Chris Ortega on Financial Transformation in Finance’s Golden Age

[00:00:00] Chris Ortega: If you do not have a solid foundation of accounting, it doesn’t matter the horsepower, the platforms, the talent that you have in FP&A, they’re never gonna be successful.

[00:00:35] Joe Michalowski: Hello, and welcome to another episode of The Role Forward podcast. My name is Joe Michalowski, and this episode is brought to you by Mosaic, a strategic finance platform that transforms the way business gets done. And today, my guest is Chris Ortega, CEO of Fresh FP&A. He’s a fractional CFO, advisory services for business, transforming and scaling finance organizations. Chris, thank you so much for being here.

[00:00:54] Chris Ortega: Joe, what’s up, man? Nice to be a part, nice to be here.

[00:00:57] Joe Michalowski: Yeah, awesome to have you. We, we got to catch up, you know, before we decided to do this, it was a great conversation, you just bring a lot of energy, man, and I, I appreciate you being here, and I’m excited to chat. Before we get started, we have a lot to talk about, but can you just give the quick background about yourself, finance, accounting experience, path to where you are now, all that kinda stuff?

Chris Ortega Introduction

[00:01:17] Chris Ortega: Yeah. So, I’ve been in the accounting, this’ll be year 18 in the accounting finance, FP&A, and financial leadership. Time is flying when you have fun, but start off my career in public accounting at Ernst & Young, tremendous opportunity, got to work with a lot of Fortune 1000 companies here in Indianapolis, which was a great experience. 

[00:01:34] But then I realized, you know what? Like, I don’t want to be the number spell checker, so like, I want to get actually into the business and do the work. So, I started my first entrepreneurial technology company, which was called ChaCha Search, was the accounting manager there,

[00:01:48] and, you know, looking at my career, Joe, for like, the first six or seven years of my career, I was in heavy accounting. Then I would say the next, uh, six, seven years, eight years of my career, that’s when I got into finance, that’s when I got into FP&A at high-growth SaaS businesses. So, building, shaping, growing, and scaling the finance organization is really, really cool there.

[00:02:08] And then, the last half of my years where I got into that financial leadership at SaaS businesses, so, uh, most recently, I was part of a marketing platform company called Emarsys, um, and built that America’s operations all the way up from, you know, 30 employees all the way up to about 150 employees in, like, three or four years time,

[00:02:26] and then actually led the acquisition through SAP. And then I, you know, I got through the acquisition, been to the mountaintop, built, and shaped, and scaled, uh, a lot of different finance organizations that I had the chance to work with. And then I found myself at this fork in the road, Joe. I said, “Look, do I continue to go down the CFO route?”

[00:02:43] But then I was like, man, I know what it takes to build, shape, transform, and scale a finance organization, I know the good, the bad, the ugly, and everything in between, and I felt there needed to be a fresh perspective on finance. So, a little under a year ago, I started Fresh FP&A, which is consult, a Fractional CFO and Advisory Services that help businesses transform and scale their finance organization in different high-growth businesses.

[00:03:08] So, this week, honestly, this week in February, it’ll, it’ll be a year anniversary of me doing this full-time, but I’ve also been doing Fresh FP&A, it’s kind of, like, a side hustle for, like, the last five or six years. So, that’s what got me here.

[00:03:22] Joe Michalowski: Damn it. Well, congrats on, uh, the one-year anniversary. This episode, I’m hoping, should be live right around when that one-year hits, so that’s awesome. Even, uh, I was really excited when we chatted the first time just because your background aligns so well with what our audience is, that SaaS background, and like the, like you said, you’ve been to the mountaintop, so you’ve been everywhere from boots on the ground, heavy accounting, all the way up through getting that exit with the, the SaaS company kind of scaling it there.

[00:03:48] So, I think, uh, you bring, you know, a fantastic perspective for our audience, and I’m really excited to dive into the Fresh FP&A perspective that you are talking about. And we’re gonna spend, uh, you know, most of our time talking, and like, getting into the weeds of that. So, before, before we sort of get into specifics, do you want to just give, like, the, the 30,000-foot overview of what Fresh FP&A means?

[00:04:15] Chris Ortega: Yeah. So, when I, when I was at that fork in a road that I mentioned earlier, right, and I, I was thinking of a word, and I remember sitting here, and I was thinking, I was like, man, there needs to be, like, a new perspective, there needs to be, like, and I was like, the word fresh just, like, popped in my head and I was like, that’s definitely gonna be it.

[00:04:31] Bringing, bringing the swagger to it. So, I was like, it’s definitely fresh with a new perspective, but I also felt there needs to be a new perspective on FP&A, right? When you look at traditional FP&A, the first thing you think about, the first thing a lot of business partners think about is financial planning and analysis, right?

[00:04:49] For me, I was like, that’s not technology, uh, technology like Mosaic, like other technologies can do. So, like, they can do the planning and analysis a lot better than what I want me and my team to do. So, FP&A means to us is financial partnership and advising, that’s the new level of FP&A. So, when I was thinking about my business, I was like, I wanna bring a new perspective to the financial partnership and advisory that we provide to the business.

[00:05:16] The reason why that’s important, Joe, is because when you think about the business, when you look at the pre-pandemic, during the pandemic and the post-pandemic, the, the level of collaboration, communication, connection, and community that the business wants from the office of the CFO, they want more of that,

[00:05:35] they don’t want more calculations, more, uh, critical spreadsheet formulas, right? They wanna be collaborators, they want us to communicate inside the business, we need to bring clarity. So, for me, uh, that was the, the catalyst and what started everything around Fresh FP&A.

