The Weekend CFOs Couldn’t Reach Their Cash

Speaker A: CFO Thought Leader is made possible by Sage High Performance Finance Software and Intuit QuickBooks bill pay. Say goodbye to manual bill entry.

Speaker B: Hello, this is Amy Wang, CFO of uh, Procurify, and you are listening to the CFO Thought Leadership podcast special episode.

Speaker C: On March 8th of 2020, 2023, which for those of you who are CFOs, that was the Thursday, uh, an SVB, uh, closed its doors on, uh, on Friday morning and didn't let any more payments out. And so as I'm sitting in a room, J.P. morgan to my right and Hercules Capital to my left, uh, my treasurer and I were moving our funds out of sv, uh in real time in that meeting. And I'll just remember that experience as being. I cannot believe that this is where I'm sitting and I'm doing this activ. You know, the bank that, you know, frankly, was the pinnacle of banks for the tech community, uh, for so, so, so long was going through this experience and none of us knew what was going to happen. The next day.

Speaker D: I was going to Palm Springs for uh, the uh, tennis tournament down there and like literally getting on the plane and landing and the whole thing sort of blowing up. Being holed up in the hotel room for four days. Um, and then, yeah, once banks opened up again on Monday, figuring out how it was going to play out. And then ultimately within a few days after that, we sort of knew how it was, how it was going to shake out.

Speaker E: I mean, just to kind of set the context, I was only pretty new to the role. I'd been in the finance seat for six months at this point. And that was a pretty remarkable event that hadn't really occurred in some time. And I think from that perspective it caught a lot of people, uh, unawares. And also it was something that I just, uh, upon remembering was just. It accelerated so rapidly from like the beginning of the week to the end of the week and then the weekend thereafter.

Speaker B: We actually started that year with um, myself and my finance director asking the question of, should we diversify our banking relationships? Um, is this a place of outsized risk? And we talked about it, we discussed it with the CEO and we were all kind of like, we'll eat the risk, it'll be okay. Okay, we'll figure it out. Um, and let's, let's table this discussion and then raise it again in six months. Of course, three months later, SVB melts down and we have to scramble along with all the other companies.

Speaker F: And there was a note that came out. It was a tweet about a week and a half to two weeks prior to things hitting the fan with Silicon Valley bank. And I remember going to our board and saying, listen, I don't know if this is real or not. I uh, have no idea. But in order to be safe, I'm going to move a chunk of our money out of Silicon Valley bank and move it over to JP Morgan just to be safe. And I'll move it back if nothing happens.

Speaker C: Mhm.

Speaker A: There are moments, moments that permanently change the way finance leaders think about risk. For many CFOs, one of those moments came over a single weekend in March of 2023. This isn't the story of Silicon Valley Bank. It's the story of uh, what happens when finance leaders suddenly are uncertain they can reach their company's cash. Payroll still has to be met, vendors still have to be paid, customers still expect the business to operate, and decisions that normally unfold over weeks suddenly have to be made in hours. Today you'll hear from several CFOs who lived through that weekend. Each experienced it differently. Some scrambled to secure liquidity, some rethought treasury strategy, some discovered their contingency plans weren't as complete as they believed. And others emerged convinced that finance leadership isn't just about growing a business, it's about making sure the business can survive long enough to grow. Our episode begins after this. Hello finance leaders. Today's episode is sponsored by Sage as AI reshapes what's possible in finance. Sage has been studying what the highest performing CFOs do differently. In the CFO Growth Code, Sage surveyed over 1700 finance leaders globally. They found that high performance CFOs share four habits. The biggest one is that 96% use AI as part of their daily work. And companies led by high performance finance leaders were twice as likely to see strong revenue growth year over year. Sage Intact is AI powered accounting software that's built for the future of high performance finance. It's the number one most trusted AI finance software and is rated as number one on G2 for ease of use. It helps automate things like AP, AR cash management and the General Ledger, all with real time visibility. For more information, visit sage.com intact and see what high performance finance can look like in practice. Welcome back. The weekend CFOs couldn't reach their cash isn't really about one bank. It's about what finance leaders do when one of their most basic assumptions, that cash will be there when they need it, is suddenly thrown into doubt. Our first perspective comes from Sarah spoia, CFO of Topalti, who found herself navigating exactly that moment. Boy, give us some background. How did things happen?

