Be the strategic partner businesses need ft. Chris Ortega (Fresh FP&A)

Speaker A: Hey, so it's great to have Chris with us today. Um, we're really excited about having a series where we speak to people, uh, who really get this space that we're looking at in this fractional CFO world. And uh, Chris, it's great to meet you. Why don't you give us an introduction, tell us a bit about yourself.

Speaker B: Yeah. Hey Colin, thank you so much man for this opportunity. My name is Chris Ortega. I run a global fractional CFO and advisory service company called Fresh FP&A. And basically what we do is we help small to medium sized businesses provide and seeking financial clarity and growth to help grow their organizations. I've spent over 20 plus years in accounting, finance, FP&A and financial leadership primarily focused on building, growing and scaling finance organizations. Super excited for this conversation today. Colin. Thanks so much, so much for having me, man.

Speaker A: Great. Well, it's great to have you. So why don't you tell us a little bit about how did you get into this space? Like what you know, most people, uh, it seems like it's probably been an evolution, uh, of a career. Imagine.

Speaker B: Yeah. So for me, um, like I said before, I've spent over 20 years in accounting, finance, FP&A and financial leadership primarily in high growth businesses. So software, technology, retail, e commerce and pharma companies. Uh, most recently I was at an international marketing platform company. Helped build the Americas operations up to scale and then we sold that off to SAP. Uh, and then after that Kyle, that was like my fourth acquisition I was a part of. So coming in you typically before starting fresh FP&A, I was always first finance hire. I would come in, there's, there's nothing built, no processes, no people. They maybe had outsourced accounting and building strength and scale that. So after that pretty big exit, which was the largest exit I was a part of. Colin, I realized two things in my career. The first thing I realized in my career is I know what it takes to transform and scale finance organizations. Like I've been doing that. I know the good, the bad, the ugly and everything in between. And the second thing is I felt like there needed to be a fresh perspective brought to finance. So that's why a little under 3 years ago I started Fresh F P and A and starting Fresh FP and A. Getting down this fractional journey, it wasn't just like uh, cut off the lights and I went from like a full time job to doing this. I was doing uh, part of uh, Fresh FP and A consulting and advisory work for about five or six years before doing that. It was what it was my side hustle, right? So I had my full time job. I was building and growing software companies. Um, and then I was also doing this on the side to help friends, help family, help other people that reached out to me. Just small little projects here and there. Maybe it's a fundraising or maybe it's a rolling forecast or making them uh, helping them look at their cash flow or get money really like learning and doing a lot of project based work before taking the leap of faith and going at it full time. And really the catalyst for me, like I said, was, you know, after spending uh, all these years and building and growing these S and E businesses up to scale and to exit, I really wanted to give back and I really wanted to give back that skills, that passion, that talent, that expertise and that knowledge that I've gained over those 20 years to really help these S and E businesses grow. So that was the catalyst for me and those were the two things that really spurred me in the leap of starting fresh at the na.

Speaker A: Yeah, that's uh, also makes sense, makes so much sense in terms of what we're hearing at the moment. And Chris, one of the questions, like, I was just spending the weekend with a bunch of other CEOs and founders and you know, really like so many of them were just saying, we're hearing about other businesses that are starting to take their first steps with like, I don't have the money or the budget to bring in a full time cfo, but uh, maybe this fractional CFO concept could work for me too. Um, like are you seeing an increase in that as well? Or, um, when do you sort of see a, uh, business start to sort of take their first steps for them?

