” he explained. “And from a finance point of view, they’re saying, ‘Okay, it looks, on paper, great to have this cost saving, but what does that mean from an operational perspective?’”

The Covid-era supply chain crisis helped finance chiefs realize “that we have to invest in the supply chain long term for what 

 happen, to protect against ourselves,” Saunders said.

Meanwhile, supply chain leaders increasingly came to the understanding that “we can’t invest in our supply chain without the support of the finance side,” he continued. “It brought an appreciation from both sides about the other [side] and how they need them versus, ‘I can do this on my own.’’

For the teams that took the lessons of the pandemic to heart, it didn’t take long to reap the benefits. 

Saunders cites the example of a Fortune 100 company he worked with that built a new production facility in Mexico after Covid in order to have more agility for the more volatile aspects of its supply chain, simultaneously moving some of its production away from Asia.

“That would have never happened pre-Covid,” he said, explaining that the finance team, which was receptive to the proposal, likely would’ve been more interested in getting the lowest cost while punting supply chain concerns to operations people.

But after the crisis, it was a lot easier to convince (or more likely, remind) finance folks “there’s a lot that can happen between Asia and here, including longer lead times, so we know forecasting is worse,” he continued. Or, “Hey, guess what? 130 ships can get stuck outside the Port of Long Beach.”

 And to that end, some of the most important lessons CFOs can take away from the crisis are around increased flexibility, Saunders and Pellathy noted.

“My number one key takeaway is to take 

 calculations, crumple them up, burn them. Then take the ashes, burn the ashes,” Pellathy said. “Never use a net present value calculation again, ever. It is crazy.”

Pellathy’s only slightly hyperbolic concern with net present value is that the metric assumes all the cash flows are equal, equally spaced, and have no variability.

“And yet, so much of the decision-making [for supply chains] is based on these kinds of financial analysis,” he continued. “I would say: Update your financial analysis toolkit. There are other ways to measure and understand the risks and rewards of investments.”

Saunders doesn’t want anyone to burn anything, but he encourages CFOs to be resilient, making more room for variability and uncertainty, and staying in close communication with supply chain teams about which hypothetical outcomes need the most investment for prevention.

“Supply chains would be really simple if the actual outcome was the same as the expected outcome,” he noted. In reality, though, you’re not managing the expected outcome, but rather “ranges of outcomes,” and that’s what makes everything so tricky.

That was true in 2021, and it holds true in 2025 as well.

“The tension you have right now is we want to incorporate everything that’s happening into our decision-making,” Saunders said of today’s supply chain landscape. “But if we do, we’re just going to be constantly going from one side…to another.”

Saunders says he asked a chief supply chain officer he works with how he’s thinking about tariffs right now, knowing the landscape is such that “if I try to reevaluate every time something changes, then I’m constantly just going to be changing direction, and that’s expensive too.”

His strategy? “He said: ‘I make a decision and we go with it.’”

The not-so-hidden silver lining of the Covid-era supply chain crisis 

Have a working relationship with your supply chain team? Thank the pandemic. 

Jesse Klein

The Covid-19 pandemic transformed the role of the CFO.

In 2020, the CFO was already evolving into a strategic partner of the CEO, involved in many business decisions. But the pandemic put that evolution in overdrive.

, digital transformation—became key to businesses’ survival when the 

 and the global economy came to a screeching halt.

CFO Brew spoke with pandemic-era CFOs in a variety of industries, including a toilet paper company, fast food chain Chipotle, a multicity church, and others. They told us stories from the first days of shutdowns, how they planned on the fly, and what they learned from the pandemic.

Here’s CFO Brew’s oral history of the Covid-19 pandemic, as told by finance and accounting professionals.

Interviews have been edited and condensed for length and clarity.

CFOs had to leap into action when the World Health Organization declared Covid-19, an infectious disease caused by the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), a pandemic on March 11, 2020.

