📬 Work of art: Designing working capital for growth

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Keep the fabulous questions coming. Remember, you can submit them anonymously if they are particularly tricky or sensitive.

👉 Send me your questions by filling out this form.

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

Now, let’s get into it.

Lila from the UK asked:

I'm an FD rather than a CFO (but also the highest finance specialist) in a £10m t/o business.

I work in the creative industries; we make and exhibit our product as well as license it to others. We've recently taken the strategic decision to increase production (hello, growth) to double our creative product.

However, this takes (you guessed it) working capital. Everyone on the team here knows cash is an issue, but also believes that we will grow our way out of it. Our cash conversion comes from either selling tickets or selling licenses, both of which have a long conversion cycle. There is sometimes tricky debtor aging, too, as we try to support licensees to ensure longer and more prosperous deals.

The challenge may be as straightforward as simply trying to get the team to engage with a weekly rather than a monthly cashflow cycle, but any tips you have would be gratefully received.

Lila, thanks for the question. But I want to be honest with you: the way you describe this growth plan makes me a little nervous.

"Double production and grow our way out of the cash problem" is a high-risk strategy.

Some businesses can look (from the outside) like they are pedal to the metal on all fronts. In practice, the successful ones have real proof of demand locked in before they make major capacity commitments.

Growth management is a real thing.

The risk of stranded cost and stranded production is just as dangerous as the working capital pressure you are already feeling.

So before we talk about cash flow cadence, I want to ask a more fundamental question. What is underwriting your confidence in the demand for this new production? Do you have anchor customers, committed licensees, or pre-sold tickets that give you genuine revenue certainty before you step up capacity? If yes, then they also become part of your working capital solution.

If no, it isn’t just a working capital issue you have; there is a wider business risk to manage.

The creative industries have some specific dynamics that work in your favor here. Ticket pre-sales and licensing advances are powerful working capital tools if you pursue them deliberately. Can you pre-sell a meaningful proportion of your new production before you fully commit to the capacity cost? Can you negotiate upfront advances on license deals rather than letting them trail out over the life of the agreement? Every pound of committed revenue you pull forward reduces the speculative working capital you need to fund.

Even if the terms are materially weaker, it changes the shape of the risk profile significantly.

That is where I would focus the commercial energy first.

Think carefully about how you structure the investment decisions ahead of you. Create as many two-way doors as possible. Only cross through a one-way door (read: irreversible investment) when you have a high degree of revenue confidence, ideally, some level of committed demand behind you. Each incremental production decision should have a clear answer to three questions: what is the incremental revenue, what is the incremental cost and investment, and how certain is each?

Once you have that clarity, you can put a number on your risk tolerance. How much speculative working capital are you prepared to commit without sales backing? Make that explicit, and turn a vague anxiety about cash into a defined and manageable parameter.

From there, the working capital management piece follows naturally…

And yes, move to a weekly cash flow cycle.

Monthly is too slow when you are in a growth phase with long conversion cycles and lumpy receipts. Weekly visibility forces the whole team to stay connected to the commercial reality of the business.

If the ambition genuinely outstrips what the business can self-fund, then have the funding conversation properly. Invoice financing against license receivables, a revolving credit facility, or a conversation with existing investors about bridging the working capital gap. There are options.

But pursue them from a position of clarity about what you actually need and why, not as a last resort when the pressure becomes critical.

But all of that only works if you are matching underlying demand to production growth. Get that foundation right first.

TLDR: You need to underwrite your growth strategy with a more robust proof of demand. Use pre-sales and advances to pull revenue forward, define your speculative working capital tolerance explicitly, and go weekly on cash flow. If you need external funding, pursue it deliberately, not desperately.

Alexandre from France asked:

Where do you put the cursor in board relationships for a CFO? What’s the best way to get closer if they won’t let you? The risk is that if they are too far, they may not support you enough; however, if they are too close, they can feel manipulated.

Where’s the right balance between being cozy, but not too cozy, with the board?

So, Alexandre… I don’t think there is a right answer here.

Good independent boards support, challenge, and enable their executives. In theory, at least…

But, in practice, they are complex places full of egos, varying levels of engagement, and wildly different expectations. Some board members are sitting executives at other companies with this as a side gig, able to give you only fleeting attention. Others are professional portfolio non-executives juggling five other boards. Others might be between roles elsewhere, making you their primary focus… whether you want that or not.

In short, if you have had one board relationship… you have had one board relationship.

Story time:

I once had an Audit Committee Chair (a former CFO and sitting public company CEO) who treated me like I was his direct report… like he was a kind of one-day-per-month Super-CFO. It was his first non-executive role, and he had not quite figured out where the line was. He was forceful; it was unsustainable. Eventually, I sat him down and told him directly that how we worked would have to change.