Speaker B: Yeah, absolutely. I think the. So taking a Colin, let's go bigger than just a fractional cfo. I think one of the biggest changes and transition of the fractional resource, I think in my opinion, happened during the pandemic. Right, when the pandemic happened, there was a lot of things, particularly in finance that like shook up, right? Because you had a lot more businesses, you had a lot of sales and marketing people during the pandemic that said, look, we don't know how to navigate this uncertainty, uh, and challenge. We don't know how long it's gonna last. We don't know the strategies, the tactics, the metrics, the milestones, the execution, the plans that we need to do around it. So those CFOs that stepped up and helped navigate organizations through that continued Challenge, uncertainty, that even still we're seeing that like set a whole new baseline of what the business expected from finance before, right? That, that mindset of what finance brought to the business was hey, finance brought us the numbers, right? We were the number, we were the number, we were the scorekeepers of the organization. So I think one big piece to latch on is that value proposition changed. Now businesses want finance, they want CFOs, they want FP and A, they want accounting, they want anybody that they interact with from the finance organization to say, hey, how are you creating value? So that was one I think like really big macro uh, factor that happened. And then you look at these businesses now, right? To me, I've always recommended there is like when you look at the going down the road of getting a full time CFO in the labor market the way that it is, right? We've done estimates and we've looked at source data from the Bureau of Labor Statistics and you're going to be spending somewhere between 500 to $750,000, right? That's inclusive of salary, that's inclusive of recruiting time, that's inclusive of uh, paying the recruiters, that's onboarding, that's bonuses, that's options, that's benefits. You take in the whole package of bringing in a full time CFO at an organization, it's a pretty significant investment, right? And if you get that investment wrong, right? Say you hire the wrong cfo, you thought you wanted, you needed a strategic cf, but you're like, man, we really need somebody tactical in the weeds. So you make, if you make that mis hire, take that 5 to $750,000 number, times it by 5 to 10x of value that that has cost the business, right? That's a big, big, big investment for people to go into. And a lot of S and B organizations, they just don't have that money to be able to spend. But not even the money aspect of it. They're not even sophisticated enough to need a full time cfo. But here's where the silver line and the opportunity happens for the fractional cfo. Those are the people like Fresh FP and A can come in and say, hey, we know the pitfalls, we know how to build your foundation pillars which are going to be your people, your process and your partnership. And we also have the experience of building your scaling pillars which are platform performance and profit optimization strategies, right? And now you have access to this person that has been there, done that, know the good, the bad, the ugly and they can help advise you throughout your journey. And you're paying a fraction of the cost, you're paying a fraction of the cost for that value, for that experience, for that knowledge. This is where it's a, uh, uh, you know, I sit down with CEOs and business owners and founders of SME businesses and it's like, you know, they look at the value, they're like, man, well, why would you not do that? Why would you not want to bring in somebody early to say, yep, you may not want to do this solution because you're going to outgrow this. And when you outgrow this, this, this is the problems that are come along the way. And let's be honest, right? A lot of CEOs, business owners and founders, finance is not their expertise. They're like, oh man. Like when it comes to the numbers, when it comes to the budgets and it comes to the forecast, it's like, I don't want to do that. I want to be focused on either the product. I want to be focused on the go to market, I want to be focused on the marketing, the sales. I don't want to be down in the finance. But I need that strategic level expertise for somebody to help guide me. So it not only becomes a value proposition, but it also becomes a great opportunity to get the right people at the right time of your organization. That way you can scale. Right. I always look at bringing on a fractional, whether it's the CFO or it's a chief human resource officer, or it's a marketing officer, or it's a sales or it's a revenue or it's a operations. Think about the foundations of those functional areas you want to build. And think about the finance organization as a house. You want to make sure that you have that foundation of your house, of your finance organization built correctly from day one. Because the time, energy, effort and resources it's going to take when you have to redo that foundation five, six, ten years from now, it's very costly to a business. So that's my insights on the justification and the rise of, uh, the fractional cfo. The fractional cfo.

Speaker A: Yeah, absolutely. It makes so much sense. Um, I think, I mean, what would you say to somebody who was maybe skeptical and they were like, you know, my accountant does that for me, my CPA takes care of that. Uh, you know, I've got the numbers and then I've got somebody internally who can use a spreadsheet and gives us our management reports. You know, what would you say to them? They're, they're if they're thinking, do I really need this rule? Like, you know, there's other things I could be spending the money on, uh, like marketing that maybe would be more important.