Samir Kanuga, CFO of Royal Paper Converting, a toilet paper company, in 2020

: I never thought toilet paper would trend on Twitter. It was a crazy time. When we were first getting the news of Covid, the first thing we thought was of our employee safety. How do we keep everyone safe? And luckily we already had access to N95 masks and a lot of Purell. We were really early in getting a bunch more delivered to our factories for the employees. We knew we would be considered essential and had to keep producing and stay in business.

Adam Rymer, VP of finance at Chipotle in 2020: 

So the two sides of the company are obviously the corporate offices, but then also the restaurants. At the corporate offices, it was simple, in the sense of there’s a working from home mandate going into place. We’ve got great technology. We can switch over and start using all the teleconferencing services that we have. So that one was a much simpler process to keep everyone safe and to continue working.

In the restaurants, it was much more complicated, for obvious reasons. But the first thing was, are we going to be able to operate as a business? Will we be required to shut down, or can we continue on? And if we do continue on, how do we keep everyone safe? What can we get out to the restaurants in terms of PPE, and just how do we ensure that our employees are safe and that they can safely serve food to guests in that environment? But even before we got there, we weren’t even sure in the early days if we were going to be allowed to operate as a business in a restaurant.

As the global economy shut down and supply chains ground to a halt, CFOs rushed to adjust their planning. Cash and liquidity management became critical.

We called an emergency board meeting, and drew all the money on a revolver, on the line of credit, and just got flush with liquidity, just in case. Because nobody knew if this was two weeks or two years or what. And then we immediately got on the phone with all of our vendors to make sure that everyone was still manufacturing…checking up on friends and colleagues, and making sure that all of our raw materials would still be coming in, as we would definitely need production…It was daily financial modeling.

Steve Webb, finance director for the Northern Kentucky Area Development District in 2020: 

With all the leadership, we had a Zoom meeting every morning to talk about what challenges were coming up…Things were so rapidly changing in terms of where we’re directing resources, and also just various operational challenges. On the fiscal side, you’re plotting out who’s going to be in the office each day…trying to ensure you have appropriate controls and separation of duties and appropriate reviews.

We definitely started to run different scenarios for how much cash we had on hand and how much we would burn through. And the most dire scenario would be, we cannot operate our restaurants. Basically, our sales would go to zero. How do we retain our people? How do we continue to pay our people, knowing that we weren’t sure if this is going to last a week, two weeks, a month, but we want to do what’s right by our employees, and continue to pay them. But also have them readily available when we are able to open so that we can open quickly, because in order to be really successful at Chipotle requires quite a bit of training.

Natacha Clesca, CFO of Christ Church, a 13,000-member church in New Jersey in 2020:

 Most of our services are feel, touch, physical presence. As an executive team, we were thinking, how are we going to pivot so that even if we’re not providing the services to the community the way we normally do, how can we do it? And how prepared are we to be able to provide the services that we do, given the limitations of Covid?

The pandemic accelerated digital transformation for many organizations.

That was definitely an environment where, “hey, we need to throw a little bit into the technology here so that we can keep things moving and stay compliant and have the right controls in place.” That was an opportunity to get things modernized.

 We included online services, online outreach, where people can actually contact us, if they were in another country, or in another state, or bedbound. That began the online presence or the non-physical presence. So that strategic thinking in terms of aligning that to our already existing programs, and a way of conducting our services, and providing services.

Paul Oliphant, CFO of medical device manufacturer Velentium in 2020: 

We’re not scalable [at the start of Covid]. We sat down and evaluated what are the things that would allow us to be more scalable. And the very first thing was a system overhaul. We knew, in order to grow, we’re gonna have to put a system in…We spent money on systems and processes that really gave the company a firm cornerstone or foundation…We had good people. We had good processes. We didn’t have a very good system. And so that was something that was going to impede our growth, and we saw that as a result of the Covid project. And then had the money to be able to spend it to upgrade our systems. We put in a new ERP system…so we were able to be ready to grow.

CFOs and their organizations emerged from the pandemic to find that they were in a new world.

Extremely good at cash management after that. We tended to be good at that before, because we were operating a very high volume, low margin environment, and that just accentuated all those details to the nth degree. Now, as a CFO, I run risk management scenarios that I’d never even think about, because we never, never projected that. It was not a possibility to happen in our modeling. I run a lot more scenarios for risk management, and even more disciplined on cash management.