[00:05:52] Joe Michalowski: I love it. First of all, the brand is great, the sweatshirt you’re wearing right now, if people are just listening to the audio, missing out on the “Freshest CFO” sweatshirt, which, uh, I’m a jealous man, I, I love the brand, and so, I, you said you just sat down, and you were like, it has to be fresh, and I, I think, you know, from a, going out on your own, the entrepreneur side of it, great choice.

[00:06:12] But even just the whole, like, concept of it, aligns so well with what, you know, we, we talk about, you know, strategic finance, and like, it’s the, it’s sort of our take on exactly what you said because when our founders sat down and they were like, “Okay, like we, we have an idea for this.” It’s sort of, I remember they showed me, like, a pyramid, and it was like, “Okay, this pyramid kind of represents all the tasks finance and accounting, like, takes care of.”

[00:06:37] And it’s, like, 80% of your time is on those, like, bottom three layers, it’s, like, transactions, it’s just, like, getting the reports out the door and then at, like, the tip-top, it was like, all right, 20% of your time is, like, actually collaborating and, you know, being strategic, driving growth, and everything I’m hearing from you is like, “Yeah, we gotta focus on that, like, top part,

[00:06:55] like, we have to sort of flip that, that pyramid.” So, I really love it, I’m excited to dig into it. But, you know, the, the first thing that I had down on my list that I, I wanted to talk about was like, if this was so easy, like, everybody would just do it, like, it’s really easy for us to say, yeah, you know, take that Fresh FP&A approach, take that strategic finance approach,

[00:07:15] but it’s not easy, like, it’s hard to get there. And so, I’m curious, like what, what have you seen as, like, the roadblocks to actually embracing your thoughts around Fresh FP&A?

The Process of Embracing a Fresh, Strategic FP&A Function

[00:07:26] Chris Ortega: Yeah, this is, and this is something we do at a Fresh FP&A, so on our advisory side, we do financial transformation, and it’s really, the catalyst is three-key pillars that people aren’t ready to take that, that next step, right? The people, the processes, and the partnership, um, when we look at the six pillars of financial transformation, those are the foundation-level pillars.

[00:07:47] You need the right people doing the right work, providing the right value to the business, that’s the people, the part, uh, the process and partnership. And when you look at organizations that say, “Hey, we want to be that, that financial partner and advisor, we want to be that level up, we want to level up our skillset.”

[00:08:04] Right? But you gotta start at those fundamental levels, right? A lot of times, and I’m not knocking, a lot of finance organizations, and I’ve done this myself, so I’m, I’m speaking from experience, right? You think that you’re gonna go get that new technology, and it’s gonna solve all of your problems, you think like, “Hey, we’re gonna bring in this awesome tool.” But you don’t have the right people,

[00:08:23] they’re still doing this manual work, and you don’t have the right partnership value that you’re bringing into the organization. So, for me, for organizations that want to get on that roadmap, to be in that financial partnered advisor, to be that valued advisor in the business, less about the scorekeeper, lessen to the data aggregation and data mining, focus on those three pillars, right?

[00:08:44] And to even go a step deeper, right, focus on those three pillars the same way you will focus on a quarterly forecast, a quarterly budget, or an annual plan, right? The same diligence that you go through, right, when we advise our clients on around the people, the process, and the partnership, you gotta set the vision, identify the strategies, set the tactics,

[00:09:05] set the milestones, set the metrics, right? So, you can take that same framework around the people, okay, what’s gonna be our vision of the finance organization, what are some strategies that we want to have, how are we gonna tactically execute on those, what are those milestones 6, 8, 12, 18, 24 months that we wanna look at?

[00:09:22] And then, what are the metrics that we’re gonna measure as a team for success that we can communicate across the business? So, for me, that is the, the framework for, uh, a lot of organizations that don’t know where to start and they think technology’s gonna solve it, or start with the people, start with building that solid foundational house of that finance organization,

[00:09:41] get the right people in the right seat, have them doing the high-value work, and bring that high level of good-value partnership to the organization, that’s the recipe for success.

[00:09:52] Joe Michalowski: That sounds, sounds great. I, uh, I had a question here, it was like, what’s kind of, like, the crux of the problem? And, you know, to your point, you know, you think people are gonna say, yeah, it’s just, like, one, one platform away, and like, you know, you know, we would like to think that technology is supportive, but yeah, without the right mindset, without the right people in the seat

[00:10:11] to get it done, like, it’s all, it’s all gonna fall flat. So, I, I would completely agree, like, we, uh, we’ve talked about those same three pillars, and like, how to improve them in the past, and I, I love that you sort of sit down and try to think through that. And so, I’d love to dig a little bit deeper into, you know, your actual engagement, like, with a client.

[00:10:31] So, when you sit down, you go, and you do the, or you put the framework in place that you just mentioned. I want to assume that the people can’t really change off the bat. So, like, you’re not gonna go in, and you’re gonna say, “Hey, you have to, like, revamp your entire finance organization.” Especially if it’s like a, a smaller, like, SaaS business,

[00:10:47] they might have, like, two, three finance people. You’re not gonna say, “Hey, I know you guys just hired me, but let’s get three new finance people in here ’cause we just don’t have the right skills.” It’s just probably not a great business model for you, and so, it sounds to me, like, a process is real, like, how do you get those, that existing finance team to put the right processes in place?

[00:11:06] And so, where do you start? Like, what, what are some of the first processes that have to change to get this vision to work? Like, where, where do you begin with these companies?