Speaker C: Yeah, this spring actually. So I think we announced it in May, um, and then, ah, and then uh, we closed around in March. So yes, $150 million, um, of uh, uh, debt raise. Part of it is a revolver, part of it is more of a traditional term loan. Um, and maybe I think the question is, you know, what a time to raise money. I guess I'll tell you the one anecdote from M. This experience is that uh, I was sitting in the room negotiating the final terms of this contract. We uh, had, you know, our lawyers here, one, one set of participants on one side of me, the other set of participants on the other side of me on March 8th of uh, 2023, which for those of you who are CFOs, that was the Thursday uh, and SVB, uh, closed its doors on uh, on Friday morning and didn't let any more payments out. And so as I'm sitting in a room with major, major stakeholders in the debt community, JP Morgan to my right and Hercules Capital to my left, uh, my treasurer and I were moving our funds out of fcb, uh, in real time, uh, in that meeting. And I'll just remember that experience as being. I cannot believe that this is where I'm sitting and I'm doing this activity while the bank that frankly was the pinnacle of banks for the tech community uh, for so, so, so long was going through this experience and none of us knew what was going to happen the next day. And so you know, it was obviously a very, uh, to get through that debt raise under that, you know, recency of the news and to like, you know, sign the contracts just a few weeks later and um, and get it completed, um, was a testament to the partnership, frankly with those two, two parties that we had built over many months, that we had already gotten through all the tough conversations, all of the you know, difficult diligence that we had built mutual um, trust like, and respect with each other throughout that process, that something as big as a global banking crisis that then brought down other banks with it would not have gotten in the way of us closing that transaction. But it was just the thing that really for us strengthened the balance sheet. So in this sort of uncertain macro environment, we could keep doing what we're doing and not worry about it. Um, but certainly when we started that process in December, January of the prior, I certainly didn't think uncertain macro environment would include multiple bank failures. Um, so it was quite an experience. I will always know where I was sitting when I got the first wins that SB was going to be in trouble again. I think there's a very sliver, small sliver of the population that will think about where they were when they heard that SCB was collapsing. Right. And maybe that's just the people I hang out with, unfortunately, which might tell you something about my friend group, I guess. But, um, you know, I think it's a moment that a lot of folks in the finance space, whether it's, you know, bankers, institutional investors, you know, VCs, you know, finance professionals will remember, uh, particularly if they were in tech, because we all have a story of, you know, a company that we were, that we were part of or that we were on the board of or something that. Where SVB really came to help them and really came to be, uh, a positive part of their journey. And so I think for all of us, there's. The first point is, okay, well, I need to protect my company. And to protect my company means I need to do X, Y and Z. I need to do X, Y and Z as quickly as possible, uh, before cutoffs, before wire cutoffs. Um, but then the back of our head is I really hope this isn't going where it looks like it's going. Um, and so I think that's sort of a shared concern that we all had that day. Um, now, as far as doing, doing the round, you know, it didn't change the answer for us to, uh, the round. It certainly, I think just anytime there's some disruption or uncertainty in markets, like, people can get, you know, cold feet. Um, and so it was just a lot of checking in with everyone, making sure credit committees hadn't changed their mind, just weren't just sort of stalling or anything like that just because of the environment. And thankfully, again, I think, um, had we not built up the trust, respect the like, you know, kind of shared alignment and gotten through all of the, you know, tougher diligence conversations, then maybe the results would have been different. But, um, you know, it's a, it was a great group we work with. I can't, uh, I can't, you know, commend the folks from JPMorgan and Hercules anymore.

Speaker B: Ah.

Speaker C: And, you know, I've built some great friendships too with, with that group. Um, and I think those two firms are really stepping in to help out, you know, in some of the void that has been created around some of the other bank closures.

Speaker A: For CFO Sara Spoja, the challenge was protecting her own company's access to cash. But what if your company suddenly found itself helping thousands of other businesses navigate the very same uncertainty? That's the perspective Ben Gammell shared with us while serving as ah, CFO of Brex. Ben has since become the company's president, but his recollection of that extraordinary weekend offers a unique view of how quickly finance leaders had to respond.