Speaker B: Yeah. So for me, I see a lot of CEOs, business owners and founders that we have that come on as clients as fresh, fresh FP and A. And they deal with this concept called fractional CFO remorse. And I'll break that down of what that means. Basically what fractional CFO remorse is, is like you do see the prevalence of it. Um, I'm not throwing shade, but you see a lot of people that call themselves fractional CFOs and it's like they worked as a staff accountant for like four years. And I'm like, how does that, how does that translate to, you know, you did accounting to you're a cfo, right. And you can advise businesses. And I think a lot of times the skeptical comes down to. And that remorse that they deal with is a lot of times accounting is very history looking. They're looking backwards when you look at the accounting function of itself, right. Like people are probably closing their February books or they did that last week, they closed their previous month. That, that tells you what do you say you're going to do and what did you do? Which are two really important business questions. But when you're leading a high growth company and you're making these pets and you're making these investments, you want to be thinking about what is the future of this going to look like. And in my career there's a huge departure between a CFO and a controller. Right. Like I've always, I came up in the accounting space. Um, I will show everybody like my Ernst and Young branding. But I started in public accounting in accounting. And I quickly realized that my value is and where I'm going to be the most passionate and provide the most experience and value to people is going to be on the strategic side. Like these are people thinking about, hey, if you're making that investment in marketing, how are you quantifying the roi? Are these the right channels? How are we measuring success? Right? What is this investment going to lead to? A lot of times that, uh, fractional CFO remorse that comes in with these CEO owners, founders and CEOs is they realize that they just hire somebody. Look at the past. Here's the thing. I'm not discounting the value of having solid accounting. That is critical. There is no CFO that's going to fractional CFO or full time CFO that's going to be successful without solid tactical operations or accounting. That is a uh, necessity. So a lot of times I say, look, before you even need me, you need to make sure you have accounting taken care of, because I'm not going to. You don't want a CFO doing your monthly journal entries and reconciling your bank statement, right? That's not the value of what you're going to be paying way too much and that person is going to be extremely bored. Right. So for me it's about making that investment and thinking about it. To say, not only of the business we want now, what does the business look like a year from now, 18 months from now, two years from now? And then who's going to help me from the finance organization set the vision, the strategy, the tactics, the metrics, the milestones and execution? Who's going to create this finance funnel of uh, future, uh, future like opportunity that we have to make sure we capitalize on that. So to me that's where that, that element comes in there, right? And that these are the people that have, hey man, we've been there, we've done that. We have the skills, passion, talents, expertise to help you, guide you in the future. That's really the true value.

Speaker A: M. Yeah, that's amazing. So what, like where would you say, uh, where would you say like is it just the accountant or the CPA and um, and then the personal CFO or do you need, do you typically like to see another person, like a financial controller or an ops person in the mix? Like what's your dream team? Team when it comes to, you know, like I'm not talking about a huge company, I'm talking about like a 20 person company. Uh, like what would you like to see in the mix? If you're. Or what's the, what's an example of some great teams that you worked in in the past?

Speaker B: Yeah, so some great teams that I'll tell one from a, uh, like working in high growth businesses. And I'll also share a little bit how fresh FP&A works with our clients. So I'll uh, share the first example. For me, I've always, I've been a part of big finance teams, right. But I've also seen, and where I think really growth orientated organizations are, I've had really lean teams. And where we've been lean is because we leverage technology to do a lot of the low value stuff. Um, I would say if you're a high growth business, somewhere between 10 to about $30 million and you're like, hey Chris, uh, you know what? A fractional CFO doesn't sound good. But I want to kind of build a solid foundation organization from scratch. You need four people aren't in that.

Speaker A: Right?