That experience helped some of the leaders realize that the fiscal people have more to offer than those compliance bits…Being in the finance seat, you have a very horizontal view of the organization…I see everything that’s going on. So any change they’re making in the police department, the fire department, public works, building and planning and inspections, I am on the front end of that change…So I think it opened the door. I think that capability was always there. It just maybe wasn’t exercised or expected or sought.

Neil Cohen, CFO of Windsor Capital Group, owner of Embassy Suites Hotels:

 It wasn’t about the financial statements anymore. Everyone looked at the CFO as, here’s the financial statements. This was more about, where are we going, where’s the future, how are we going to get through this? That talent of the CFO that always was hidden, that no one really looked at, all of a sudden became the forefront of everything. Where are we going? How are we going to get out of this? And what does it look like?

Your CFO has gotta be a storyteller. He’s telling you where it’s going. Recording history was part of his job, but it became a smaller part.

The pandemic was a landmark moment in the evolution of the CFO role

A CFO oral history of Covid-19 pandemic

How Covid-19 supercharged the CFO role: An oral history

Courtney Vien

Tariffs. So many tariffs. Retaliatory tariffs. Negotiations. Deals. The invoking of obscure trade laws. 2025? Nope. 2018.

In his first term as president, Donald Trump placed tariffs on Chinese goods, steel and aluminum, and washing machines and solar panels. Countries retaliated with tariffs on US imports. Some of the tariffs expired, some were removed or extended through negotiation, and others have stuck around.

CFOs and finance leaders who worked through the first Trump trade war might be experiencing déjà vu. Some of the 

 the first time around still apply today. But there are some key differences between 2018 and the current round of tariffs that can make strategizing for them more of a challenge.

The biggest target of Trump’s first trade war, by far, was China. The US government concluded that China was using unfair trade practices around intellectual property, technology, and innovation. Invoking Section 301 of the Trade Act of 1974, it levied a 25% tariff affecting $50 billion worth of Chinese imports, mostly mechanical parts and equipment, in spring 2018. China retaliated with a 25% tariff on $50 billion in US imports, largely vehicles and agricultural products like soybeans. In September 2018, the US added tariffs on an additional $200 billion worth of Chinese goods. China again followed suit by tariffing an additional $60 billion in US imports.

This particular trade “battle” ended in January 2020 after negotiations between the two countries, in which China agreed to purchase an extra $200 billion in US imports by December 2021. (China 

But that wasn’t all. In February and March 2018, the US invoked a little-used provision of the Trade Expansion Act of 1962 to levy tariffs of 25% on steel imports and 10% on aluminum imports, worth around $48 billion in total. China retaliated, and so did other countries, among them Canada, Turkey, and India. The EU placed 25% tariffs on more than 

 of US goods, including corn, bourbon, jeans, motorcycles, and suntanning beds. (Can tariffs be passive-aggressive?)

The US levied more targeted tariffs, meant to benefit specific American industries, as well, like on imported solar panels and washing machines.

In some ways, the first trade war hasn’t really ended. In 2022, President Biden chose to extend some of the solar panel tariffs for four more years, and in 2024 he placed new tariffs on Chinese goods including semiconductors, EVs, batteries, minerals, and magnets. Then came 2025, and, well, you know the rest.

Economic effects were muted, and mostly negative: 

How did the first Trump trade war affect the US economy? Its long-term effects are hard to separate from other factors such as the pandemic and 

The short-term effects were modest. Some US industries and regions “benefited from additional protection from competition,” Kari Heerman, director of trade and economic statecraft at Brookings, told CFO Brew, and saw “some pretty small gains in terms of employment.” But in broader terms, the US experienced “a manufacturing recession in 2019,” Jason Miller, professor of supply chain management at Michigan State University, told us. US manufacturers that imported tariffed inputs, such as parts, materials, and equipment, exported less than those that weren’t exposed to tariffs, because their costs and therefore prices grew, he noted.

