📬 The 3am cash flow stare

POV: Your latest AI bill landed on your desk and it’s 3x bigger than last month.

And that's the job right now. AI decisions get made outside finance, but the bill lands on your desk. 

CloudZero's survey of 260 finance leaders found only 22% can tie that spend to an outcome, so most CFOs walk into the board meeting carrying someone else's decisions with no proper way to justify them.

So, here’s a five-slide deck that I'd want in front of me in that meeting. 

👉🏼 Feeling the itch of a complicated problem and need advice? Send me your questions, and you might just see yourself in next week’s Mailbag. Submit anonymously using the button below:

Here’s what’s on the menu:

Now, let’s get into it.

RG_Restructuring from Antwerp, Belgium

Hey CFO Secrets,

Wanted to get your take on something. Early 30s, working in operational/financial restructuring at a solid firm (think A&M, AlixPartners). I genuinely love the work, but the hours and intensity are relentless, and I don't see a lighter lane that keeps the same substance. Big 4 feels too watered down, boutiques feel like the same grind without the platform or pay, corporate transformation feels like a step down without any chance of hitting the top dollars.

The only path that actually excites me is going direct: taking ownership of a distressed or under-managed business and doing the turnaround myself instead of advising from the outside.

My current approach is: get genuinely excellent at the work now, and build the right network in parallel, betting the two eventually intersect into an opportunity.

Curious what you've seen. Is there a real lane between "advisor forever" and "buy your own company," or is that the actual fork? And for people who've made that jump, did the opportunity find them, or did they have to manufacture it?

Would value your read on this and share any perspective to make this grind easier/worth it.

Thanks for this question.

I typically do not take too many career-specific questions in the Mailbag, but this one caught my eye because it is a path I have considered myself in the past. A couple of CFOs and former bosses I admire very much have done exactly this.

They effectively acquired an underperforming business, using a combination of their own capital and sponsor capital, inserted themselves as the Chief Restructuring Officer, did the heavy lifting, and then stepped up to Chair once the business was stabilized.

It may even be a path I still take at some point (in the distant future though… I’m too busy codifying the CFO role and building a media empire right now 😎)

But first, I have to address something in your question.

You mention the hours and intensity as a key reason for wanting to move. And there is no question that working somewhere like A&M or AlixPartners brings serious intensity. I have worked with both, by the way, and the people are typically outstanding.

But if you think ‘going direct’ and buying a distressed business will reduce the hours or intensity, then all I have to say is this:

🫵😂

OK, OK… maybe I could have been nicer, but I hope the point landed.

Maybe you won’t be doing 14-hour days worshiping at the altar of PowerPoint, spreadsheets, and windowless conference rooms to drive up your billable hours.

But you will wake up at 3am staring into space thinking about the cash flow forecast, how many weeks you have to fix the margin issue before the debt defaults, whether your personal guarantee is about to become very personal, and how you replace Barry the warehouse foreman, who retires next month and takes 40 years of tribal knowledge with him.

It hits differently when it is your security, capital, and reputation on the line, not your firm’s.

So, I would not frame this as a move toward lower intensity. It is a move toward ownership, that can be far more rewarding, but it is DEFINITELY not lighter.

I also think you may struggle to attract the talent, capital, and deal flow you need directly from a consulting role, even if you are on the very top shelf of restructuring consulting.

Fortunately, I think there is an obvious halfway house that gives you the cut and thrust you crave, the financial upside, and a much better shot at your long-term goal.

Go work in turnaround PE, special situations, or distressed investing.

Ideally, get a couple of years of deal-making under your belt. Learn how capital actually gets deployed. Learn how sponsors think. Build relationships with funders, lenders, advisors, lawyers, and operators. Get close to deal flow. 

Then, if you can, get a couple of years in an operating partner, portfolio CRO, or hands-on turnaround role where you are closer to management and actually delivering the plan.

Those two things together would be powerful: investment judgment, and operating scar tissue.

With that, you will be far better placed to go in later as a CFO, CRO, operating partner, or principal on a deal. You will also have built a network of people who might back you, and, hopefully, some capital of your own to deploy alongside them.

TLDR: Don’t buy distress to escape the long hours. Move toward ownership through turnaround PE, operating roles, and earned deal flow.

Hydration Break CFO from USA

I was recently brought on as interim CFO for a highly seasonal business.

They are a year into a complex ERP implementation, which was supposed to go live already. As it happens, the timeline has drifted, putting the UAT back, and the go-live squarely in the busy season.

The company decided this would be too much of a distraction from the core business, so they will go "tools down" on the ERP implementation during busy season. Any remaining launch-related work will be picked post busy season in a ‘sprint.’

This decision pre-dates me, and in my role as interim-CFO, I have already raised the “pause” as a major risk for about 10 different reasons. 

I’m curious what your take is on the biggest risks. And specifically, how can I be most effective in helping the company mitigate them.

Thanks for the question, Hydration Break CFO. Apt name, given your question is about an irritating interruption.

Being honest, once the operation has decided it is not all-in on the launch, the battle is already lost. I don’t think you have much choice other than to eat the delay.

Once you are into UAT and go-live, the implementation needs to be the number one thing on the pad for nearly everyone, at least for a short period of time. That creates a huge distraction from the core operation. And in a seasonal business, that is a serious risk.

This is not like a recurring revenue business where you might delay revenue by a month or two. In a highly seasonal business, if the operation misses the window, you can write off a whole year’s profit.

So, I think your question is the right one: how do you mitigate the delay?

The biggest risk is that this never really starts again. Everyone says “tools down for busy season,” then busy season ends, people are tired, priorities have shifted, the consultants have moved on, and suddenly the sprint becomes a jog, then a walk, then a corpse in the corner of the project room.