Speaker E: Yeah, for me, uh, personally, but also for Brex, I'd be remiss not to highlight, you know, how Brecht showed up in the wake of the SVB collapse, uh, back in 2023. I mean just to kind of set the context. I was only pretty new to the role. I'd been in the finance seat for six months at this point. And that was a pretty remarkable event that hadn't really occurred in some time. And I think from that perspective it caught a lot of people, uh, unawares. And also it was something that I just uh, upon remembering was just, it accelerated so rapidly from like the beginning of the week to the end of the week and then the weekend thereafter. And one of the things that I really appreciate about that as a strategic sort of finance moment for Brex was not only was there that dynamic of, okay, well how is Brex set up to be able to weather this by virtue of like, do we have our capital with the right partners in the right format so that we can continue to serve our customers? But then also given the fact that we are uh, big proponents of supporting the startup ecosystem, how are our customers potentially impacted if they have funds otherwise locked up at SVB while they're working through what does this look like from an administration perspective? And so I think I remember with some sort of fondness that the company overall and as a thousand person organization really rallied around, okay, what is the product we can launch to help customers meet payroll next week if their funds are trapped at sbb? That product didn't exist at Brex or even generally in the market. We had to devise the product, go to lenders, raise a billion in capital in terms of commitments so that we could go out and give our uh, sort of customer certainty around being able to be there in the case that they weren't able to get access to their funds from scb. Ultimately they didn't need our uh, products because they were able to get access to funds which was the best outcome for everyone. But what I thought that, that really highlighted for me as a, as a moment was finance can have this, especially the fintech, but finance can have this Outsized impact in terms of thinking through how can you show up for your customers, especially in times of need? What are the capacities that you may have, especially as a larger organization to get access to capital or thinking through, um, helping your customers when you know as, especially as a smaller company, you may not know sort of what to do or how to approach those type of challenges. And so I was really happy with both how Brecht showed up, but also finance team, specifically.

Speaker A: Ben Gammell's experience showed how quickly companies had to respond as the crisis unfolded. Our uh, next guest reflects on what finance leaders learned after the dust began to settle. Larry Roseman, CFO of ah, Thumbtack, built his career across public accounting, investment banking and operating finance with leadership roles at ebay before joining Thumbtack. Having lived through multiple market disruptions, Larry explains why the weekend wasn't simply a baking crisis. It became a turning point in how many CFOs thought about liquidity, capital allocation and profitable growth.

Speaker D: The saying never let a, uh, good crisis go to waste. Um, you know, the svb, uh, First Republic banking kind of crisis that occurred a couple years ago. I was going to Palm Springs for uh, the uh, tennis tournament down there and like literally getting on the plane and landing and the whole thing sort of blowing up, being holed up in the hotel room for days. Um, and then yeah, once banks opened up again on Monday, figuring out how it was going to play out and then ultimately within a few days after that, we sort of knew how it was, how it was going to shake out. Uh, from a sort of operating perspective, we had the ability to, you know, split up our operating cash so that if there ever was another crisis like this, we had multiple places where we could, where we can draw funds. We revisited sort of our covenants and made sure that that wasn't going put us at risk. We revisited our investment policy to make sure that um, we were sweeping cash in a way that um, sort of enabled us to prevent this from happening. So I will say that using that experience within my organization and in some regard, I think our industry really enabled us to focus again, and I think rightly on profitable growth. And this was a moment in time when all of a sudden now CEOs and business people realized, uh, okay, we need to understand how to focus on the full prenon. It's not all about revenue, it's about generating profitable growth. And I think the pendulum swung really far, uh, coming out of that crisis. And I think it's sort of swung now to uh, a place that's healthy, which is, sure, growth, I think, is still worth more than a point of growth, is still worth more than a point of profitability. But it's not out of whack. Right? You still have to invest, you have to invest profitably, but ultimately you have to generate EBITDA and free cash flow. It was a complete mindset shift that I think ultimately will enable us and others to create a lot of value coming out of that. I think lots of companies cut, uh, costs. So you really started to think about what are the, you know, being even more disciplined about, um, current, current investment levels. Um, and then we, we were a customer, we had all of our uh, cash at svb. Um, and you know, it's sort of not germane to sort of the uh, the outcome, but like, yeah, there was a time there where we thought we were going to lose all of our cash. M. And uh, there was some tense days during that crisis when looking to move money out of the bank and um, ensuring that you can make payroll. And it was a high stakes, high pressure, um, situation that ultimately resolved itself, um, uh, appropriately. We had money that was sort of not at the bank, that was in custodial accounts that, you know, that was, was safe the whole time, even though we didn't know that. Um, so it was, it was, that was the catalyst for us sort of saying, okay, this is a new time, we're entering a new sort of chapter and how do we think about profitable growth?

