Ep 313: The Ideal Financing Structure for E-commerce Brands with Matt Putra
When and why does getting a fractional CFO make sense in the life of a business? What is the ideal financing structure for a business? Does it differ from what banks suggest?
In this episode, Jordan chats with his business partner and CFO, Matt Putra and they talk about how to structure debt, what kind of debt to take on, and the different types of debt levers that are out there. He shares how the bank wants you to structure things and the way he thinks your debt should be structured.
Listen and learn in this episode!
KEY TAKEAWAYS FROM THIS EPISODE
Every business should start out doing proper bookkeeping.
A fractional CFO makes sense when it is doing above $500,000 and wants to grow fully for the long term.
If you are venture-funded and want to grow really fast, you can have a CFO right away when you are starting.
The more complex your company is, the more a fractional CFO can help.
It is not bad to get debt from more expensive financing such as Shopify, Clearco, PayPal, & Wayflyer because these have very clear values and are very flexible.
You can pull money out of your business and put it in investments. Your net worth will be in a different exposure to risks.
A five-year-term loan provides certainty and gives you one big cash injection which is paid in small monthly payments.
Banks will have a lot of restrictions to protect themselves, it is important to read through the covenant or ask your CFO or lawyer if you don't understand it.
Some of the things that a CFO looks at in a company hiring are revenue, sustainability, growth margins, marketing spend, and the salary-to-revenue ratio.
Looking forward constantly at your expense structure and managing it is important for sustainable growth.
Recommended Book:
Will by Will Smith
https://www.willthebook.com
Today’s Guest:
Matt Putra is a fractional CFO at EightX.
EightX helps businesses in need of CFO services to optimize their business cash flows.
Connect and learn more about Matt and EightX here:
Website: https://www.eightx.co
LinkedIn: https://ca.linkedin.com/in/mattputra
Financing structure that banks suggest:
https://www.linkedin.com/posts/mattputra_longpost-bank-money-activity-6898057989517840384-Fjvj
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