[00:11:16] Chris Ortega: Yeah, so, a lot of times when we look at those foundation-level pillars, it’s really, you know, the, the people’s where we start with first, sometimes, right? Like, I’m not saying it’s, like, every time, ’cause you, you know, you may be dealing with a client that has, as you mentioned, they have that typical VP of finance,

[00:11:30] finance manager, accounting person or a controller, and like, a staff FP&A or a staff accountant, right? Like, interchangeable, that’s the, the typical framework that you see. But on the people side, I’ll talk through, like, quick start guide on all those. On the people side, one thing that we do is exactly right,

[00:11:46] we don’t go in and say, “Hey, get rid of your entire financing.” That is not a scalable solution, right? But one thing we go and identify is we say, “Okay, what are the core competencies that you’re looking for in your finance team of the future?” Right? The whole purpose of that is you’re doing a little forward forecasting,

[00:12:05] like, what are those, like, we need great storytellers, we need people that are great communicators, we need people that are be able to turn complexity into clear, concise conclusions to the business, we need people that have a curiosity of learning the business, right? These are all core competencies that you want to identify and say, “Hey,

[00:12:21] everything was right, we had the funding, we had, everything fell into place, here’s the core competencies that we wanna look for in the future.” A lot of times, we do consulting and, and advising on the, with the clients and, and help them understand what those four to five core competencies are.

[00:12:35] Then the second thing that we do is, like, okay, what are the baselines that you have now, right? Like, what is, if you look at your four people, five people, six people, two people, whatever, the amount of number of people that you have right now, what are the core competencies that that team has, right? A lot of times you see, hey, they’re great at problem-solving,

[00:12:54] they’re great at, you know, this ERP tool, you start to identify where are we at, which is that baseline assessment, and then where do we want to get to for our competency team? Now, you know those ranges, here’s where we are, here’s where we want to get to. Now, comes into that same discipline that we take to a cashflow forecast,

[00:13:14] the same discipline we take to a, a budgeting forecast, we know where we’re at, we know where we want to get to, how do we develop the strategies, the tactics, the metric, and the milestones to get us from A to B? And then, how do we break that down into maybe monthly chunks, quarterly chunks, semi-annual chunks?

[00:13:32] Now, you get the rigor into it. So, um, that’s what we do on the people side. Same thing on the process side as well, too, right? Typically where I land and expand and where we see a lot of clients need help is definitely around the, the automation, around the, the accounting, uh, the automation around the data aggregation, you know, they’re, they’re taking data from all these disparate systems that nobody’s updating, and it’s the whole garbage in, garbage out mentality.

[00:13:57] So, typically same thing you do right there, right? You look at it and say, “What are the processes we have now? What are the bottlenecks?” What, one thing that we do with our clients is we do a full mapping of all of their financial processes. So, we look at contracting, we look at order to pay, we look at the month and close,

[00:14:14] we do, here’s a baseline of every process right now that you have that touches the finance organization. Then we say, what is the ideal state that we want to get to? The reason why that kind of baseline, and where do we want to go, now that gives people, like, an honest assessment of here’s where we’re at, right?

[00:14:31] Here’s exactly where we’re at in our people, here’s where we’re adding our processes, here’s where at, we’re adding our partnership. It gives that reality check because one thing I always see, too, Joe, is you got those VPs and those CFOs out there to be like, “Yeah, Chris, what are you talking about? We’re valued advisors,

[00:14:47] like, what are you talking about?” Our business brings us to the conversation, and then I talk to their CEO, and I’m saying, “Hey, what is the value that your finance organization brings to you?” And the first thing he says is, “Oh, man, they make sure to get the numbers to us on time.” I’m sorry, like, that’s not gonna blow people’s mind,

[00:15:04] that’s, like, to be expected, right? If you’re, if your value proposition that you’re bringing to an organization is that you get the numbers on time, I’m sorry, technology can do that a million times faster than you want people to do, right? So, for me, that’s typically where we start on those engagements.

[00:15:22] Understand the baselines, know where you’re at, know where you want to go, and develop the strategy, tactics, metrics, and milestones of how you want to get there.

[00:15:33] Joe Michalowski: I think, I love it, I, I think it’s exactly what we hear as well. It’s like, yeah, everyone talks about wanting a strategic seat at the table, like, you want to be in the room, somebody, I don’t know if you’ve seen Hamilton, but the room where it happened, like, I had a, I had talked to somebody one time who kept referencing that, and I was like, I may have seen Hamilton a few times, and I appreciated that.

[00:15:53] So, I, I think that all makes sense, and I really love getting the CEO’s perspective, like, as the advisor, like, you get to go in, and you get to see what the reality is, and it’s a good reality check for anyone in the finance team. And so, when you’re talking about going from, you know, point A, from that baseline to where you want to get to, I want to hone, hone in on those, the process part of this because there’s gotta be some, like, easy wins versus, like, the really hard changes to make.

[00:16:22] So, I wanna start with what’s hard because why not? What have you found to be the hardest processes to modernize and to get from baseline to where companies want to get to? And like, what tips do you have for, for kind of working through that?

How to Modernize Your Month-End Close

[00:16:35] Chris Ortega: Yeah. In, in both working professionally and, and the client and the advisory that we do with clients, one of the key processes that everybody struggle with, that you need, if there’s one take away, you have to make sure that that month-in close is not running outside of, like, 15 days, right? Like, that close process and everything that goes along with that is, like, the starting point of being a strategic finance person.

[00:17:00] Let me give you an example. When I was working at a, a SaaS company, right, our month-end close, Joe, we were getting done with the month-end close, typically, like, around the 18th, 19th of the month, right? So, you had almost a two, you had more than a two-week period where there’s, like, nothing going on in the business, there’s no, like, the business is waiting for finance to get done with the month-in close, right?

[00:17:25] Then when we get done with it, we would have our one, like, couple days, business days of reporting to the business and to our board, to our founders and everybody, right, what we, what we did last month and what, what that compared to. We’re already walking into the next month, right? So, typically one of the key processes, get, if you get that month-in closed down to, like, two to three days, right?

