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Anthony Nitsos CFO Yeah
CFO Yeah! Podcast

How to Perform a Financial Diagnosis with Anthony Nitsos of SaaS Gurus

Patrick Whatman, Spendesk
Patrick Whatman Spendesk

“You can't go in and fix the finance, accounting and stakeholder ecosystem without understanding the entire organization. If you're focusing on just one piece and ignoring how the others relate to it, you're missing the bigger picture and the opportunities to really optimize.”

After several years studying medicine and understanding how systems drive the human body, Anthony Nitsos joined the business world to study the systems driving organizations and supporting growth. And there are plenty of similarities.

After supporting several companies as a fractional CFO, Anthony launched SaaS Gurus, a company dedicated to help organizations unlock their potential for scale.

In this episode of the CFO Yeah! podcast, Anthony explains the importance of building robust foundations to support business growth, and how to build a business diagnosis to measure your company’s resilience potential.

Listen to the full episode on Apple, Spotify, or RSS.

From medicine to machines: Anthony’s segue into the business world

I came to the finance world through a very different route than most people I've talked to. I was a medical student - and several years into that particular process - when I realized it just wasn't for me. So I left medicine.

The first industry I worked in was manufacturing, as a process engineer and systems analyst - mostly because of the fact that my training in medicine gave me skills in the field of systems analysis.

When I started working, ERP systems were starting to become very popular. An ERP hits everything from engineering to procurement, to delivery, to accounting, to finance. So, it was a natural fit for me to move from manufacturing systems processes to ERPs. My next career step was then to implement these massive multi-million dollar systems across many states and countries. 

After a while, I decided to move from accounting to finance. I got an advanced degree in finance from the university of St. Andrews. Since that time, I have been working as a fractional CFO for several companies, including unicorns.

The importance of understanding systems in depth

When I look at fractional CFOs, they seem to come from two primary backgrounds: accounting and finance. 

Those who come from a finance background may have had a few classes in accounting. They understand accounting at the conceptual level, but they've never gone into the system’s details. So they don't come in with a knowledge of how you could structure these things and companies usually end up with a lot of outsourcing. 

And the finance types often don't understand the intricacies of those topics. So, what we do is try and help them with that. The best way to control a process is repeatability and standardization. 

The other part of being a CFO is data integration and communication. You can't have siloed systems, otherwise you cannot have an global overview of how you’re performing. You can’t know what your gross margin is, or what your sales and marketing spend is. 

The first thing you need to do is dive deep into your systems and fix them - it’s the absolute must if you want to scale.

The importance of building a solid systems foundation before scaling

From experience, we know what B2B SaaS should look like. We know which systems work. But there are still many questions our clients need to ask themselves: 

  • What KPIs are you going to use? 

  • Which accounting system  are you going to choose? 

  • What are you going to use for planning? 

  • How are you going to organize HR and payroll? 

There are good solutions out there that fit B2B SaaS really well. And we've honed that in, so when we work with a client, we can identify the best ones for them. The first thing we do is completely re-engineering the back office and turning it into a robust system, which is easy to use for CFOs who don’t have an accounting background. 

In the end, you end up paying your CFO a lot less money because they’re only working on the finance pieces of the business. And all this accounting controller, financial reporting and budgeting gets taken care of. This makes it easier to scale. 

The financial diagnosis: looking at the big picture

The next step in our usual work with clients is a diagnosis. Just like when you visit your doctor, the first thing they'll do is what's called a review of systems. And they're gonna take you through a checklist.

You can't go in and fix the finance, accounting and the stakeholder ecosystem without understanding the entire organization. Because there isn't a single action or decision in a company that doesn't have a financial impact. So if you're focusing on just this piece and ignoring how the other ones relate to it, you're missing the bigger picture and the opportunities to really optimize.

So, with our clients, we go through every key function: 

  • How it's working

  • What’s not working

  • Where the data is stored

In the end, it becomes very clear to us what needs to be fixed and prioritized. And every time, it goes back to building the right foundations, which you won’t have to touch again, to minimize the risk of being confronted with corrective controls and accounting issues in the future. 

Building up financial resilience during the pandemic 

In January 2020, we started SaaS Gurus. I had three clients, and one of the typical problems they had was that the budget wasn't harmonized to the accounting system. Of course, they had sales forecasts and some semblance of an organization forecast in terms of headcount, tax, stack, operating expenses… But then Covid happened.

And all of a sudden, all of these businesses’ assumptions were gone out the door. In one case, the client was a health tech company and they were able to pivot and even take advantage of the situation. But the other one was a FinTech company, and they simply couldn't. So, sales came to a crash and halt. 

In these cases, the first thing happening is the mad scramble to redesign all the systems and get everything done. So it was really an all hands on deck for us. We had to pivot very quickly to changing the business plans and seek whatever funding sources. Then, the PPP loans started coming out.

But of course, these are not enough and you need to be able to forecast if you have enough runway and if your sales are growing enough to get to the next level. If these companies hadn’t had us working with them, they would've had to struggle to figure out any forecasting.

That's why I like to automate all this, because as a CFO, I can sit down, look at what the P&L is telling me, and move to strategic discussions. 

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