You need to force a defined recommencement date. Not just “after Christmas.” 

Schedule the ‘Sprint to go-live’ kick off meeting now. Get it fixed in the diary with the right people, even if its 6 months away. Then send a note to the key stakeholders confirming the formal pause, the reason for it, the date it ends, and the risks being managed in the meantime. Not in a whiny way. Just as a way of binding the business around one shared message, and giving yourself a reference point later if needed.

Then I would focus on a few specific risks.

First, cost. You will have implementation partners, consultants, contractors, and various other project barnacles who will see this as an opportunity to charge more. Get them on a call, and make the pause window clear. Agree what stops, what continues, what is being preserved, and what work should not be repeated later at your expense.

Second, cutover. Your balance sheet cutover date is moving. That means your cutover plan needs to move too. Revisit opening balances, reconciliations, sub-ledger alignment, stock, fixed assets, customer and supplier balances, and whatever other charming little traps are sitting in your cutover plan.

Third, master data. Given the stage you are at, I assume you have already done a lot of work to get master data ready in the new system. If another few months pass, the old system will keep changing as products, suppliers, customers, prices, terms, and users change. Meanwhile, the new system master data will become more and more stale. You need a deliberate decision on how to manage that. Either dual-run master data maintenance (which would be my temptation because it builds the muscle now) or plan a proper realignment sprint before go-live.

Fourth, training and freshness. You will need another round of training before launch. That is duplication, but it is unavoidable. This is a bad place to penny-pinch.

Fifth, scope drift. A pause creates a vacuum, and vacuums attract clever ideas. Everyone will suddenly have “just one more thing” they want included before go-live. Be careful. The final sprint should be about getting live safely, not reopening every design argument from the last 12 months.

There are plenty of other risks, but those are the big ones that spring to my top of mind.

TLDR: Accept the delay, but don’t accept further drift. Fix the restart date, protect the data, and control the costs.

Realist CFO from USA

I am the CFO of a $5m PE-backed healthcare business. We’re growing rapidly through acquisition but our same-store sales growth is declining. It’s important to the board, and for exit valuations, that we correct this. The issue is the CEO and COO both basically ignore clear data I bring identifying the decline and the likely cause. They receive it almost like “fake news” and don’t engage. 

Conversely, any remotely positive trend they’re quick to claim, extrapolate, and use as proof to the board that we are growing the business. It’s becoming deeply frustrating for me. 

How can I get them to accept the reality of the business and use that information to drive results?

Thanks for the question.

No credible PE board is going to be fooled by this forever.

In any multi-location operation, same-store sales is one of the clearest indicators of underlying performance. It is the equivalent of churn in a subscription business. You can acquire your way around it for a while, but if the core estate is weakening, the truth will eventually come through the numbers.

The biggest risk in any acquisition-led strategy is that management gets addicted to the deal machine and stops watching the core business. I kind of get it. If your CEO and COO are acquiring businesses at 5x EBITDA on the assumption they can exit the platform at 8x, that multiple arbitrage is intoxicating. Everyone loves buying $1 for 60c. Your job is to show them that the $1 is shrinking.

So I think you need to use the boardroom a little here. You have the power of the pen in the board pack. So use it my friend.

Your revenue bridge and EBITDA bridge should show the impact of same-store sales decline clearly. A red bar for same-store sales versus prior year or budget. Another view showing acquired growth versus organic performance. Make the difference between “we bought revenue” and “we grew revenue” impossible to miss.

Then you can show what that means if you reverse-engineer it from the exit.

No doubt the value creation plan assumes some combination of acquired EBITDA, synergy capture, and multiple expansion. Great, but show them what happens if same-store sales decline by 3.5% a year for the next three years? The platform revenue base will be ~10% lower than it should be. That creates fixed cost deleverage across the portfolio. EBITDA will take a pummeling.

And if the business is showing sustained organic decline, the exit multiple may not be 8x. It might be 7x (for example), or worse…

You can quantify that… you can put it in terms of enterprise value at risk, and what that will mean for the PE MOIC, and for management equity.

People will hate it. They may even shout a bit. But they will talk about it.

How you handle this politically is important. Do not catch your CEO and COO offside. Make sure they have seen the analysis before the board, even if they don’t agree with it.

Give them the chance to engage, challenge, and help shape the action plan. You do not need their emotional approval, but you do need to be professionally fair. I have been in this place many times, my CEO did not like it, but he always respected why I was doing it. 

Your radical independence is your superpower. You should not overuse it, but based on what you describe, the business is at risk of telling itself the wrong story. And you have a duty to your board and shareholders to fix that.

TLDR: Separate bought growth from real growth. Quantify the exit impact and force the boardroom to confront the real story.

A few of the biggest stories that CFOs should pay attention to. This is also the section you might not want to see your name in.

One in five CFO chairs will change hands this year

CFO turnover is up a bit, but still under 20% … a five year average stint still feels about the right average length for a big CFO role.

ConocoPhilips CFO moves into CEO seat

And he’s been set a $7bn free cashflow target for 2029.

Walmart CFO says American consumers are “making trade offs” in tight economy

Falling sales at Walmart, despite price cuts, could be a bellweather that the American consumer is reaching a cost of living breaking point.

ICYMI, here are some of my favorite finance/business social media posts from this week.

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

Last weekend’s Playbook Part 3 of our Manchester United deep dive breaks down the £2bn decision to replace a 110-year-old stadium.

In last week’s Boardroom Brief we sent AI queries to investor relations teams, and the results were…surprising.

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