[00:17:48] Think about the time, energy, effort, and resources that you can dedicate thinking strategically about the business, right? That’s always one that we tackle when you wanna be that strategic partner, the partnership is not just FP&A as well, too, right? Like, you have to bring, and a lot of organizations, and I see this sometime, where you have accounting, and you have FP&A, like, kind of siloed, right?

[00:18:09] Like, the accountants are in the corner, and the FP&A team are in the corner, and they only talk about once the month-end closes is done and that’s when the baton is passed off, and FP&A takes it from there. You don’t wanna do that, you wanna have those teams understanding the bigger picture, right?

[00:18:25] You don’t, you don’t want accountants, but you also don’t want accountants in the FP&A piece of it trying to fully understand everything FP&A does. You need to make sure that that, like, it’s not a baton being passed off, it’s a running together. So, that’s typically one process that we see that really, really the, limits that FP&A team for being that strategic advisor.

[00:18:45] The second one is the processes around that, the, the, normally things that they do around their tactical operations, right? Like, the AR, the AP, a lot of that transactional level work, you’ve got so many organizations that dedicate so much resources to that. Technology, bring in technology to help automate a lot of those different things,

[00:19:05] and I tell you, one thing I’m really excited about, about the overall macro space of the finance organization, you have so many great solutions that can help automate AP, that can automate AR, that can automate fixed assets, that can automate a lot of these areas in, in accounting, right? And the reason why I’m talking about accounting so much is because that, that’s, if you do not have a solid foundation of accounting, it doesn’t matter the horsepower, the platforms, the talent that you have in FP&A, they’re never gonna be successful,

[00:19:35] they’re always gonna run into roadblocks. So, typically that’s where we start with understanding a lot of those tactical processes and which ones are creating bottlenecks to the fi, to the FP&A, and the finance organization, right? That’s always, uh, and, and that comes back from my career, right? When I was leading and building finance organizations, I always wanted to make sure that, ’cause the last thing you want to get into is a conversation,

[00:19:59] you’re sitting there with that board member, that CRO, that CEO, and now you’re spending the first hours debating if the numbers are right, you don’t need to do. So, those are just some core processes, you gotta start, and you gotta build that connection with the, with the accounting team, you gotta help them see the bigger picture, you’ve gotta get some wins in there.

[00:20:19] Joe Michalowski: There’s, uh, probably a, a small contingent of accounting listeners who are just like, “Yeah, Chris, like, we are, we are the background, we’re the foundation here.” So, I’m sure they all appreciate that very much, and it’s everything that we, I’ve heard from other guests as well, it’s, it’s not just strategic finance in the way of, like, the FP&A side, it’s strategic finance, the entire umbrella organization that brings in accounting.

[00:20:45] And if you’re not working together, like, it, it’s gonna be that garbage in, garbage out mentality that you mentioned before. So, I love all that, and I think it makes sense to start with those processes because if they’re broken, nothing else works, like, it doesn’t matter if you have this rock solid budgeting process that’s, I don’t know, a month late because your numbers aren’t right or you’re, you’re still working through the accounting.

[00:21:07] So, I think that makes sense. I’m curious if, uh, are there some easy wins? Like, if somebody listening right now, they’re like, “Okay, Chris, like, I do need to get those, those processes figured out.” What are some, like, quick wins, small things they could tackle, like, right now instead of like, you know, boiling the oceans, like, I gotta fix my entire month-end closed process? Where do you start?

[00:21:28] Chris Ortega: Yeah, I think the first one to start is probably one of the most important metrics that every CFO needs to be tracking against, right? That’s cash burn and cash runway. So, if there’s, like, one process that you’re like, “Chris, we need to get laser tight on it.” Go get laser tight in your cash, in your treasury management process, right?

[00:21:45] Anything that hits that bank account, you want to have as much accuracy, as much insight, as much clarity and think about it, like, that’s gonna be AR, that’s gonna be AP, that’s gonna be a lot of different elements. So, if there’s one process for you to really make an impact and look at a, at a macro level of, of in, intelligence that’s, like, really impactful to a business.

[00:22:05] Cash burning and cash runway, like, for me, like, anytime, like, I, I talked, I was talking with the CFO, a fractional CFO last week, and he was really into this cash flow modeling, uh, with his client, he was like, “Hey, Chris, what are some things that I should be looking at, like, I’m so traditionally used to looking at the statement of cash flows, like.” And I’m like, “That’s not the places, that’s the, that’s where, that’s where the accountants start,

[00:22:26] like, you need to, like, dive into the actual hard numbers of that cash change, like, you had $10, and now you have $8, what drove that change? You need to know everything around that.” So, for one, I would definitely advise to start on that cash flow process, anything around touching cash, most important one. I think the second one that you can really have an impact on, that kind of goes into that cash piece of it, that has an impact, the AR process, that is a pain for a lot of different businesses, right?

[00:22:55] That’s a pain because when you think about a SaaS business, right, like, the billing aspect of it, whether you’re, you’re on a, a subscription base, maybe you’re on the uses base of it. There’s so many different nuances that go into that billing cycle that may delay you getting cash in, maybe that’s something that you identify in that first process.

[00:23:13] You’re like, “Hey, if we got better in our billing, we can increase getting our invoices out to our customers faster, which can have a better cash conversion, we get more cash in the door.” Right? So, anything that is helping you drive and optimize cash a lot better, um, there’s also on the, like, the SaaS subscription side.

[00:23:30] So, when you’re looking at some of your spin, getting to that AP element to say, “Hey, like, how can we get better in our, our, our vendor contracts?” Those are goldmine opportunities, right, and the reason why I call ’em goldmine opportunities because you can see the bottom line impact on that, you can see cash coming in faster,

[00:23:48] you can see floating cash a lot faster, you can see your cash burn decreasing because you’re bringing in more cash, you can see your runway being stressed out, right? That, to me, is like, if you’re looking for a win to have that you can have across the business, no doubt about it, treasury management and cash flow optimization and really getting laser specific on cash burn and cash runway, huge opportunity.

