More Cash Less Stress with Matt Putra of Eightx

Empowering E-Commerce Excellence with Matt Putra

Matt Putra is a seasoned Fractional CFO with a laser focus on empowering e-commerce businesses to thrive. With a wealth of experience in financial strategy and a genuine passion for fostering long-term growth, Matt has become a trusted ally for businesses navigating the complexities of the online marketplace. Having dedicated his entire career to the trenches of small businesses, Matt brings a unique perspective and a wealth of insights that go beyond traditional financial roles.

In his role as a Fractional CFO, Matt has left an indelible mark on businesses like Mindful Marketing and Little & Lively. Jordan, the head of Mindful Marketing, attests to the transformative impact Matt has had on their operations, providing them with a clear roadmap for the next five years and significantly reducing anxiety. Carmen, the owner-designer of the Little & Lively online clothing brand, experienced tangible financial benefits, with Matt uncovering $50,000 in annual cost savings within just three months of collaboration.

Matt specializes in long-term financial forecasting for e-commerce businesses with annual revenues ranging from $1-9 million. While these businesses may not be giants in size, Matt recognizes the depth of their dynamism and the potential for immense success. Through his expertise, he aims to provide clarity, structure, and direction, ensuring that the founders of these businesses not only survive but truly thrive in the competitive e-commerce landscape. Matt’s mission is rooted in the belief that every business, regardless of its size, deserves the chance to experience the satisfaction and success it is capable of delivering.

Episode Transcript

Matt Putra: We’re a bunch of accountants and nerds who love helping business owners make more money. I would say that’s why we all get out of bed in the morning. We have accountants, we have analysts, we have some assistants, we have whatever. But all of us are aligned around the mission of more cash, less stress, more cash, less stress. It’s everything that we do. What we love is we love to deliver a plan to a business owner and watch the stress fall off their shoulders.

Jacob Hollabaugh: Welcome to PayPal. The payments industry podcast. Each week, we’ll bring you in-depth conversations with leaders who are shaping the payments and fintech world, from payment processing to risk management, and from new technology to entirely new payment types. If you want to know what’s happening in the world of fintech and payments, you’re in the right place. Hello, everyone. Welcome to Pay Pod. I’m your host, Jacob Hollabaugh. And today on the show, we are talking about ecommerce cash flow. Why? Cash flow is king with how with better operations infrastructure, we can increase cash flow and much more. As always, I’ve brought an expert in these matters along to discuss these topics with us. I’m joined today by Matt Putra, founder and CFO at Eightx, the home of ECommerce financial architects who help you scale your business with more cash and less stress, which I have to say does sound like a pretty great deal to me. Matt, welcome to the show. Thank you so much for joining us today.

Matt Putra: Thank you so much for having me. It’s my pleasure.

Jacob Hollabaugh: Pleasure is mine. Let’s kick things off by getting to know a bit about you. Matt. How did you become obsessed with e-commerce and cash flow? Because to do what you do, it seems like you’ve got a real passion for it. So can you give us the background on your career leading up to the founding of Eightx, and how you found yourself wanting to work with eCommerce and specifically with cash flow?

Matt Putra: Yeah, so I would say a different journey. So Cash Flow became obsessed with first e-commerce came a little bit later. How I became obsessed with Cash Flow was I was working in a local manufacturer, struggling, trying to figure stuff out, realize that the accounting systems and enterprise software and all these things had all this data. And when I looked at the data, I could combine it, figure it out, and then I could give tactical insights. Tactical insights led to more profit, more margin, more cash flow. So from that point on, it was like, wow, accounting can be a superpower if you don’t have a boring accountant at the wheel. So that was when I was like, okay, accounting is my jam. I’m going to be a CFO. Flash forward to probably seven years after that point. I was appointed by a board. I was a CFO of a private equity group, and Covid happened and I didn’t have to commute downtown, which was three hours a day, 1.5 hours each way there and back. Got all this time back and was like, I got to work for myself. A very good friend of mine named Jordan West has been in e-commerce for a long time, and he’s like, hey, why don’t you come on this podcast with me or do a presentation for my clients? And I did that and loved talking to those people, signed on with 1 or 2 of those clients, and just started working in the community on LinkedIn, with e-commerce and interacting with folks and financers and vendors and brand owners and agencies. And just I find e-commerce to have a great vibe. People have a great vibe in the e-commerce community. The other thing like that makes the CFOs job easy is there’s a lot of data for you to use when you work in e-commerce, Shopify, Google, there’s all these things. And so it’s easier to make tactical decisions when you have all the data at your fingertips.