And US sectors that China and other countries retaliated against saw employment dip. “China basically stopped buying soybeans from the United States to the point where we had to 

,” Miller pointed out. China still imports far fewer agricultural products from the US than it did prior to the 2018–19 tariffs, Heerman told us.

“Even after Covid, we lost a lot of our [Chinese] 

,” Heerman said. “We were able to find some alternative markets, and that’s fine for some commodities, but the ones that were really China-heavy—pork, soybeans, sorghum, some of the nuts and fruits—never really came back,” Heerman said.

The tariffs the Trump administration has levied in 2025 are different from the first round. The 2018–19 tariffs were largely targeted at China, and affected “things that businesses buy rather than what consumers buy,” Heerman said. The new tariffs touch far more countries and sectors.

Consumer demand was also higher, generally speaking, in 2018–19 than it is today. Then, companies “felt more confident that they could pass on” the costs, Miller said. “The importers are absorbing a greater share of the tariffs this time around.” In sectors where demand is high right now, such as electrical equipment, 

Business leaders could have a difficult time gauging how much the tariffs should affect their long-term investments. On the one hand, “tariffs tend to be sticky,” Heerman said, because they’re legally and politically difficult to unwind. On the other hand, companies may be reluctant to make large investments in, say, factories, if they think a new presidential administration could undo the tariffs, Miller said.

In fact, both Heerman and Miller argue, tariffs could disadvantage US manufacturers that, like those in many other developed nations, source cheaper parts and labor from abroad. Placing tariffs on these inputs will inflate manufacturers’ cost structure, Miller said. When the US “goes it alone” with tariffs in a world where trade is globalized, Heerman said, US producers will face “a cost increase that their competitors outside the US don’t face.” That could make their exports pricier and thus “less attractive and less competitive on the global market,” Miller said.

Tariffs can work in certain limited cases, Miller and Heerman agreed—for instance, if a country has evidence that a competing nation is “subsidizing an industry and dumping product” in a way that threatens a key sector the first country wants to protect, Miller explained.

But they both caution that, today, broadly applied tariffs make little economic sense. Trade has just become too global.

“Our biggest exporters also tend to be our biggest importers,” Miller said. He likened the current round of tariffs to “fighting a Pickett’s Charge against essentially all the economic theory on trade over the last 40 years.”

As far as tariffs go, history repeating itself might not be a good thing.

Before the Trump trade war, there was the other Trump trade war

 The 2018 tariffs are and aren’t like the ones we’re seeing today.

A young female CEO with a uniquely charismatic presence? Check. A complicated new technology that few people understood? Check. A big-name board that seemed to govern with its eyes closed and ears plugged? Check. Media hoopla? Check.

The downfall of Theranos, the blood testing company launched by Elizabeth Holmes, has been covered ad nauseam: You’ve seen 

For CFOs, however, there’s a lesson lurking right under the surface of the existing narrative: So 

 is what happens when a company doesn’t have a CFO? Well, yes and no.

Before Elizabeth Holmes was a federal prisoner, she was just a young founder firing her company’s CFO, Henry Mosley, who only held the seat for eight months before he was sacked in 2006.

Mosley, a finance vet who had already taken two tech companies public by the time he joined Theranos, expressed concern that the company showed falsified test results to potential pharmaceutical investors, per Wall Street Journal reporter John Carreyrou’s 2018 book on the Theranos fallout.

When Mosley voiced trepidation, “Elizabeth’s expression suddenly changed,” Carreyrou wrote of the incident. “Her cheerful demeanor of just moments ago vanished and gave way to a mask of hostility. It was like a switch had been flipped. She leveled a cold stare at her chief financial officer. ‘Henry, you’re not a team player,’ she said in an icy tone. ‘I think you should leave right now.’”

He did—and the company never hired another CFO. That should’ve been red flag #1.

“That was relatively early days,” Ann Skeet, senior director of leadership ethics at Santa Clara University’s Markkula Center for Applied Ethics, told CFO Brew of Mosley’s firing. “For the CFO to be dismissed, a C-suite executive to be dismissed, and for there to be no inquiry from the board is remarkable. It’s an abdication of duty, really.”