[00:24:12] Joe Michalowski: This, this is great ’cause I know, I know, I, I showed you the question before, so this isn’t that surprising, but one thing I wanted to do because I feel like sometimes, like, the, espe, even when we talk about strategic finance, it can get very abstract, you’re like, oh, it’s this new, like, a new P and a new A in FP&A, and it’s, it’s,

[00:24:29] I love the conversation, it makes a lot of sense, but I want to try to make it as, like, practical, actionable as possible. I think you’ve been doing that the whole time, so thank you for that. But I wanted to talk about, since, you know, we’re at that time of year, it’s, it’s January as we record this, some, like, 2023 trends.

[00:24:44] And the first one that I had listed was all about cash management ’cause that’s what we’ve seen is that big trend is, you know, we’re in this market downturn, everyone needs to get better at managing their cash, optimizing cash runway, cash burn, and I want to hear, and you just gave me a lot of it, so thank you,

[00:25:03] um, but I’d love to go a little bit further on, like, give me the F, the Fresh FP&A perspective on tackling new cash management challenges, optimizing those cash spent, even if it’s like, you know, you mentioned digging into AR, like, how do you actually do that? What are some practical steps, and maybe some wins you’ve seen in the past?

2023 FP&A Trends

[00:25:23] Chris Ortega: Yeah. So, when you look at the traditional way of cash management, you’re, and, and honestly, Joe, my heart goes out, I think the Tally’s up to, like, 51,000 tech people that have been laid off to this point, so far in January, right, in the, in the tech market. So, first and foremost, man, my heart, everything goes out,

[00:25:40] I’ve been there, for those people listening to this, if you’re going through that right now, just understand it’s just a, a moment in time and you’re gonna bounce back, it’s just a, it’s just a minor setback for a major setup. So, first off, my, everything goes out to, to those people affected by these, by these layoffs that we’re seeing, right?

[00:25:56] But the thing about it is, is like, that is that traditional mindset of managing cash, right? You look at it, CFOs are like, and, and, and a lot of it, you see it, it’s this, it’s these exercises, scenario plannings, it’s these Excel models that they’re using, and saying, yep, this is how we need to go make a 10% reduction, right? 

[00:26:14] Some of those fresh ways, and this is where it’s like, this is where I never understood from, from leading finance organization, and like, I’ve had to go through layoffs, I’ve had to do that, but the re, it was our last option, right, Joe? It wasn’t the first thing that I thought about, it wasn’t the first thing that went through my mind, was like, hey, we need to have a positive impact on our cash,

[00:26:35] we need to increase our, decrease our cash burn, and increase our cash runway, right? It wasn’t my first idea of like, hey, let’s go, just go get rid of 25% of our workforce, right? That’s that, that to me is that traditional mindset, some ways that you can get instant wins around that, three areas that I’ll tell people to focus on.

[00:26:52] The first one that can have a big impact, right? Look at the num, look at the technology that is throughout your, your enterprise, right? Not just in the finance organization, right? Look at the technology that’s in sales, look at the technology that’s in operations, look at all the different technology pieces that your organization is using, right?

[00:27:11] And if you’re that, like, high-growth, like SaaS businesses, past business, probably like a Series A, you probably don’t have a procurement group, right? That was always one gap that we never had a, in smaller organizations that I led, we never had a procurement, we wore that hat. But this is where you can bring in a great partner

[00:27:28] to look at that entire SaaS software subscription model, right? Because there’s a lot of opportunity to say, you probably got redundant tools in there, who owns it, where are the contracts, are we getting the best pricing? There’s organizations out there that you can leverage that give you guaranteed savings, like, they guarantee the savings that you’re gonna have, right?

[00:27:49] And that’s gonna have a, that’s gonna have an immediate bottom-line impact on. The second piece of it is one way that I love to work in the sales organization is on the contract management process, right? So, when you think about from a SaaS perspective, you got marketing bring in the lead, sales works it, sales close it, sales gets the contract, contracts get fulfilled, it gets implemented, gets billed,

[00:28:11] we collect cash, dollar retention rate, that whole cycle, right? But one of the things that I love to partner in the sales organization, and I actually work with some clients on this, is helping that client understand what is the ideal contract that you want your sales organization to sell. A lot of times in, in, in SaaS businesses, a lot of early stages, and even some Series B-level companies that I’ve worked with, right?

[00:28:34] They’re get, their contracting’s all over the place, it’s like, “We got this one that has monthly terms, and it’s 60,” and I get that you want to be able to sell, and you’re all about, like, we need to bring in volume of customers, but what that creates is inconsistency around your cash side. So, one thing that I, I, I did and I recommend clients to do, and I’ve actually done some trainings around this, is like, walk the sales organization through,

[00:28:56] here’s exactly that contract you wanna sell, it ma, if you can get it semi-annual payment in advance, here’s why the subscription date matters, like, bringing them along, helping the sales organization understand with them. A lot of times, like, they’re great at understanding what’s in it for me, but when finance can partner inside the organization to help sales understand it.

[00:29:17] And then the biggest piece on top of that is, like, now you give them incentive to say, “If you sell this kind of contract that’s semi-annual in advance, that have this conscriptive, breakout, this kind of piece of it, this kind of accuracy around it.” Then we’ll give you an extra Commissional bo, bonus on top of that, right? Now, you got everybody bought in,

[00:29:35] you got, and the thing about sales that I’ve learned, if you tell sales the right thing to go sell and you give them incentives around it, that’s everything that they’re going to try to sell, they’re going to try to do that, right? And what that helps now that brings in that better cash flow, right?

