📬 The difficult salary conversation...

Finance teams have a new role: the finance engineer. They’re using AI to build the tools for finance, instead of wading through spreadsheets.

Numeric made a free five-module course for them, covering everything from data foundations and Claude skills to managing control in the AI era and thinking about your tech stack. Take it yourself, or forward it to the person on your team who already automates everything.

I’m running a research project to build a proper picture of how companies actually run their budgeting processes, using real experiences from real finance leaders.

The idea is to give us something we’ve never really had: a way to benchmark our own budgeting process against peers. And hopefully ‘borrow’ a few good ideas along the way.

But I need your help.

The survey takes around 7–10 minutes. Everyone who takes part gets a detailed copy of the research when it’s published in November.

If you’ve been anywhere near a budget this year, I’d love your input.

👉🏼 Tough situation got you spinning in circles? 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 today:

Now, let’s get into it.

Growing Resentment from UK

This is an issue I've had multiple times in my career, but only seems to be getting trickier as I advance in seniority. 

How do you balance personal compensation conversations when you're the person preparing the budget/forecasting a tight cashflow? I know that the budget for pay increases next year is X, because I built it in. But when the business is struggling and I'm spending half my working life desperately trying to scrape pennies, how does one go from that to "and also let's chat about my salary"?

This is such a great question, and a tension I've had to work through many times.

Let's take it back to first principles.

As CFO, you have a fiduciary duty to the company and its shareholders to do the right thing for the business.

But, my dawg, you also have a ‘fiduciary’ duty to someone else… your family. And that means making sure you are paid a fair market wage for the work you do.

The problem is that you have a unique view of the opportunity cost of every dollar you might ask for. You know exactly what that money could otherwise be used for. And when cash is tight, it's hard not to feel guilty about that.

So I think the first thing is to separate what is fair from what is affordable.

If you're looking for a correction to bring your compensation into line with your responsibilities, performance, and market value, then absolve yourself of any guilt about having that conversation.

Here's how I would approach it.

Whether it's the CEO or the board, tell them you'd like to set aside some time to discuss your own compensation. Make it clear that you spend 24/7/365 thinking about how to put the business first. But you'd now like their permission to spend the next 30 minutes thinking about your own position.

You're asking for ‘permission’, but they can hardly say no!

More importantly, you're creating a clear distinction between your role as steward of the company's finances and your position as an employee.

Then I'd try to agree on what fair compensation looks like for the role, independently of what the company can currently afford. Use market benchmarks, your responsibilities, and your performance to establish that number.

Once you've agreed what's fair, you can have a separate conversation about how to bridge the affordability gap.

Maybe it's a phased salary increase. Maybe some of the gap becomes a retention or delivery bonus. Maybe there's an equity or LTIP component that gives you access to the upside.

And naturally, as CFO, your own performance has some influence on the company's ability to afford that compensation. So it's not unreasonable for some of the gap to be tied to delivering better business performance.

If cash is genuinely critical, you may have to wait for some of the money. But I'd want a clear agreement on what happens when, rather than a vague promise to revisit it when things improve.

Of course, the specifics depend on the numbers.

But I think the most important thing is to give yourself permission to have the conversation, and create a different environment in which to have it.

Over a coffee, a beer, a plane ride with the CEO, whatever works. Just somewhere away from the daily grind of cash forecasts and cost challenges.

You can both be completely committed to putting the company first without putting yourself last.

TLDR: Separate fair pay from affordability. Agree what you're worth first, then work out how and when the business can pay it.

BackToBasics from NY, USA

I don’t have a formal finance background, but I’d love to understand how experienced CFOs think about choosing the few metrics that really matter for a business.

For example: in a VC-backed company, burn and runway give you a quick read on cash health. In a more traditional business, cash health seems much more tied to working capital, debt, collections, inventory, etc., so there isn’t an obvious equivalent.

How do you think about identifying the right “at-a-glance” metrics for a business?

Thanks for the question.

It's interesting that your examples are all focused on cash and liquidity. Those are important, of course, but they're not where I'd start.

Take burn and runway. They're critical metrics for a startup, but they don't tell you much about the underlying health of the business in isolation. If you've got two years of runway but ARR is declining, that's a very different proposition from having three months of runway with ARR growing at 5x.

So, while the specific metrics depend on the type and stage of business, I tend to think about three fundamental questions.

First, are you creating something people actually want?

This is where I'd start. Customer satisfaction, measured both by what customers tell you (Net Promoter Score, for example) and, more importantly, what they tell you with their wallets. Retention, churn, repeat purchases, sales growth. The specifics depend on the business, but you're looking for evidence that customers genuinely value what you do, and early signals that this might be changing.

Second, can you make money doing it?

Are you creating that customer satisfaction by subsidizing it with uneconomic pricing, or are you building something sustainable?

