📬 Feeling anxious: is it time to refinance your debt?

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Now, on to today’s Mailbag.

We’ve got some great topics. Here’s what’s on tap:

Now, let’s get into it.

EnFlexCFO from the UK asked:

How would you think about interest rate hedging in the current economic environment?

My CEO wants to hedge more (we are over 80% fixed already), but I fear this could be the worst time to move.

How do you balance reacting to the markets but not making rash, emotive decisions?

Thanks for this question EnFlexCFO. I'm prioritizing it because it feels very live right now, and I want to be transparent that this answer is specific to the macro environment at the time of writing. Some of the principles will age well and transfer to other situations, but the specific market call right now won't.

So let me start with where we are.

Central banks have, broadly speaking, done a reasonable job navigating a genuinely difficult landing on interest rates over the last few years. Slow off the mark to raise rates in 2022, yes, but they got there, and inflation had been settling back toward the 2.5-3% range with further cuts looking likely. A few weeks ago, the trajectory felt relatively clear.

Then came the escalations in the Middle East.

That changes the calculus in two specific ways for anyone trying to think about financing right now.

First, there is a real risk of oil-price-driven inflation ahead. If that materializes through supply chains (and that takes several months), we have a very different rate cycle ahead.

Second, geopolitical uncertainty tanks bank risk appetite. Money gets harder to find and more expensive almost immediately, well before any central bank moves - the risk premiums grow.

If you need to go to the debt market during a risk event, you will pay for it. This is why you should never back yourself into a corner on refinancing timing if you can possibly avoid it.

Every exogenous shock, whether it is a conflict, a pandemic, or a financial crisis, has the same two effects: it introduces rate unpredictability, and it simultaneously tightens credit availability.

The CFOs who get hurt are always the ones whose timing was forced. I have been there, with my hands tied on a forced refinance during an ugly macro environment.

Runway and optionality are king in those situations.

Now to your actual question…

You mentioned being 80% fixed, but said nothing about your debt duration, and that is the more important number. 80% fixed for 12 months is arguably more ‘risk-on’ thank 30% fixed for five years. The extent to which you need to act now versus later depends entirely on the tenor of your existing fixed debt and when your exposure rolls.

Before you even think about instruments, make sure you understand your natural hedges. If any of your revenue or costs are floating-rate linked (even if indirectly), that changes your net exposure picture materially and might mean your real risk is smaller than it looks on paper.

Then there is the question of what hedging actually means here. Fixed rate debt, swaps, caps, collars: these are not interchangeable. A cap gives you protection against rates rising while preserving the upside if they fall. A swap locks you in. The instrument is important, not just the fixed/floating ratio, and right now the cost of locking in will be elevated because banks are pricing in significant uncertainty.

Which brings me to the 80% number itself. Before your CEO pushes to go higher, it is worth asking whether 80% fixed is already too conservative as a starting principle, independent of the current environment. There is a cost to over-hedging. You give up flexibility, you pay for certainty you may not need, and you can end up locked into elevated rates for years because a decision felt safe in a moment of anxiety.

That is exactly the emotive, rash decision your CEO is tempted by right now. The anxiety is rational. The response doesn't have to be.

Your job in this moment is to slow it down. Build the analysis. Map your maturity profile. Model the rate sensitivity across your actual exposure. Stress test the scenarios. Then make a deliberate decision. If the analysis tells you that you genuinely need to act, act. But go in clear-eyed about the cost, and make sure you are hedging real risk rather than managing your CEO's nerves.

TLDR: Right now, hedging more is likely expensive and reactive. Understand your maturity profile, check your natural hedges, and never let a risk event force your timing if you can avoid it.

BacktoBasics from the US asked:

Since we are in the topic of cash flow, how should AP actually scale as a company scales? As invoice volume and vendor count grow, AP has become one of the hardest functions to automate.

In practice, finance ends up doing data entry of invoices into the system. If there is an automatic data upload, you spend time double-checking info and making invoice-by-invoice payment decisions when cash is tight. That feels wrong.

At what point should AP shift from processing invoices to managing a predictable cash-out schedule (clear due dates, weekly visibility, bulk decisions)? Where do you draw the line between finance owning cash discipline vs. the business owning vendor prioritization?

Is this more of an issue that is solved by the AP system being used (we use SAGE) or more by how business evolves to manage invoices? What does 'best’ look like in the world of AP?

BacktoBasics. This is an interesting one, because I want to push back on the premise a little.

AP should be one of the easiest parts of finance to automate. If it isn't, you have a process problem, not a technology problem.

The automation technology for the procure-to-pay cycle in 2026 is genuinely excellent. Maybe not all of it is native to Sage, but there are plenty of strong solutions you can plug in that will handle invoice capture, matching, approval routing, and payment scheduling without your finance team touching every line.

So why isn't it working?

My honest read is that the messy AP process is not really the problem. It is the solution.

A deliberately friction-heavy AP process gives you flexibility to use payment timing as a cash flow lever. Invoices sit in a queue, someone makes judgment calls about what gets paid this week, and the process conveniently creates cover for that. I understand the logic, and I have lived it.

But let's be honest about what it is actually costing you:

Is that trade-off worth it?

The answer is almost certainly no. But the solution starts with correctly labeling the problem.

You have a cash flow / working capital management problem, and a messy AP process is how you are currently managing it. That needs to stop being the answer.

So what does good actually look like? In a well-run AP function, the vast majority of invoices are processed without anyone touching them. They come in, they match, they get routed for approval automatically, and they sit in a payment queue with a clear due date. Finance runs a payment cycle on a fixed weekly/bi-weekly/monthly cadence, making bulk decisions on what is due, not invoice-by-invoice judgment calls under pressure.

