Answers
Founder questions, direct answers
The questions we get most often from founders and operators at $1M–$20M revenue companies. No fluff, no filler.
Fractional CFO
When should a company hire a fractional CFO?
Most companies should hire a fractional CFO when they cross $2M in revenue and start making capital allocation decisions — hiring, pricing, fundraising — without real financial rigor. Not when you are big. When the decisions are getting bigger.
Full essay →What does a fractional CFO cost?
Typical fractional CFO engagements run $4,000 to $12,000 per month for companies in the $1M–$20M revenue range, depending on scope. A full-time CFO at the same seniority costs $300,000 to $450,000 in base salary plus equity. The fractional model delivers the same strategic finance leadership at roughly 20–30% of the cost.
What is the difference between a fractional CFO and a controller?
A controller runs the close, manages the books, and produces financial statements — the accounting function. A fractional CFO sits above that layer: building forecasts, driving capital allocation decisions, managing investor and banking relationships, and connecting finance to strategy. Most growing companies need both, but they are different roles.
Do I need a fractional CFO if I already have a bookkeeper and a CPA?
Bookkeepers record what happened. CPAs file taxes. Neither builds forward-looking models, prepares you for a raise, or tells you where to allocate the next dollar. If your financial reporting is purely backward-looking, a fractional CFO fills the strategic gap.
How is a fractional CFO different from an outsourced finance service?
Outsourced finance services typically deliver accounting at scale — fast, templated, and transactional. A fractional CFO is a strategic partner who acts like an embedded executive: attending board meetings, leading investor conversations, and making judgment calls. Different tiers of the finance stack.
Related essay →Monthly Close
How long should a monthly close take?
A healthy monthly close at a $1M–$20M company should take 5 business days. Many companies run 10–20 days, which means leadership is making decisions on 3-to-6-week-old data. If you close on day 15, your board data is already 45 days stale by the time the next meeting happens.
Full essay →Why does my monthly close take so long?
The most common causes: manual reconciliations in spreadsheets, unstructured AP workflows, revenue recognition done after the fact, and no defined close checklist. Each of these is fixable. Most companies can get to a 5-day close within 60 days of focused work.
What is in a modern monthly close process?
A modern close process includes: automated bank and credit card reconciliations, AP cutoff by day 2, revenue recognition built into the billing system, accrual entries by day 3, variance review by day 4, and board-ready reporting package by day 5. All documented in a close checklist that any team member can run.
Cash & Forecasting
What is a 13-week cash forecast?
A 13-week cash forecast is a weekly projection of cash in and cash out for the next quarter — showing your exact cash position each week. It is the single most important financial tool at the $1M–$20M stage. Unlike a monthly forecast, weekly granularity catches liquidity problems before they become crises.
How to build one →How much runway should a company have?
Bootstrapped companies should maintain 6+ months of expenses in cash reserves. Venture-backed companies should maintain 18+ months of runway at current burn, with a committed path to either profitability or the next raise by month 12. Below 12 months of runway, every decision becomes constrained.
What is burn multiple and why does it matter?
Burn multiple is net burn divided by net new ARR in a period. A burn multiple of 1.0 means you spent $1 to generate $1 of new recurring revenue. Under 1.0 is great, 1.0–1.5 is healthy, 1.5–2.0 is borderline, above 2.0 is inefficient. It is the single best operating metric for capital efficiency at the growth stage.
Full essay →Is Rule of 40 still the right benchmark for SaaS?
No — not for sub-$20M SaaS companies. Rule of 40 is designed for mature SaaS businesses with stable growth and profitability trade-offs. For earlier-stage companies, burn multiple + net dollar retention are more useful operating metrics.
Full essay →Finance Stack
What is the modern finance stack for a $5M company?
At $5M revenue the core stack is: QuickBooks Online (or NetSuite at $10M+) for the general ledger, Ramp or Brex for spend management and AP automation, Stripe or a SaaS billing platform for revenue, a cloud close tool like Numeric or FloQast for reconciliations, and a lightweight FP&A layer (spreadsheets or a tool like Mosaic or Abacum) for forecasting.
Full essay →When should a company move from QuickBooks to NetSuite?
Most companies should stay on QuickBooks Online until $10M–$15M in revenue. Move to NetSuite when you have multiple entities, multi-currency, complex revenue recognition, or inventory complexity that QuickBooks cannot handle. Migrating too early is a common and expensive mistake.
What AI workflows actually work in finance today?
Three categories are proven at the $1M–$20M stage: (1) accounts payable — AI agents that extract invoice data, match to POs, and route for approval; (2) cash forecasting — AI that categorizes transactions and projects weekly cash positions; (3) variance analysis — AI that generates the narrative for board reports. What does not work well yet: fully autonomous close, AI-generated investor memos.
Full essay →Capital
How do I know if I am ready to raise a Series A?
The hard markers: $1M+ in ARR growing at least 2x year-over-year, net dollar retention above 110%, burn multiple under 1.5, and a clear story about what the Series A unlocks. Below any of those, you are not ready — and investors will tell you the same thing with a longer process.
What makes a finance data room ready for due diligence?
A diligence-ready data room includes: 3 years of monthly financials (or from inception), GAAP-compliant revenue recognition, a 3-year operating model with sensitivity scenarios, detailed cap table history, all signed customer contracts and MSAs, bank statements and reconciliations, and tax filings. The biggest red flag to investors is when these materials take more than a week to produce.
Should I use debt to extend runway?
Growth debt (like SVB or Mercury growth capital) is a useful tool when you have proven unit economics and just need more runway to hit the next milestone. It is a terrible tool when you are using it to paper over a business model that is not working. If your burn multiple is above 2.0, debt extends the problem — it does not solve it.
Operations
What is the best way to structure a finance team at $5M?
A $5M company typically needs: one in-house controller or senior accountant running day-to-day operations, an outsourced bookkeeper or accounting firm handling transactional work, and a fractional CFO providing strategic leadership and board/investor support. Total cost: $12K–$18K/month, which is roughly a third of a full-time CFO hire.
How can I tell if my gross margin is actually accurate?
Most companies at the $1M–$10M stage overstate gross margin by 3–8 points. Common causes: not netting out payment processing fees, misclassifying hosting and infrastructure costs as OpEx, excluding customer success labor from COGS for SaaS businesses, and not properly allocating contractor costs. A real margin audit takes about a week and almost always uncovers the gap.
Full essay →Have a question not answered here?
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