Speaker A: Larry Roseman reminds us that the Silicon Valley bank crisis permanently changed the way many CFOs think about liquidity and treasury management. But what if you had already identified the risk and simply hadn't expected events to unfold so quickly? That's the perspective Stacy Tamarkin shared with us while serving as CFO of Kubecost. Today. She's Chief Operating Officer of Oregon Public Broadcasting. Her story is a candid reminder that even thoughtful contingency planning can be overtaken by events.

Speaker B: As a finance leader in 2023, um, we were a little bit busy dealing um, with the fallout from the SVB meltdown. Um, we happened to be fully concentrated in SVB at the time. And so that was ah, another interesting journey that we had to take and another um, challenge to survive and get through. We actually started that year with um, myself and my finance director asking the question of, should we diversify our banking relationships? Um, is this a place of outsized risk? And we, we talked about it, we discussed it with the CEO and we were all kind of like, we'll eat the risk. It'll be okay. We'll figure it out. Um, and let's, let's table this discussion and then raise it again in six months. Of course, three months later SVB melts down and we have to scramble along with all the other companies. I don't think that we ever saw that we were truly like at risk of losing the business. It was more just the challenge of finding sources of short term funding in case those, um, our main funding was um, frozen for an extended period of time like we needed to make payroll. I can't say that if I had it to do over again, I would make a different decision and I don't think the business would have made a different decision. And I think that's one of the unique things about finance leadership at a startup is, um, it just comes with the need to have a slightly higher risk tolerance. And are these black swan events going to happen from time to time? Absolutely. Um, but the key is really maintaining ah, a mindset of flexibility and adaptability and learning to deal with it as it comes versus trying to address every risk all at once because there's just not time and resources to go after everything.

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Speaker F: We were banked at Silicon Valley Bank. Uh, and I've always, always had at least two relationships from a bank banking perspective. I actually like three. I don't care how big a company I am, but I always like to have at least two, if not three. And so when I got to, uh, uncork, we had one, it was Silicon Valley bank and decided to actually put another one in place with J.P. morgan, uh, which was important. And, you know, as things started to move, if you were just paying attention, and I always have, you know, alerts, and I'm always looking for things around key vendors of mine, including my banks. And there was a note that came out, it was a tweet about a week and a half to two weeks prior to, you know, things hitting the fan with Silicon Valley Bank. And I remember going to our board and saying, listen, I don't know if this is real or not. I have no idea. But in order to be safe, I'm going to move a chunk of our money out of Silicon Valley bank and move it over to JP Morgan just to be safe, and I'll move it back if nothing happens. Um, board was okay, we moved that money. And I'm sure you have plenty of stories about this, but, you know, when that weekend hit, uh, you know, I mentor Quite a few CFOs and having discussions with them. One thing that I should have done a better job just always have two bank accounts. They were stuck with one. It was Silicon Valley Bank. They were concerned about what they were going to do where they could move their money. So to me, just kind of having that basis really, really important.

Speaker A: Looking back, it's easy to focus on the event itself. But that's not what these finance leaders remember. They remember the uncertainty, they remember the decisions that couldn't wait. And, uh, they remember the realization that treasury management isn't simply about maximizing returns. It's about preserving options when the unexpected arrives. Each of these leaders came away with a different lesson. Together, they remind us that resilience isn't built during a crisis. It's built long before the crisis begins. For CFO Thought leader, thank you for listening.

Speaker F: M.

Speaker C: Hello.

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