Speaker B: The first two people. And I've always, how I've always had my lean teams. I've always had a great staff accountant and I've had either like a junior controller or a controller person. That way there's a person that's dedicated to the tactics and there's a person dedicated to the strategy. When it comes to tactical operations, right. I've got someone doing the work and I've got someone super knowledgeable that can communicate the strategic side of the county. Right. This may be like implementing ASC606 or there's an accounting pronouncement or there's an accounting change. I've got somebody implementing it and I've got somebody informing the organization and informing our team around it. So that would be my starting lineup for if you're bringing everything in house from a tactical operations perspective. On the strategic side, on the finance side, I've always had a FP and a analyst, maybe a senior FP and a person. And I've either had a manager of finance or a VP of finance in that area. Right now you've got that person trying to take care of the finance inside the business and then you've also got that strategic leader that the controller reports to, the financial analyst report to. And I some of the times where I've seen it be very valuable is I've had finance members inside the organization. So I've had marketing ops, I've had sales ops, I've had other people inside the organization inside of different functional areas report to me. And finance. That to me has been. I've had operational people inside the sales and marketing which to me for any growth business are going to be probably two of the most important areas of the business. Sales, sales, marketing, HR and finance. That is what you need to have expertise in as you're growing business. So that's been like my prototype for in house teams. A staff accountant, a controller, assistant controller, junior FP and a or senior FP and a person manager of finance, VP of finance or director of finance and then maybe one in sales and marketing. They're they're like a rev ops FP and a person. Those are usually like my, my black ops inside the business. They're like my double agents. They're like reporting to the business, but I'm also have a dotted line with them. So that's on the in house side. Now typically how we work with clients at fresh FP&A is all of my fractionals. We have uh, a pot of resources. So my pot of resources, I have five people that help support me and the clients that I serve, two of them are going to be, one is a junior and one is a senior FP and a resource. Right. So that is having my tactical. They're doing the modeling, they're updating the forecast, they're really into the modeling, into the analysis, working with the tools. The third resource I have, this is a systems person. So this is a person that knows NetSuite intact, QuickBooks, Power, BI, Tableau, uh, Power Automate, Zapier, They're a very systems orientated person. Then the next resource that I have is going to be a Director of finance, right? That's my pod. And including me as a cfo, that's a pod of five resources that we're giving and serving our clients. It's not just me, but I have an entire team and typically with my other fractionals across my unlock, uh, that support Fresh, FP and A, they have a similar concept. So not only are you getting access to a cfo, a strategic level cfo, but now you've got this whole supporting engine of resources that are helping support your organization from a strategic perspective to help you look towards the future. So that's been the ideal model for us, that's really worked for us in helping support our clients at Fresh fna.

Speaker A: Brilliant. Uh, and uh, did you ever see clients going back to like, I'm just going to get a full time to, you know, or do you think like that is the new way, that is the new model to just keep this fractional role? I mean maybe you're biased because that's your thing, but have you seen where people say we're kind of, we're ready to bring all those people in high smart people that grow, you guys?

Speaker B: Yeah, yeah. I mean definitely, right. Like since we work with SMB businesses, I think typically when you start to get to 70, 80 million, $90 million of revenue inside your organization and maybe you just brought on your Series A and you brought more institutional investors. They're going to want somebody in house, they're going to want some. And even at that stage the cost justification warrants having someone in house. And typically whether that's a VP of Finance or they bring the CFO in house, typically when they make that hire, they're going to want to build out their internal team themselves. So There definitely is a destination where organizations reach, but it's also like, don't pull that trigger too early because a lot of times I've seen it, you know, we've had clients that have left the business not because there's been a bad relationship, it's just because it's like we've ultimately sat down with that CEO and founder and said, hey, you probably don't need a full time cfo, but you probably do need a, uh, manager of finance. You probably need someone in between that piece of, you're not ready at the stage to need that full time person, but maybe a middle ground, right? So we've had that situation with clients and we've also like helped that same client find that person. Uh, given our network and people and connections that we've had, there's been clients that we've lost that we found a person to replace them in a manager of finance position that they said, hey, thank you so much for like finding the talent to give us this position. And we still want to work with you in an advisory capacity. So to me, the most important part, I think of any fractional is, and particularly for us@fresh, FP&A is we want to be part of that journey. Right? That's the number one thing for me. If when people ask me like, hey Chris, where do you see Fresh F P and A three, five, six years from now? I'm like, as long as we're still part of the journey and as long as we're still making an impact, that's all I really care about. Like, I look back over my team, looks back over our careers that we had. Um, I have a fractional CFO in San Francisco that helped take a pharma company public. So we got deep experience and the number one thing we come down to is we love being part of the journey. I want to see you go from 5 to 15 to 25 to $50 million. I want to help you write that journey and see what your business scale and grow. So I think there's definitely a, a, a timeline. But I also caution those CEOs, business owners and founders making it too early, you're not going to really get the biggest impact. Making it too late. You're probably going to be scrambling to try to bring everything in house. It's, it's definitely a def, uh, delicate balance to manage for sure.