[00:29:50] Semi-annual in advance, getting that six months in advance, right, getting multi-years in, in this, in, in this economic environment is kind of difficult, but that’s way better impacting, phasing that out monthly, right? Same thing that you can do on the AP side as well, but my whole, the whole purpose of, like, when I’m communicating around this is, like, you gotta bring the business in that conversation, right?

[00:30:12] Don’t dictate to the organization to say, “Hey, I need you to sell this kind of contract ’cause this contract is the best.” They’re not gonna do it. Too many times finance, we go dictate to the business, we go tell the business, “Go do this, go do that.” When we, when we need to be in that conversation, it’s like, how can we help support you deliver on this?

[00:30:31] So, for me, I think those are some great, like, processes, some great quick wins that you can get to have an immediate impact on your cash flow.

[00:30:40] Joe Michalowski: I love that. All this is great, I think you’re so right, o, obviously, uh, agree with all the sentiment around the, the tech layoffs and stuff like that, it’s, uh, it’s been rough and we, uh, back in July, you know, when, when the market downturn sort of conversation started, everyone was sort of jumping on this bandwagon of like, you know, how to weather the storm, and like, so we did our own take on, like, weathering the storm and there were all these VCs talking about the market outlook.

[00:31:06] And that was a big part of it, we, our, our CEO talked about, uh, like, cutting into the bone, like, that was how he described, like, that’s your last sort of resort is, like, these layoff events. And I think, you know, the Sa, the SaaS spending, I think it’s a really good tip to, to bring in a partner, um, I haven’t heard someone say that, so that’s great.

[00:31:24] But the stuff about partnering with sales and the rest of the business, like, that, that’s a really great takeaway, I think for anyone listening is just a really practical story about where you can, can get better at this. So, appreciate that, like, that, that’s a great way to tackle that sort of first trend.

[00:31:39] I want to, I wanna keep this going and, and I only had two trends down and I, I’d love to hear what yours are, but I, before we get there, the second trend I had, and it’s kind of, it’s a little bit newer, you know, weathering the storm was the end of 2022, it’s like, how do we survive? And now I think everyone’s kind of getting to this point where they’re realizing, like, a startup, like, a, a VC backed SaaS company can’t really just, like, survive the year,

[00:32:03] like, you still need to grow through this. And so, I would love to hear how you think finance can be, like, a growth catalyst for the business, like, it’s not just saving money, but actively pushing the company to earn more, to grow more through, you know, difficult times.

[00:32:20] Chris Ortega: Yeah. For me, I think, like, the, the VC market and private equity market and strategic market has made a significant shift, right? Like, the whole goal, the whole premise before of grow at all costs, like, we don’t care, like, that has, that is gone, those days are gone, right? 

[00:32:36] And when you look at, when you, and I was looking at the interest statistic, and they were looking at a lot of SaaS businesses that had Rule of 40s before the whole profitable growth, and you would always have these organizations that had triple digits revenue growth and that EBIT margin was negative, right?

[00:32:51] Like, you, that was the profile of all of them, right? The, the version of going forward is if you, if you were looking at a Rule of 40 and you’re able to have, like, that 20, 30% revenue growth in, like, 20 to 10 per, uh, 10% to 20% EBIT margin, like, that is the profitable growth way, right? Like, you’re spending, you’re spending on the top line, but you’re doing it in a, in a profitable way from the bottom line.

[00:33:17] Like, that’s that full perspective that you need to bring into it. So, for me, I think, like, as, as SaaS companies are thinking about what we need to do, like, how do we do that, right? Everything on the revenue offside, right, like, that we mentioned, some of the things that we talked about that you can go partner inside, that is, like, a goldmine opportunity because a lot of finance organizations and even CFOs, right, like, they don’t really have that collaboration that almost, like, I call it, like, the sparring partner mentality,

[00:33:45] with the C, the CRO, or the, the VP of sales, or the leader of the commercial organization, right? Where you can come in as, like, help them understand what are the pains and frustrations that they’re seeing in their organization and how can you help serve them and help solve those pains. One of the biggest value adds of finance organizations of the future, how can you turn business pain into productivity, right?

[00:34:08] Like, how can you make an organization more product, like, produce more, right? Because that’s gonna bottom, have a bottom-line impact. The second thing is, is like, and that’s more on the top line, right, and then also, like, the insights that you can provide, it’s, it’s way past the point of like, “Hey, our revenue growth does 30%.” Right? 

[00:34:25] You need to be thinking about this balance between accuracy and precision inside the business, right? A lot of times, uh, uh, you know, finance organizations, and they’re, we’re in January, and probably in two more months, they’re gonna be reevaluating those budgets they did back in Q4 that are thrown out the window because the, the environment has changed, right?

[00:34:44] You need to have more agility insight. How are you as a finance leader in partnership with the business, making these pivot or persevere conversations? And how are you making that informative? And how are you making that proactive and not reactive, right? So, for instance, if you were setting out your cash burn target, and you’re all, you’re coming at the end of January, and you’re like, “All right, do we pivot on

[00:35:07] that assumption that we had, or do we continue to persevere?” How are you informed of the business around that, right? I think that’s another key way that finance can help, you know, really drive this whole profitable growth mindset. And then, obviously, the major, like, when we look at SaaS businesses that are gonna have the highest valuations, those 10, 20, multiples going forward, they’re gonna have three characteristics.

[00:35:29] They’re gonna have a balanced revenue growth, they’re gonna have EBIT, EBIT, a nice EBIT, uh, EBIT margin, and they’re gonna be cash flow positive, they’re gonna have CFBs. CFBs is their cash flow, their, their cash flow break even, and they’re staying there, right? Like, they’ve already crossed that chasm to where every dollar that they make in revenue, they’re having a, a, a, a nice 10% to 20% margin on EBIT, and they’re self-funded.