For Skeet, who has interviewed Theranos whistleblower Tyler Shultz and developed business ethics teaching modules around his experience, one of the most intriguing aspects of the Theranos case “was the relatively young age and lack of experience of its CEO, which 

be augmented and balanced out by a competent board.”

That was not the case at Theranos—and that became exceptionally clear with the firing of the company’s CFO.

Reading off the names on the company’s board feels like flipping through flashcards for an APUSH quiz: Henry Kissinger, former US secretary of state; Jim Mattis, former secretary of defense; George Shultz, yet another former secretary of state, and Richard Kovacevich, former CEO of Wells Fargo.

“The board for Theranos was really a rock star board, more of ‘in name only’ high-profile people, but not people who had expertise in the industry that the firm was operating in, and I thought that was a real obvious miss,” Skeet noted.

Similarly, Bill Miller, a professor of accounting at the University of Wisconsin, Eau Claire, where he focuses on accounting ethics, says the Theranos board appeared to be “totally hands-off.”

“You can’t run a business without somebody watching the store,” he added. “The sheer lack of internal controls, controls in any way, is just scary, and so the need for really good financial leadership, but also then a strong internal audit component, has to be there, and without that, we see what happens.”

While seemingly every form of internal governance was missing at Theranos, Skeet noted that many boards “operate under this adage of ‘noses in but fingers out,’” meaning “it’s okay to be nosing around and asking a lot of questions, but you shouldn’t get involved in the day-to-day management of companies.” That can get messy, however, at “young companies and in companies that are working with brand new technologies, like artificial intelligence today.”

At Theranos, both were true: “It was a relatively young company, 

 it had an unproven technology. You would expect the board to be more engaged,” she said.

“At a minimum, you’'d want to know, was the CFO fired because they were cooking the books? Was the CFO doing something that was irresponsible, and do we have some exposure as a company as a result of some missteps by them?” she added, in reference to the board. “But in this case, being summarily dismissed relatively early in the company’s history, without looking into that, is unheard of.”

So how on earth could a board seemingly fail to ask any follow-up questions of a fired C-suite executive? Both Skeet and Miller point to the unique charisma of Elizabeth Holmes, whose pull was so strong that even when Shulz, the whistleblower whose grandfather was board member George Shulz, “tried to draw his grandfather’s attention to the fact that there were problems, he was dismissed,” Skeet said. “People were taken in a bit by her, and didn’t do their due diligence as a result.”

If you’re a CFO reading this, you know your company has a CFO. And let’s assume your board isn’t wrapped around the finger of a cunningly charming young Stanford dropout CEO. And let’s also assume you’re not defrauding investors of hundreds of millions of dollars. Proud of you!

There’s still plenty to learn from Theranos and the firing of its CFO. If anything, the downfall of Theranos is a perfect storm of worst case…everything.

And if you’re curious what the exact opposite looks like: Skeet has conducted research comparing Silicon Valley and the Basque Country in Spain, comparing the two regions to “identify conditions that make it more likely for ethics to be used in organizations.”

The first condition is “a symbiotic relationship with society,” in which company culture stresses a sense of responsibility to society and acknowledges how things happening in society impacts the company in turn. Theranos had lofty goals on this front…but with fake results.

Next, companies more likely to use ethical practices foster a “climate of mutual understanding and trust,” which is identifiable, Skeet said, by whether or not “there’s a comfort level with decentralized decision-making, because there’s some kind of rubric for ethical decision-making in the company.” In short, executives can trust that employees know right from wrong, and can make their own decisions. At Theranos, “decisions were pretty tightly controlled by Elizabeth and Sunny Balwani, her COO,” she added.

Another hallmark of ethical leadership? People feel “comfortable coming forward and raising concerns” about the company, Skeet noted. “Obviously, when the CFO did that in this company, he was fired. So that isn’t creating a climate of mutual trust and understanding.”

Finally, the last key condition “is a set of ethical deliberation practices,” Skeet said, including “thinking about downstream effects, things that could go wrong, anticipating those, and then, whenever possible, sharing the thinking behind decisions that are made.”