Speaker A: Yeah, no, I mix, I mean slides. That's very cool. You just, you can go from that, uh, like all the way up from five, the whole journey. I think it's really, that's, that's really exciting because a lot of, a lot of CFOs might not be able to make that. Uh, they might be used to being in a certain size and a lot of exists across the board. You know, you'll hire somebody who they're used to being a certain size company and the ability to scale is huge. So I really like it from our point of view as well. Um, Chris, I, I wanted to ask you about cash flow. Um, obviously a float. We think like cash is king. But you know, it'd be great to get your perspective on it. Like where do you see, um, like where do you start with cash flow with your businesses? Um, like what tools do you suggest? Like where have you seen people make mistakes with this? Um, I, you know our, most of our clients are probably, our customers are probably in that uh, like they're 2 million up to 20 million, um, scale. So you know, not, we're thinking more on that smaller end rather than in the huge end. Um, but it's great to get your anecdotes and butts on that.

Speaker B: Yeah. In leading high growth businesses and working and working with clients in high growth industries. Right. Cash profits are a dream. Cash is a reality. Right. I tell our clients all the time it does not matter doing a 36 month forecast. If you can't pay payroll next week, none of that matters. Right. So for me that's cash burn and cash Runway for every client across Fresh FP and A. Those are like one to two, priority number one and priority number two right. Now breaking that down a little deeper, I think this is where a lot of people that measure cash burn and look at cash. Right. You look at traditionally this is from an accounting perspective. You look at the indirect statement of cash flows. Right. Uh, I never liked. And this is. Yes, I'm a recovery cpa. I'm a retired CPA and I know all my accountants are going to be like throwing their calculators at me right now. But I think the indirect statement of cash flows is the wrong statement to look at for cash. It's wrong. Throw it out the window, don't use it. The most important place to look at cash is look at your bank account. That's the reality. When you're looking at the indirect method, you're adding this back, you're looking at the changes of accounts payable. And I went up. No, we look at hard dollars and we look at the bank trend. That's money you're paying out and money you're getting in and all of that is the direct method of cash flow. So typically when we work and advise our clients around Cash burn and cash Runway, we're like, hey, stamina. Cash flow is a good guy. But we're going to do the analysis, do the planning and do the forecasting and do the modeling on your bank account. Because that's real dollars coming in and out. That's real dollars you're getting in, that's real dollars that you're paying out. So I think that's one, uh, place that a lot of organizations fail is like, man, like get into the details. Like get into your ap, get into your collections, get into your contract, get into everything that's driving money inside your bank account and money that's driving outside your bank account. Um, and the second guideline that we always recommend our clients, given a lot of the continued economic uncertainty and just overall challenges that a lot of business are facing, talent see all the different macro factors that are affecting businesses. We advise our clients to keep at a minimum 16 to 24 months of Runway, right? Like, how are you making sure that we have, uh, investments in place that we're looking at fundraising strategy, we're looking at capital strategies, we're looking at debt strategies, we're looking at ways to make sure at a minimum we're keeping 16 to 18 month Runway for our businesses, right? Like that is a gold standard for us. Is gone are the days of, like, you look at the vc, private equity and strategic market. It used to be a lot easier pre2019, uh, to go raise money. That's really, really difficult now. So a lot of businesses are saying, how can we make sure we operationalize our cash flow, our inflow and our outflow to make sure we're getting the best out of that? And that's where you learn the business, right? This gets into another place is like, go learn the business, go learn your contracting, go learn your contract management process on your, on your AR side for your customers, right? Like that's a big lever. And a lot of times, you know, it could be offering, you know, discounts to get accelerated cash. And some people may look at it as like, man, Chris, you're giving a 10% discount for somebody to pay quarterly. Like, want to have a revenue impact? Yeah, to have a revenue impact in it. But I care about getting the gas right now. I, I care about accelerating the cash. The cash is more important to investments we need to make right now. And we can make those investments that are going to yield a higher than 10% return. Inside the business. So let's do that. Right? Um, so to me, that's where, and a lot of times, you know, organizations, this is where I think technology becomes a huge value add for fractionals and just overall CFOs.