This is where unit economics play their part. Contribution margin, gross profit per unit, LTV, whatever best captures the underlying economics of your particular business. You don't necessarily need to be profitable today, but you need a credible path to making money on what you sell.

Third, can you finance the journey?

Now we get to your cash metrics. Burn, runway, working capital, debt, cash conversion, liquidity headroom. These tell you whether you have the financial capacity to keep going, invest, and ultimately realize the potential of the business.

And this is where the stage of the business matters enormously. A VC-backed startup, a mature manufacturer, and a highly leveraged services business will have very different financial constraints.

The trick is to choose a small number of metrics under each heading that best capture the economic engine of your business, and then give particular attention to whatever is currently constraining it.

Ultimately, it all comes back to the fundamental physics of building a successful business. Can you create enough value through what you do to share that value with your customers, your employees, and yourself?

This is a useful starting framework for an earlier-stage business. But as a business matures, the metrics need to evolve into a more balanced scorecard, reflecting a wider range of operational and strategic priorities.

If you want to see how that might work in a mature business, I wrote a Playbook on performance reporting that goes much deeper into the subject.

TLDR: Start with customer value, unit economics, and liquidity. As the business matures, evolve toward a more balanced scorecard.

First Time PE from UK

I’m FD at a company that is about to be acquired by a PE-backed company. I’m told I’ve done a good job throughout the process, presented clearly, answered questions quickly and helped the process. 

I’d like to continue this. What advice would you give, particularly around board report format? It’s unlikely I’ll have direct contact with the PE owners; it will be via the company that acquires us. They are doing a buy and build. The combined group will be £100m, we’re £30m.

We’re a service provider, with a high percentage of annuity revenue with customer renewals and additions key.

Congrats on the deal. I promise that what you've learned over the last few months will serve you well for the rest of your career.

This will be a big deal for the PE platform too. Your £30m business is increasing the platform's revenue by more than 40%. That's a significant acquisition, so expect plenty of attention.

There are different ways to use that attention. Some would say capitalize on it immediately and have the "what about me?" conversation. Personally, I'd be tempted to show you can deliver as an operator first.

And that means getting laser-focused on two things.

First, understand the investment case.

There is an underwriting case and a value creation plan behind this acquisition that you may or may not have seen. That is ultimately how you and your business will be measured.

That investment case might be reasonable. Or it might be a crock of shit.

Either way, somebody holding the pennies thought it was a good idea. So I wouldn't start by telling them why they're wrong!

But you do need to understand exactly what is expected of your business, how the investment case was constructed, and what needs to happen to deliver it.

Second, make yourself the person who owns delivery against that plan.

That means the core business performance, the conversion into cash flow, and whatever initiatives sit within the platform's value creation plan.

In your case, I'd be particularly focused on the leading indicators of revenue performance. Customer renewals, gross and net retention, churn, upsell, new business wins, and the economics of delivering those services.

For the board reporting, I'd keep the structure relatively simple:

Make sure the metrics and definitions are consistent with those used by the acquiring group. There is plenty of KPI definition risk during moments like this, so make sure everyone is talking about the same things.

And remember, you are unlikely to have much direct contact with the PE sponsor. So your most important relationship will probably be with the platform CFO. Make their life easy. Give them reliable numbers, clear explanations, early warnings, and no nasty surprises.

If gaps start emerging against the investment case, quantify them and flag them early. But, most importantly, bring solutions to your business unit and group reviews.

The key is to demonstrate to the people who matter that you own performance against their plan, not just the reporting of it.

Do that consistently in PE, and good things will happen.

Good luck.

TLDR: Understand the investment case, own delivery against it, and make yourself indispensable to the platform CFO.

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.

CFO wins $2.1 million in whistleblower suit for refusing to pass bad info to investors

The detail that sticks with me is that the CEO told the CFO that he was “just an Accountant, you don’t know anything about business and finance.” We’ve all heard a version of that over the years, and it’s usually right before someone wants you to sign off on some bullshit.

AI threatens the CFO talent pipeline

I don’t buy that the CFO role is going to change as much as people say (although it sounds good on LinkedIn). But the paths to CFO certainly are going to shift radically. But I also find some of the commentary on the impact of AI on entry roles to be a little basic too. Sure, the accounting firms could have fewer entry roles as they do more with less. But what if they use AI to move to full-coverage audits? Wouldn’t that create jobs, and much better jobs too? There’s a lot of road to run.

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

I’m doing a thing! Join me on November 12 at 12pm EST as I walk through a live case study on how to implement maintainable free cash flow.

Click here to save your spot:

Last weekend’s Playbook was part four of our CFO Operating System deep dive, where I get into how to actually keep track of numbers, people, projects, and decisions.

And last week’s Boardroom Brief explored the benefits and risks of invoice financing.

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