Jacob Hollabaugh: So yeah, they’ve all e-commerce at least has access to everything. You’re going to need to know to do everything you would want to possibly do in that world, versus some places that might be running a little more physical brick and mortar. So very cool. That sounds like it basically started as kind of accidentally fell into consulting as a CFO, more or less, and then turned that into a full fledged company. So fill us in kind of high level overview. I’m sure we’ll get into some more details here in a moment, but at a high level, who is Eightx? What do you do and who do you typically work with?

Matt Putra: Yeah, so who is Eightx mean? We’re a bunch of accountants and nerds who love helping business owners make more money. I would say that’s why we all get out of bed in the morning. We have accountants, we have analysts, we have some assistants, we have whatever. But all of us are aligned around the mission of more cash, less stress, more cash, less stress. It’s everything that we do. What we love is we love to deliver a plan to a business owner and watch the stress fall off their shoulders because they know A. How they can get to where they want to go, and B. That there are plans to weather the cash flow problems along the way. That’s who we are, what we do. Our ideal client, I would say for us, 5 million and up a year is a good client for us. We work with SaaS companies, clean tech, green tech and e-commerce. Now, generally speaking, if you have 5 million in revenue a year or more than that, we work with clients up to 80 and 100 million. If you’re smaller than that, if you’re funded, we can help you. But really what we look for is this you have big plans or you want to fix big problems. Those are the two things that get us out of bed.

Jacob Hollabaugh: Love that. And it’s definitely, as I referenced, even in your intro, I couldn’t help myself. I’d say less stress, more cash. Definitely a pretty easy sales pitch. If I’m a business owner and you come to me and say, this is what I provide, you, sign me up, okay? I don’t need to even know how you do that necessarily, but I’m sure I want to bring you in and have you help me with that. If anyone you tell anyone more cash, the answer is going to be yes. That’s pretty simple, but can you explain for me, myself and the listeners what makes cash flow itself as that metric? When you’re going in and looking the thing you’re basing everything else around, there’s a lot of critical measures that could be taken. But what makes cash flow the one metric that you basically based this whole thing around that, like we’re going to come in and fix this metric for you and watch what that does to your business.

Matt Putra: Yeah, very good question. I haven’t been asked it in that way before. So like that a lot. A couple things. When you stop working, what do you want to have in the bank? Cash. Right. You could have stock but it got. If it doesn’t convert to cash, it’s useless. So you want to have cash in the bank? You need cash to pay your bills. You need cash to buy the new truck. You need cash to send your kids to university. If you look at your business, you want to do marketing. You need cash. You don’t need profit, you need cash. If you want to buy a new machine, you need cash. Again, revenue doesn’t cut it. Profit doesn’t cut it. You need money. Cash. So for me, what I realized is that cash is this thing that’s relatively hard to track, to be honest, but it’s probably the most important thing you can try to track. All cash tracking mechanisms have their weaknesses, but the bank account doesn’t lie. You know what your bank account is at any point in time, and we can help you figure out how you got from bank account from before to bank account now and bank account in the future. We will help you map that out. And again, you can be profitable and have no actual cash and then you’re still in it. You’re still in trouble. And I have a client with that problem. We’re working their way out of it right now.

Jacob Hollabaugh: Yeah. Are there any you’ve worked with a bunch of businesses at this point then, and are there any common mistakes that stand out that you’ve seen so many times over and over, like low hanging fruit, I guess would be a way to put it that, you know, without a doubt, when you start working with a client, I’m probably going to come across these couple of things. First, we’re going to fix that, and then I’ll figure out the kind of things unique to this company. Is there any kind of ones that just continually pop up common mistakes E-com companies should be super aware of?

Matt Putra: Yeah, for sure. I think a big one is fixed costs, so that’s probably the biggest one that I’ve seen up to like this past year. People are starting to be careful now, but by and large, adding fixed costs before you needed them was a big killer of businesses or a big stress adder of businesses up until now. Generally speaking, for an e-commerce company, any $1 of fixed costs requires 4 to $5 of revenue to cover it. That’s a lot, right? When you think of adding $1,000 of cost, you’re going to find five more thousand dollars of revenue to cover it. For an Amazon company, that can be 5 to $8 of revenue, because it’s just the margins are a little slimmer. So being very careful about fixed costs or adding them too early is the mistake that I’ve seen. I’d say another one is marketing spend. So it’s getting better, but don’t have a really tight system to manage their agency and manage their marketing spend. One of the key ways that we have an impact is we come in and we have systems that we’ve developed over four years now to manage, track, communicate and watch how your marketing spend converts to cash. We make it very simple for people to understand and very simple for their agencies to understand and where the agencies don’t. We give the e-commerce owner tactics to help. So just yeah, not having the great understanding of how marketing converts to cash has been a big part of our work.