“Those practices were not in place at Theranos,” she added. “Looking at it from the 30,000 foot level, it’s less likely for ethics [to be] used in a company where none of the conditions are present.”

Would a CFO have prevented the Theranos fraud?

Without a CFO, no one was watching the financials. 

We’re sure you’ve heard the phrase “I’m moving to Canada” recently. But corporations have been pulling this move—called a tax inversion—for decades, at least on paper. But rather than a political statement—or a fondness for poutine—heading abroad helped corporations avoid billions in taxes.

Bear with us, because explaining how it works can be a mouthful. A 

 is a loophole in which a US-based company merges with, or acquires, a foreign company in a lower corporate tax jurisdiction and then claims to be a subsidiary of the foreign company in order to avoid paying higher US taxes.

By shifting its headquarters to another country, a business still has some US tax liability, but companies can significantly reduce their tax bills by shifting profits abroad or borrowing from the foreign parent and deducting interest payments to offset profits. According to a 2017 Congressional Budget Office (CBO) analysis, 60 corporations completed inversions between 1983 and 2015.

And the practice was growing: In 2014, the combined assets of companies announcing plans for inversions was $319 billion, “more than the combined assets of all of the corporations that had inverted over the previous 30 years,” according to the CBO. The Obama administration estimated that the US stood to lose tens of billions in tax revenue as the practice increased.

“The feeling in Washington, among the lawmakers and among Treasury people, was this may be technically legal, but it shouldn’t be allowed,” Alistair Nevius, former editor in chief of tax at AICPA’s magazines and newsletters in 2014, told CFO Brew.

As more companies looked to inversions to reduce their tax bills, in September 2014, the Obama administration took action to close the inversion loophole by 

 that made the practice much more difficult, and less advantageous.

“I think the regs were fairly successful in at least slowing down corporate inversions,” Nevius said. “Certainly the attention to them really went away.”

Within a few short years, the Obama-era regulations on tax inversions seriously curtailed the practice, and the Trump administration would later pass legislation that essentially ended inversions.

In part, the 2014 Treasury regulations changed the ownership requirements of inversion transactions. The new regulations mandated that a company was still liable for American taxes if “less than 25 percent of the new multinational entity’s business activity is in the home country of the new foreign parent,” and the shareholders of the American corporation owned 60% or more of the foreign company. In 2016, new regulations also changed how organizations could account for intra-company debt, further weakening the advantages of tax inversions.

“[Tax inversion regulations] gave companies a lot more hoops that they had to jump through in order to do it successfully,” Nevius said.

In other words, if the company is doing business in the US and is owned by American shareholders, the new entity is considered an American corporation, no matter how it moves money around. Voilà, loophole closed.

“It was a bold step by the Treasury and we encouraged them,” Steve Rosenthal, former senior fellow at the Urban-Brookings Tax Policy Center, who was also an advisor to the Obama Treasury Department at the time, told us.

But companies weren’t happy about it. According to Rosenthal, there was backlash from some in the 

 that argued the regulations went beyond the Treasury’s authority. And while there was a threat to take the administration to court, that challenge 

 found that the Obama-era anti-inversion rules led to a decline in foreign direct investment in the US, suggesting that tax-driven mergers and acquisitions had indeed slowed.

But the real nail in the coffin of tax inversions was the first Trump administration’s 2017 Tax Cuts and Jobs Act, which brought the 

 from 35% to 21%. According to Nevius, bringing the corporate tax rate more in line with other countries took away a big incentive to find creative ways of avoiding taxes, and put corporate inversions on the back burner.

“I don’t think there’s been a real big name corporate inversion since then,” he said.

Even though the Trump administration’s business tax cut curtailed most corporate inversions, Trump considered 

 with Obama’s Treasury rules on inversions. But ultimately they were 

“What I took from that was that even the Trump administration, a business-oriented administration, appreciated the fact that these regulations were both effective to stop the abuse, and not too burdensome,” Rosenthal said.

Treasury Department cracks down on corporate tax inversions

But did it work?

Accounting once ran on a whole lot of dead trees.