The business owns vendor relationships and prioritization. Finance owns the cash-out schedule and the discipline around it. Those are different jobs, and they should stay separate. When AP is working properly, your finance team barely thinks about it.

As CFO, your job is to solve the underlying cash shortfall properly.

That might mean finding additional funding. It might mean renegotiating payment terms with key vendors transparently, having the difficult conversation rather than just paying late. It might mean reducing inventory levels, repricing, cutting costs elsewhere, or some combination of all of the above.

Build an 18-month indirect cash flow forecast, with proper headroom for timing volatility, understand the real gap, and build a plan to close it.

There is nothing wrong with paying suppliers on the agreed date, even if that date is 60 or 90 days. And yes, occasionally you will need to do a little street fighting to get through a rough few weeks. That is fine. But if your business model is structurally dependent on paying suppliers late, on an ongoing basis, whenever it suits you, that is a fundamental problem, and it is your responsibility to fix it.

I say this as someone who has been in exactly this position. I am not proud that I did not act faster when I was in it. But fixing it properly unlocked an enormous amount of management bandwidth, enabled the automation that should have been there all along, and most importantly, rebuilt commercial relationships that had quietly been eroding for years.

Suppliers who want to work with you will give you better pricing, better terms, and better service. That flows straight through to your cost base. The upside of doing this right is bigger than you will realize, so pleeeeease, sort this out now…

TLDR: Your AP problem is a cash flow problem in disguise. Fix the underlying shortfall, automate the process properly, and stop using payment delays as a management tool.

JeffT from the US asked:

I’m a fairly young CFO. I’ve been in my current role for a year at a low-margin manufacturer. The company is highly cyclical, dependent on residential construction, and has international exposure (i.e., tariffs).

My company is over-levered, the industry is declining, and there is little relief in sight. I would like to leave, but am worried that a departure after one year would look like a failure. Given my age, and the talent availability in the market, it might take a while to land another CFO position.

Should I consider a #2 position at a larger, more stable company or continue to endure the hand-to-hand combat of my current role?

Jeff, forgive me for administering a little tough love here. But I think it's probably what you need to hear.

I don't love it when CFOs jump off a sinking ship, especially after only a year. Your business is low-margin, cyclical, and over-levered. Presumably, most of that was true when you were selected and took the role. So the first question I would ask yourself, honestly, is: What did you think you were signing up for?

The instinct for self-preservation is human. I get it. But the time for that kind of reflection was before you accepted the appointment. That is the learning here. CFO roles are not just jobs. You are being brought in as a solution to a problem, and the implicit promise is that you will stay long enough to make a difference.

There is also something else worth sitting with. There are people in that organization who do not have access to the same information, opportunity, or economic security that you do. They are waiting to be led through a difficult period by you and the rest of the leadership team. I believe you made a tacit contract with those people when you took the role. Not everyone will see it that way, and I respect that.

Now. There is an important caveat.

If you were misled and the situation is materially worse than what you were told during your interview, that is a different conversation entirely.

And yes, you are allowed to make a mistake and pick the wrong job. That is OK. But if you are going to move on, it is important to understand clearly why and what it tells you about your own skills, risk appetite, and judgment. Not to beat yourself up, but because that self-knowledge will matter enormously in whatever comes next.

Your bar for walking away from this should be high. But if, after honest reflection, you genuinely believe you are not the right person for the fight ahead, then it is probably better for everyone, including the people in that organization, if you find something else. A leader who has already checked out is worse than no leader at all.

On your specific question about stepping back to a number two role at a larger, more stable company: don't dismiss it. It’s not failure, especially if it’s a deliberate recalibration, a chance to learn in a healthier environment, build different skills, and set yourself up better for the next CFO role. The CFO path is rarely linear.

One more thing, and I say this without judgment. Hand-to-hand combat in a distressed, over-levered business is genuinely grueling. It takes a toll on you personally, on your family, and on your mental health in ways that are easy to underestimate when you are in the middle of it. Know your limits. A leader running on empty is not serving anyone well, least of all themselves.

Just please, whatever you decide, do better due diligence before you take on the next one. Best of luck.

TLDR: Your bar for leaving should be high. But be honest with yourself about why you want to go, what you promised when you arrived, and what you can learn about your own judgment.

A few of the biggest stories that every CFO is paying close attention to. This is the section you might not want to see your name in.

Beyond Meat’s financial reporting woes delay latest filing

Beyond Meat back in the headlines … the same business where the CFO has been swerving the PAO rseponsibilities like the plague. Sounds like inventory reserves are the problem area … honestly, how hard can it be,.

Former software company CFO gets two years in prison for siphoning funds to invest in shady crypto deals

A CFO who siphoned $35m into a personal crypto account to earn a ‘guaranteed 20% yield’ is now in prison. Lol... “Siri, show me the opposite of guaranteed”

Reddit’s CFO leans into Dad jokes for IR

If Reddit’s investors are anything like my kids, they are not amused.

ICYMI, here’s what’s been happening on my Substack aka the spot where all the cool kids hang out. Come join the fun!

Let me know what you thought of today’s Mailbag. Just hit reply… I read every message.

Last weekend’s Playbook built a handy guide for prioritizing and addressing data issues.

In this week’s upcoming Boardroom Brief, we answer the question: What are the hidden risk for CFO’s vibe coding their next piece of software?

Disclaimer: I am not your accountant, tax advisor, lawyer, CFO, director, or friend. Well, maybe I’m your friend, but I am not any of those other things. Everything I publish represents my opinions only, not advice. Running the finances for a company is serious business, and you should take the proper advice you need.