Jacob Hollabaugh: Yeah. So being able to draw that roadmap for them of like every part of your business, let’s draw that roadmap back to cash and how it affects that and what the situation, underlying cash situation is going to be underneath all of these different activities.

Matt Putra: Yeah, it is a very opaque measure, at least when you’re trying to figure out, well, how does my business generate money and how does it spend money. Like it’s actually not easy. You can’t look at your profit and loss and say, oh, there’s cash. Most of us can’t do that. So we need to look at timing of things. And how does marketing convert to cash and how does payroll and all that stuff. But the third one that I’ve seen be a killer is a predatory lending. And I shouldn’t say a word predatory. Don’t know if you might want to edit that out, but there are some e-commerce lenders. The terms are just scary. So when you use these types of loans, what’s happening is you take a loan and I won’t say the names now because I said the word predatory, but if you take these loans, let’s say you take $100,000, you have to pay it back in four months. Well, most e-commerce brands, your inventory takes four months to just arrive or so, 3 to 6 months actually, on average. So you’re paying off this loan that you took for inventory before the inventory got here, which means that now you have to take another loan. So it’s paying its own self back. And then your inventory is now finally starting to cycle. But all the margin that you gain on your inventory is going back to paying off these loans rather than buying more inventory. So for me, those three, and especially, I would say especially the predatory lending has been really hard to watch. And so that’s a big part of our education on LinkedIn and otherwise.

Jacob Hollabaugh: Is there anything that you help companies with on like the payments front or like the kind of how they operate, either the receivables, the deliverables when they’re running payments through where, what type of payments infrastructure they might be using, anything of that nature that falls in that realm, that you’re helping them, hey, you can get this little margin back here. You’re losing money over here because you could be doing it this way.

Matt Putra: I would say I’m not a payment infrastructure expert, but we still look at it. Most people should review what they’re paying their processors, of course. Right. And most people should be using buy now, pay later and understanding what, what the costs are. But yeah, review your processors. There are options other than just the standard Shopify or Magento. You can look at third parties and that’s something we want to do. Because sometimes you can save one and a half, sometimes 2% of revenue can be saved if you negotiate with your processor or find a new one. And then. Buy now, pay later can unlock customers that wouldn’t have bought, but then will because you’ve given them a bit of terms. Some of the other stuff we like to talk about is pre-sales. So when it comes to payments, well, will your customers pay you in advance for something that they’re not going to receive for two weeks? Some people three months. So then how do you create the scarcity? How do you create a community around these products that they are willing to buy before they can get it with suppliers, something we talk about all the time. Everybody should get on Facebook invoicing. If it’s available to you, Google invoicing, it’s available because then you’re just going to get a 30 day bump in cash, because that very first month you don’t pay Facebook anything.

Matt Putra: You should negotiate with your suppliers regularly. There’s a word that I use given to me by a friend. He called it nibbles. When you negotiate with your suppliers, you take nibbles so you don’t go, hey, supplier who? I pay 100% on shipment. Can I pay you 100% net 30 days? That’s a very big ask. No, don’t do that. Say, hey, what if I pay you 80% of shipment? 20%. 30 days? That’s a nibble. So they accept you honor those terms. You do really well. Three months, six months. You go again. Hey, by the way, how about 70, 33 months later? Oh, how about 60? 40? And so you just take these small nibbles every time. There was once a supplier where I was purchasing $1 million a year. And I asked them if I give you an extra 1% on invoices, can I have an additional 30 days terms? They email you back. They took it in two hours. So now we have 60 day terms with them. And I’ve given up 1% of my gross margin. But gross margins are 7,080%. So it’s fine.

Jacob Hollabaugh: Yeah that’s amazing. And that’s a great way to look at I like the nibbles concept and it could be applied in so many different ways because on the infrastructure side of things, it might only be a little nibble that either can can make or break something or can make a huge change over the long haul, whether it’s if that last example you use in a situation where, hey, we can offer, we could offer to basically pay 1% more on this because look at our margins or on the other side, if it’s like, can we get half a percentage less on this processing over here because that’s a nibble to them. But to us, over the course of a whole year, we’re doing X amount of revenue that turns into we just freed up this much extra cash per month. And so yeah, I think there’s lots of ways and I really like that idea of nibbles.

Matt Putra: To illustrate the concept. So there’s the the method called the power of one. And really it’s created by someone else. I forget their name. But you look at your financial infrastructure and you say, well, what if I can get paid one day faster? What if I can pay suppliers one day later? What if I can cut costs by 1%? What if I can increase orders by 1%? So very small amounts. So I did this analysis for a company doing about $8 million a year, one, one and one all on all these different areas equaled $250,000 extra cash at the end of the year for them. So these very small nibbles, systematically taken over time, generate very much outsized outcomes to the positive. I love.