[00:35:54] Those are the businesses I gu, remember I said this? Those are, when you look at the amount of dry powder that’s in the VC private equity market, those SaaS businesses that have those three characteristics, they’re gonna have crazy valuations, crazy valuations, um, and to me, as you can start thinking about how you can work inside the business, as you can think about, as we talked about before, having some of those processes that are gonna drive that, right?

[00:36:19] Like, if you’re able to partner in sales to draw a better contract management process that brings more cash inside the business, finance is already cash flow producing that, right, if you’re able to, and then, now that same contracting management process has a better customer experience on the top line from a revenue perspective.

[00:36:36] Maybe that increases the dollar retention rate for the customer now because they had a great experience. So, I think this is the golden time for finance to leave a legacy that we’re no longer the cost people, we’re not the su, we’re not the cost function inside the organization. I intimately believe and know that we have a legacy, that we could be revenue producing, and we could be cash producing and bottom line results driven inside the organization.

[00:37:03] Joe Michalowski: What a, what a manifesto, I’m gonna plaster this everywhere, we’re gonna be like, “Chris Ortega, Fresh FP&A take on finance’s golden age.” This is great, I think all of that is, is just great tips for sort of being that growth catalyst, being the driver of the business, being that true strategic partner.

[00:37:19] I think it ties into everything that you’ve said about what sort of your mindset is about kind of modernizing, uh, making FP&A more fresh. So, and we’re, we’re coming up on time, I have two, like, bigger questions I wanna ask, but before we get there, uh, those are two trends that I have seen that I wanted to get your take on, for sure.

[00:37:36] Are there any other, uh, 2023 trends that you would like to call out, something you’d like to put your name on and be like, this is what people should be paying attention to this year? I’d love to turn the floor over to you and see what you’ve been…

[00:37:47] Chris Ortega: Yeah, I think one of the, I think one of the biggest ones, man, is technology adoption, man, like, we, when you, when you, when you compare us to, you know, and I hate the comparison aspect of it, but when you look at some parts of the, of the business, right, they are technology adopters, right? Like, they’re the,

[00:38:03] they’re the first ones to dive into that, we usually are, like, the laggers, like, the last tw, last 10% to be like, ah, we should do that, right? There is so much power and scale, um, and platforms is, as we talked about people, process, and partnership being that foundation for finance organization to build the three scaling pillars,

[00:38:24] platform, performance, and profit optimization. That’s how you scale. Platforms are a great way of doing that, and my trend that I wanna see is you’re gonna start to see a lot more, we’re already starting to see in it with ChatGPT, right? The, the functionality that it has inside of, like, content creation and marketing, like, the use case it has around that.

[00:38:44] I’m starting to see, like, it involved, um, in the collection side and the A, and the AP side of it, you’re starting to see a lot of machine learning. I remember working at a software, uh, uh, in Emarsys before, and we were actually implementing a, a solution called Collect AI, which was, like, an artificial intelligence that helped maintain the collections process.

[00:39:04] So, you can start automating a lot of those manual, routine, low-value, high-transactional processes, like, like AP, like AR, like T&E, right? You can start, and it’s not a, and let me just make sure I caveat this to people, right? The goal of technology and adoption is not meant to replace people, we’re never gonna be, like, to a point where it’s just like, Chris is replaceable,

[00:39:28] it’s meant to put us at the right moment to deliver us the highest value with the highest skill set that we need, right? Do you want your high-potential, high-performing person taking this Excel document, downloading it from Salesforce, putting it into this model, updating and cleansing it? No. You don’t want them doing that.

[00:39:45] Let technology do that, put them in the right sides of it. So, for me, I think a really, really big trend is the finance organization moving away from being technology laggers to being technology adopters. That’s how we scale.

[00:40:01] Joe Michalowski: Love that, selfishly love that because, you know, it’s a Mosaic podcast, and we want everybody to do, adopt all the technology, but like it for unselfish reasons as well ’cause I think it’s a really good point and it’s, it’s exactly, you know, obviously, we’re trying to sell software, and like, that, but that’s, that’s the promise,

[00:40:17] it’s that you can get rid of some of those low-value tasks so you can focus on being the strategic partner you want to be ’cause nobody wants to spend, you know, sleep under their desk at, like, come quarter end or board meeting time just to, you know, get the numbers right, and like, they have five minutes to put together some, like, insights into an analysis, like, you wanna focus all your time on, like, what’s strategically valuable to the business.

[00:40:41] So, I love that one. I wanna get down to these last two questions, and they, I know I’ve been putting you through, I’ve been putting you to work to be honest, like, I’ve been asking you some, some deeper questions, you’ve been awesome. I want to give it, give it a little bit of a lighter ending, uh, less, a little less practical, but I’m just curious what’s some of, like, the, the aha moments you’ve experienced as a fractional CFO? Like, what are some, some wins that you’ve seen with clients by implementing your framework for Fresh FP&A?

[00:41:09] Chris Ortega: I think, uh, some of the wins, man, and some of the best moments and, and, and why I love what we do at Fresh FP&A is the impact that it has. I think when I look back over my career, Joe, one of the things I love the most is, I love being part of the journey, right? Like, I love being part of that book where you’re writing the chapters, right?

[00:41:26] You’re in chapter one, or maybe you fast forward to chapter eight. That’s one thing that I’ve absolutely loved with organizations is like seeing them go through that journey and that chapter and get the impact, right? Another aha moment is, like, when I sit with CEOs and, and border directors and founders and maybe they, you know, VC or private equity back, and I’m sitting with those, those VC and private equity people,

[00:41:48] and the first thing that they say is like, “Man, we’ve never worked with finance or people like you, like, we’ve, like, who are you guys? Like, where did you come from? Like, what do you do?” That’s such an aha moment because, like, they have all this experience, right? And they never worked with what it meant to be working with a strategic advisor, right?