Jim Bourke, a partner at accounting firm Withum who’s been with the firm since 1987, remembers those days. Before the cloud, if you asked your accountant for a copy of an old tax return, for instance, “it could be a couple of weeks by the time you get it,” he told CFO Brew.

Staff would need to get it out of the physical file room at the office, photocopy it, and either mail it to you or have you pick it up, he said. (And cross your fingers that no one shelved your paperwork in the wrong file.)

The advent of cloud-based accounting software changed all that. The cloud “was a revolution,” according to Bourke, who, as managing director of his firm’s advisory services branch, has helped many firms build out their tech stacks.

SaaS made it possible for accountants to work remotely, to hire and find clients from pretty much anywhere with internet access, and to provide clients with faster and more convenient service. But getting firms on the cloud hasn’t all been smooth sailing.

Cloud software for accounting first emerged in the late 1990s with the advent of NetLedger, the ancestor of NetSuite. By 2009, accounting software giants CCH, Intuit, and Thomson Reuters all had web-based tax preparation programs. But the first generation of cloud products was “very feature-thin,” Randy Johnston, a consultant with 40 years’ accounting software experience, told CFO Brew.

By 2012, cloud technology had advanced to the point where the profession took notice, in the form of the inaugural Digital CPA Conference, originally named the Digital CPA 

, which took place in October of that year. Around 2013 was when cloud products “started to get enough features that they could kind of work,” Johnston said. One of the pioneers of cloud accounting, he sat in the original design meetings for QuickBooks Online, NetSuite, and Sage Intacct.

But accounting firms were still wary. Convincing them to give up their onsite servers “was like taking their baby away,” Bourke, an early adopter and cloud evangelist, told us. One partner at a firm told him, “‘I want to be able to put my arms around the server,’” he recalled. Firms were concerned about data breaches, but they also feared change in general.

“They got so used to the way in which they did things. Most firms went to the cloud kicking and screaming.” he said.

The pandemic was what really spurred firms to join the cloud, Bourke noted. When firms weren’t able to get into their offices or visit clients on-site, they quickly saw the value of being able to access data remotely. “Everyone finally realized, ‘Oh my God, this cloud thing makes a ton of sense,’” Bourke told us.

Desktop’s being sunsetted, but laggards remain: 

Today, many vendors have discontinued their legacy desktop products. Intuit stopped accepting new US subscriptions for QuickBooks Desktop in September 2024. Most new vendors entering the market only offer cloud products, Bourke said.

But not all firms are on the cloud yet. Some of the holdouts seem to be smaller firms whose clients haven’t made the switch: Johnston said he recently spoke with a small Texas firm whose 20 clients are all on desktop, and it hasn’t even considered moving to the cloud. Firms that convert now may “have to leave some of their client base behind,” he said. And converting can be costly, he added: “You have to dedicate the resources and charge enough to get it done, and sometimes the clients aren’t willing to pay.”

Bourke feels that getting on the cloud is a no-brainer. “It’s accessible anywhere day or night or in any country, anywhere in the world,” he said, and because it’s scalable, it works for sole practitioners and huge firms alike. It allows firms to give clients the “Amazon experience” they’ve come to expect even from accountants, he said, and provide them with more convenient, transparent, and faster service.

But there are some drawbacks to the cloud, according to Johnston. Cloud software often isn’t as robust as the legacy programs it replaced, he said. Then there’s SaaS price creep to contend with. Since switching software is a big undertaking, if vendors raise prices, firms may feel they have little choice but to pay up. “That type of stuff is rampant in the accounting market,” Johnston said.

Security is a legitimate concern, Bourke added, admitting, “Data breaches keep me up at night.” But firms can protect themselves by choosing good providers, he said. He recommends looking for vendors that have had SOC II audits to help ensure they’re using best practices for data security.

AI could be accounting’s next digital “revolution,” Bourke believes. He hopes it will catch on more quickly than the cloud did. Change, he said, is necessarily painful, but his advice is to “get it over with; put it behind you.”

“It’s where you’ve got to go for the profession to remain relevant for so many years to come,” he concluded.