Jacob Hollabaugh: That. Would you say, I know you’ve been doing this with the company for four years now, and some time before that, my point of view, as we don’t have to disclose our ages, but I think we’re probably similar age range here. And I would say, especially through all the conversations I’ve had on this show, that something like taking a want, a cash flow minded view of a business and just incorporating much more, being willing to like, let’s hire a fractional CFO to come in and help us. We do have a CFO, an account, whatever. But like let’s hire another person or the many companies I talk with on the show that are all doing these niche, different services within the broad financial world, being open to those, would you say that the problems that, like e-commerce companies have have they’ve there’s been less of them dealing with the kind of obvious ones in the last half decade or so? I feel like the whole industry as a whole is getting a little smarter, or at least getting much more open to there’s ways around this. There’s all these new things out here. We should be using those. Do you think it is trending in that direction?

Matt Putra: Yes. And so there’s a concept called contribution margin, which I’ll just explain it real quick. So if you think of a dollar of revenue, remove every variable cost from that dollar of revenue. What’s left over should be for e-commerce company 20 to $0.30. I don’t know what it would be for SaaS. Amazon would be 15 to 25, wholesale would be 30, right? Contribution margin. Three years ago when I started, no one talked about it. No one knew what it meant. Looked like a genius. I brought it up today. Probably 3 or 5 people I speak with know what it is, know how to measure it with some adjustments, of course, but that’s one indicator to me that. All business owners think in general have gotten a bit smarter over the last even two, three years. I would say something’s accelerated in terms of managing marketing spend. I’m seeing people do it a bit better. I’m seeing agencies start to do it better and then lending again. A lot of other people talk about this. I’m beginning to see people think about it a little bit more smartly, if that’s the word, intelligently. Yeah.

Jacob Hollabaugh: Yeah, that was the one I was going to remind me to reference earlier that I definitely agreed with you and was okay with your word choice when discussing the kind of lending practices hold, but it’s been a very refreshing with we’ve had guests on the show who do just that. We’ve talked with a lot of folks in the Bnpl business where it’s their competitive advantage in the market is, what if we didn’t treat the customers like crap? What if this was a fair exchange of value and everything is like, oh wow, what a brilliant idea. But it’s like, well, some industries, that’s all it takes is what if we can do that? And unfortunately, within the broader financial world, there has been a lot of opportunity of that nature of what if we just make this a little bit more for everyone, not just the huge company? What if we just make this a little bit more beneficial to both sides versus just, you need this service and we’re the only ones offering it. So it’s going to be a little bit leaning more towards us versus an even dynamic.

Matt Putra: So and the unfortunate thing this past year has been that those friendlier financers have suffered. Unfortunately their portfolios have.

Jacob Hollabaugh: Tightened up a little bit.

Matt Putra: Certainly. Yeah. So the friendlier terms are less friendly than they were January 2023 than they are today. And by way of reference, there was a deal I did for a client of mine who’s healthy. It took us nine months to get the funding that we wanted from the bank. They just kicked the can down the road every month just to wait and see what happened. Nine months. It’s unheard of before. Even last year it was faster than that. So hopefully it turns around and hopefully the friendly guys come back in a way that’s different. That helps too.

Jacob Hollabaugh: Yeah, and hopefully at least the sentiment stays and the objective of those companies stays and they’re working with difficult times on their ends and just difficult times across the market. And so that’s a more acceptable reason for things to be tightening up versus like, can we make sure that this is a back and forth if things aren’t as bad, can we move back the friendlier and friendlier we can be? Let’s change course here and talk about a couple business philosophy type questions for you, because you and your business are a great example of some common themes across the fintech world, and things that we talk about on this podcast quite often. So starting with how do you stand out in a crowded space? Because what you do, I imagine there’s there’s a lot of folks at this point offering that, as we said, you’re doing something that most companies do are supposed to have someone doing in house first. And so you’re competing with the in house people before even competing with the broader market of what you do. And in a competitive niche like that, most of the fintechs we talk to on this show are in a similar space, especially as the last half decade, the decade the as a service space is really just taken off beyond SaaS to now just everything as a service. Yeah, a lot of companies are finding themselves in what used to be our whole thing was we’re unique. No one else does this within the financial ecosystem. People have competition now in each of these little niches. So how do you go about trying to stand out in such a crowded and competitive niche?