[00:42:09] And, you know, there’s some clients that we brought on, Joe, where they, they, first thing that they say is like, “Man, it’s so refreshing to have a strategically-focused finance person, not just a person that’s masquerading as a fractional CFO, and they’re really a controller,” and I’m not knocking people that do that, right? 

[00:42:25] But you got a lot of fractional CFOs out here, man, that are just controllers, they’re just accountants, man, they’re just accountants, and accountants don’t make great finance business partners. So, that’s another aha moment. I think the third one, uh, aha moment as well, too, and this is from a, putting my leadership hat on, is seeing other people that come join F, Fresh FP&A, and like, they’re able to, you know, they, they have their full-time big-boy, big-girl job,

[00:42:51] but they’re actually able to work on these passion projects that we have for our clients, right? And to see them light up, I mean, this was my story, Joe, if I’m being honest and transparent, right? Like, I was doing kind of Fresh FP&A passively while having a full-time job leading a finance organization at a high-growth SaaS business.

[00:43:08] I was doing them both at the same time, and to be able to provide that opportunity for other professionals to work on, to develop new skills to work on passion projects, to do things that they never thought they can do, or skills they never thought they can develop, and they can provide that impact and, and help clients

[00:43:26] at the end of that, man, that’s been, like, one of the most rewarding things to sit across and say, “Man, Chris, I love,” and the thing about it is, is like, I love working in, like, my macro teams that I have, right? Like, we, you know, have a project, and we bring in a person that has this expertise, and the client’s happy, and they’re happy,

[00:43:43] and seeing that whole recipe of success that you’re able to give not only the client but the professional as they leverage their skill and, you know, maybe get to a point where they’re like, “Chris, man, since I’ve worked with Fresh FP&A in, in a, in a consulting capacity, like, this is something I’ve learned,

[00:44:00] I wanna be able to go full-time to be able to do this, right? Like, I wanna be full-time dedicated to doing these things.” I think a lot of those moments have been, like, really those moments where it’s like, “Chris, keep pushing, keep going forward, you’re making an impact.” Because at the end of the day, Joe, like, for everybody listening, my, the reason why I started Fresh FP&A was not to be, you know, grow this thing to be a multi-billion-dollar, million-dollar consultancy, and all over the world.

[00:44:27] I want to make an impact, I want to write the story, I want to use my skills, passions, talents, and experiences to help other realize and achieve greatness, and as long as I’m doing, man, that, that’s, that’s some of the most beautiful things, and when you see that in action and you see that being implemented and you see cl, you see clients that are changing their entire game of what they thought about working with a finance organization, those are those beautiful aha moments, man.

[00:44:54] Joe Michalowski: That’s awesome, I, it sounds really rewarding, I’m sure it, it’s not, like, your job got, um, it’s difficult in a different way, it’s not like, “Oh, my job was so hard before, and now it’s easy,” but like, it just sounds really rewarding, I’m sure you’re working hard every day, and it just sounds, uh, you just sound really happy, man.

[00:45:10] I’m, I’m happy for you, uh, it sounds really great, so I love to hear it. I have, uh, I have one last question for you, uh, we can keep it short, we can keep it high level, but I ask everybody that comes on, and I’m excited to hear what you think about it, it’s, uh, just what’s one thing you know now that you wish you knew when you started out in your accounting career?

[00:45:29] Chris Ortega: One thing I know now that I wish I would’ve known, I would, like, earlier in my career, I think I would have one, one thing I know now is I wake up every day, and I look for failure because outside of failure have been some of the greatest learning opportunities and expansion of my comfort zone. So, I think if I was younger, I would have, like, been less re, I would’ve been

[00:45:53] encouraging of seeking failure and not trying to fail, right? Which is a whole different mindset, like, now, man, I wake up every day and I, I, you know, I was doing a, a, a podcast with, uh, a university student, they, they, they, they ask me that, I’m like, man, I, I, I seek failure every day. And the reason why I do that is because outside of failure is learning,

[00:46:12] that’s it, the, there’s two options, you either win, or you’ve learned, you only lose if you don’t learn. So, I think for me and for all the listeners out there, the moment that you demystify failure and turn it into learning, the, the whole game changes, man.

[00:46:31] Joe Michalowski: Yeah. That’s such a positive outlook, yeah, honestly, you’re just a really positive guy. I appreciate you being here, it’s, uh, you know, Monday morning as we record this, it’s great to start, uh, with your perspective on everything ’cause it’s really big, uh, optimist, I, I love to hear it, it’s getting me kind of amped up to start the week, so I appreciate that.

[00:46:47] I’ve kept you long enough, so I, I just wanted to say that I appreciate you being here, I really enjoyed the chat, but I want to turn the floor over to you. Where can people go to learn more about you, learn more about Fresh FP&A, follow along with all the, the fantastic content that you put out? So, I wanna make that disclaimer, I’ll link out to everything, but the floor is yours. 

[00:47:06] Chris Ortega: Yeah. So, if you wanna learn more about Fresh FP&A and how we can help transform and scale your finance organization, check us out at www.freshfpa.com. If you wanna learn more, uh, we’re always posting content, so much stuff, follow us @freshfpa, and then also you can connect with me on LinkedIn, I’m on there as well, too,

[00:47:25] feel free to ask me any questions, connect with me, challenge me on some of these points, some elements that I missed, but that’s where you can find more about me and more about Fresh FP&A.

[00:47:35] Joe Michalowski: Awesome. Well, Chris, it was a great time, I just wanted to say thanks for being on The Role Forward, and, uh, yeah, hope we can do it again sometime. Thanks, man.

[00:47:41] Chris Ortega: Thank you so much, Joe, appreciate it.