The history of accounting’s cloud revolution

The long, slow road to the cloud was paved with dead trees. 

Alex Zank

There’s a lot from the mid- to late-2000s that invites feelings of nostalgia.

Seth Rogen and his troupe dominated the comedy scene with hits like 

. Eli Manning and the Giants gave NFL fans the 

 in Super Bowl XLII. The 2007–08 global financial crisis and ensuing Great Recession gave an entire generation lasting economic anxiety…wait a minute.

A core memory needn’t be cheerful to be consequential. Indeed, the financial crisis consequently led to passage of the Dodd-Frank Act, an overhaul of the US financial sector “on a scale not seen since the reforms that followed the Great Depression,” as then-President Barack Obama 

The Dodd-Frank Act was lawmakers’ response to “the shadow banking system at the time,” according to Mark Nelson, senior legal analyst at Wolters Kluwer, and they passed it in 2010.

That shadow banking system included “the largely unregulated businesses that were getting blamed for [the crisis],” such as mortgage lenders, Nelson told CFO Brew. “And I think the Dodd-Frank Act, it addresses those issues mostly in the banking provisions, like bank capital, bank stress testing, and things like that. But it also pulled in a lot of other topics that may or may not have been directly responsible for the financial crisis,” including hedge funds.

Dodd-Frank still plays a central role in public discourse 15 years later, though its future is uncertain in a Trump administration focused on deregulation. Before we go there, let’s examine all the ways it impacted banking and, more generally, corporate America.

 A breezy read that spans 2,300 pages, Dodd-Frank introduced 400 new regulations on Wall Street.

Fortunately, Mayra Rodríguez Valladares, a financial risk consultant and trainer, helped us summarize what the law did in far fewer words. She said Dodd-Frank had five main objectives:

It created new agencies such as the Consumer Financial Protection Bureau (CFPB), which Rodríguez Valladares said was a “dramatic change in how institutions were regulated” by centralizing the role of consumer watchdog against predatory lending and similar “miscreants.” Nelson at Wolters Kluwer also name-dropped the Financial Stability Oversight Council (FSOC), which “was a new creation to look at systemic risk” in the financial sector.

By creating this plethora of new financial regulations, Dodd-Frank reminded the public that “banks can get into trouble” and there’s never a guarantee they’ll always remain open, Rodríguez Valladares said.

The law also created the Volcker Rule, which bans proprietary trading or speculation by banking institutions. As a bank, “you have to go through a fair amount of documentation to show to your risk managers and to the bank regulators, why exactly are you holding these stocks, why are you holding these bonds, why are you doing these derivatives,” she said. “And banks don’t like it.”

It created regulations for derivatives. Before Dodd-Frank, only derivatives that were traded on exchanges such as the Chicago Mercantile Exchange were subject to regulations, Rodríguez Valladares said. Over-the-counter derivatives such as interest-rate derivatives were not. “Transparency is key,” she said. “When different players know how much is outstanding, how much is being traded, what the prices are, it is a much, much better market.”

Dodd-Frank added more requirements for banks such as “living wills” that, according to the Federal Reserve website, “must describe the company’s strategy for rapid and orderly resolution in the event of material financial distress or failure of the company.”

Not everyone was happy with all this new red tape.

 Dodd-Frank had its critics, including Republican politicians. The law got through Congress largely because of Democratic support. Three Republican senators voted for Dodd-Frank, which was just enough to avoid a filibuster.

The GOP-controlled House Financial Services Committee website states that “Dodd-Frank reaches far beyond Wall Street and does not address the real causes of the crisis,” and former Rep. Randy Neugebauer (R-TX) once claimed that “it will take over 24 million man hours” annually to comply with just 224 of the law’s 400 regulations.

Rodríguez Valladares noted that large banks “fought…tooth and nail” against the Volcker Rule because of the added documentation it required, but “no, banks should not be casinos,” she said, “because they are holding your deposits…so they should not be speculating.”

It should be no surprise, then, to hear that Republican lawmakers put Dodd-Frank in their crosshairs in future Congressional sessions.