He disagreed. We ended up in a full-blown shouting match in front of the rest of the Audit Committee, which ended with me telling him he would have to change his approach or (verbatim) "fuck off and take his nonsense somewhere else.” And that I was not going anywhere…

This wasn’t as risky as it sounds. I figured the rest of the board would back me because I was the one turning the ship around, and he was barking distracting instructions from the sidelines once a month. And was kind of pissing everyone off.

After our blow up, he shook my hand, laughed, and told me he had been testing me and I ‘had passed’. That was complete nonsense, but it gave him a way to back down gracefully and still feel like an alpha dog.

We actually ended up with a great relationship (although it took a while.)

I tell that story because there is no way to plan or legislate for situations like that. You just have to read the room and act. I don’t get drawn in to shouting match easily like that. But in that moment I calculated that fighting fire with fire was the right way.

On your broader question about getting closer when the board keeps its distance: I would start with one-to-one time rather than trying to shift the group dynamic. Pick the most accessible board member (not necessarily the finance one) and offer them something genuinely useful: A quiet session on the numbers, a safe space to ask questions they would not want to ask in front of the full board. Go over and above; travel to them, offer to buy lunch. Just make it quite hard to say no.

You could also frame it as wanting some ‘advice’ from them. Most wise old heads love being asked for advice, it takes a seriously cold fish to turn down a request like that.

Build one relationship at a time and let the trust compound from there.

One more variable... You are in France, and there tends to be a meaningful difference between the role of the board in continental Europe versus the US or UK. Continental Europe boards often bias more toward governance than toward enabling growth (and some of that is hardwired into law).

That shapes the dynamic and affects how much informal closeness is even culturally expected. That is worth calibrating to your specific context.

I wrote this series on managing boards a couple of years ago; you might find it helpful.

TLDR: There is no universal answer to board management. Start with one-to-ones, pick the friendliest entry point, make it easy to say yes, and build from there one relationship at a time.

Andrew from the US asked:

How did you know you were ready to take on the CFO role? I’ve been offered the role at the company I work for, but I’m 34, have more of an FP&A background than accounting, and imposter syndrome is crawling all over me. I woke up at 3AM with my mind racing.

I’ve talked to some mentors and my wife, which has been helpful but I’m still struggling. How do I know I’m ready?

Andrew. Big dog.

Sounds like the only person doubting you is yourself.

34 is young, but you are no baby. I was a similar age when I took on my defining CFO role; a multi-billion dollar turnaround. You can accumulate a serious amount of experience in ten to twelve years if you have used that time well. And clearly someone who knows you well thinks you have.

I remember my first business unit CFO role. I had just turned 30, sitting on an exec board full of people much older. It didn’t help that I looked even younger at the time.

I genuinely remember wishing my own hair would gray faster so I felt more credible in the room. It sounds ridiculous. But, for a while, I was kind of paranoid about it, and even grew a beard to hide my babyface.

Oh, what I would give to get that youthful glow back now…

Here is the thing about imposter syndrome. It does not go away when you are ready. It fades over time, but it never goes altogether. It’s a sign of humility, and your brain telling you, you are doing something meaningful to you.

But this is important … because when you walk into that boardroom, you must show up as an equal. Not performing confidence, but actually deciding you belong there. If you cannot do that, you undermine your own chances of success.

The way you carry yourself in the early days sets the tone for everything that follows, especially if you are stepping up from within and will now be leading people who were recently your peers.

So, here is what I would suggest. Stop cataloging what you do not have and start getting clear on why you are the right person for this. You were chosen, internally, by people who have watched you work. That is a real thing.

Yes, you have gaps; everyone does. I’ve gotten through a whole senior finance leadership career with barely even a working knowledge of tax. The FP&A versus accounting balance is real, so build your team around your blind spots. Find a strong controller you trust, lean on them, and learn from them.

Be curious, and ask lots of questions about the things you don’t understand. Make sure your team knows, “I’ve been picked for this job because I know the business and its quirks, and I know how to drive the financial performance. I’m not a world-class accountant, but you guys are, and I want to learn from you. So please give me permission to ask some dumb questions while I catch up.”

The 3 am wake-ups are your nervous system doing its job. They mean you care. That is a good sign, not a bad one.

Go get ‘em, tiger.

TLDR: Back yourself. I bet you are far more ready than you think.

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.

This CFO is building AI skills ten hours at a time

The AlphaSense CFO is spending 10 hours a week outside her day job learning AI. That is what real commitment to personal development looks like. I bet she’s not learning it by reading dumb LinkedIn posts with pictures of Ben Affleck in the Accountant though.

New Berkshire CFO gets double his predecessor’s salary

Berkshire spent decades as the exception to every rule about how you run a public company. There is beautiful irony that the retiring CFO is being gifted a private jet. From the Company who named their first corporate jet ‘The Indefensible’…

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 laid out how to build an effective Working Capital model.

In last week’s Boardroom Brief, we dug into AI’s impact on audit quality.

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