Speaker A: Right?

Speaker B: Traditionally, when you think of the FP&A as a whole, FP&A has always been financial planning and analysis to me. And our fresh perspective that we bring to it is that's not our version of FPA. That's not the FP&A. That's in fresh FP&A. That's not it. Financial planning analysis technology can do that. Technology is like float for your cash flow management and forecast. Let that, let them do that. Let the technology handle your financial planning analysis where you really want to be positioned and the value you're going to bring the business is being the financial partner and advisor. That's our version of the fresh FP and A side of it. And that's really where you're advising your clients, say, okay, like, look, we're going to look at ap. Let's kind of flow some things. Let's look and see how we can maybe put this on a credit card to get additional flow. Let's leverage some investment with our banking relationships to see how we can maybe secure a line of credit that secures us for, uh, a month of payroll. These are all the things you need to be thinking about. And it all gets beyond the statement of cash flows. Right? It gets beyond that. And bringing in technology to help you do that analysis and be able to look at that. And that way you can have a advisory conversation with your clients, an advisory conversation with your business, an advisory conversation with the CEO, business owner or founder of the organization. That's the value add. And technology helps amplify the value that we bring from the financial planning analysis. The technology can handle that. We Fresh FP and A can do. The financial partner and advisor. Now you've got an entire team that's focused on making sure that, that you're keeping 16 to 24 months of cash Runway in your business. That's been my recipe around it.

Speaker A: Yeah, that's cool. And 16, 24 months, to be honest, that's a lot m from speaking to our customers, that's like the holy grail. You know, we find like so many businesses in the uk, uh, are certainly like operating at the average was something like three months Runway. Um, so it's just, you know, and a big part of the reason we built float was because, you know, if you're doing a Long term forecast and you've only got three months Runway in the bank. You need to see the intra month like payments. You need to understand like what's happening in the 15th of the month whenever my payroll is about to go out. Um, and those are the, those are when it comes to a bit more of a crunch time. But yeah, um, it certainly feels like we're on the same page about building the cast, building the cash reserves, building that cash position. Um, and uh, that's where you want to get to. So. Absolutely, yeah. I think, um, it's been fantastic to hear that. I love the idea of that partnership, um, model and letting the tools take care of the, the legwork and coming in and telling the story, uh, for the businesses. That's really what we need to know. That's really what we're looking for. So, um, from a business owner perspective. Yeah, I love that. And uh, I hope that um, maybe we get to work together one day.

Speaker B: Yeah, absolutely, absolutely. And for all those business owners, founders, CEOs that are going to go back and look at the end of this video, my number one thing for you is listen. Technology is how finance scales, right? I've been part of organizations, Collins. You lead organizations. When your business is growing, when float is growing, you're not going to look to your finance leader and be like, hey, go hire more accountants and go hire more finance people. We don't scale. Finance doesn't scale. We scale. And the biggest value that we're going to have in the roles and responsibilities that we do, the value that we bring and the helping guide the future of our organizations, we have to move away from being technology laggers to technology adopters. So if you're looking for a forecasting, cash flow, forecasting, budgeting, planning tool to help you get to that holy grail of that 16 to 24 months, to help give you the insights and information that you need to make better data driven decisions around your cash flow. I highly recommend go check out Floating.

Speaker A: Thanks so much for the tattoo.

Speaker B: Thank you so much. Colin. Thank you so much for your time, man.