Matt Putra: Good question. When I started this in 2020 was my first kind of full year. Everybody who I spoke with was like, oh, what’s a fractional CFO? Oh, you do that. Oh, I need you right now. So close rates for like 50% today. There’s a lot of fractional CFOs. So I got in the wave a bit early, which helped. I would say I try to distinguish myself a couple of ways. One, I niched pretty far down in the beginning. So it was just e-commerce. Right now we’re doing like say SaaS, clean tech, green tech, and we do those well but niched. So I’m known, I don’t know how well known, but a lot of the bigger people know who I am. I’ve been around long enough now and I’ve not sold them and I’ve given value. And so I’m trusted. At least. I think being very value forward has been helpful. It’s like an ethos, like we’re so value forward, we will give away free tools. We see people make a post, we’re like, oh, hey, I can make a calculator for you. So here’s this calculator. We’ll put their names on it. As created the idea. We created the calculator, send it out into the world. Everyone can have it for free. We do a lot of that kind of stuff, because I think that I think that helping help more cash flow stress is why we do this, and we don’t need everyone to pay us for that. Enough people pay us that we’re doing okay. But I think just we’re so value forward and we’re very people first. And again we get out of bed for the business owner, not just the bank account. So that helps. And then honestly, I think staying power, like just figuring out how to hang on, how to white knuckle it for long enough that people know you and trust you. I think that’s just part of it. And I’m not all the way there for sure, but I have. The dream is to white knuckle it for long enough that I’m known and the business can run itself, but we’ll see.

Jacob Hollabaugh: Yeah, those early days are definitely the hardest when you’re like, I don’t have. Examples don’t have referrals that don’t have. I have a track record, but it’s not exactly the type you’re looking for. Exactly what I do exactly now. And so yeah, you definitely got to get through that, that initial period to get that brand trust behind you 100%. What makes for a good partnership in the financial world, because you you are coming in as a partner to these companies that you’re working with for a short time period or for a long time period. And with most of our guests and our listeners, we’re constantly talking about partnerships, integrations. It’s an ever expanding web in the world of finance and the payments ecosystem, the whole thing. So what’s needed? How do you approach building and maintaining the partnership itself outside of just we deliver the work. We say, sure, but what kind of makes for a good partnership in this industry?

Matt Putra: To be honest, there’s a lot that we have to figure out on that. I think people are very happy with us because there’s me and there’s another CFO and we, our analysts, a couple, our senior team members, we’re very friendly. We’re super fucking smart. And I think those things have helped gone a long way. We send gifts to people randomly, thank you letters, thank you notes. And I think transparency is a big one. Hey, I don’t know this, but I can figure it out or I don’t know that you’re going to need help figuring it out. I think being clear about where we’re good and where we need help is one. Delivering the work that we’re supposed to do, obviously is a big part, right? Like and actually providing the help with the cash and stress. Like we are really good at that and that has helped us. We’re probably one of the best at this point for our niche. That is I would say, and again, people first, client first is one of our four core, 4 or 5 core values. So everybody on the team knows we’re clients. First. When we want a meeting with somebody, we send the meeting options in their time zone. We don’t just send them, okay, here, pick whatever you want from our calendly. No, we do have calendly, but we send them stuff in our time zone. We go out of our way to Overserve to say yes to to do the things that are slightly out of scope, that are one time things. Money will come back to us somehow, someway later. It’s fine, we were profitable, but we just try to do everything that we can do to get people what they need, which is more cash, less stress.

Jacob Hollabaugh: Yeah, making sure they come first and it’s a great way to do business. Final question I have for you then with the role you play with your clients, you’re obviously working pretty closely with a lot of businesses and a lot of the business leaders, the heads of those businesses up close, getting to work with them in pretty close settings. What would you say from all the people you’ve worked with and seen companies different rates of success? What would you say are 1 or 2 characteristics about a business or its culture, or maybe even its leadership that stand out to you as like key indicators of future success? Either that when you go in, you’re like, oh, this is going to be great. We’re going to be able to help them so much because of this, or I want to work with them because they have this and this. I know they’re going to they’re a successful company. They need a little help. But are there any indicators after you’ve worked with so many that kind of stand out of like, that’s a company I feel like is going to be successful because they have this, and this.

Matt Putra: Focus is one knowing what you’re good at and doing that, doing that for a long time and being focused is one that I’ve seen people have outsized success on, probably more than their capacity and whatever else. Like I would say, focus on your focus on what you do those things well and serve your well, and don’t let it creep too much. I’ve seen that is one I would say for sure. The other one, I think has to be kindness. People that I’ve seen really succeed are good to their own staff. They’re really good to their employees. They’re good to their vendors. Like if you fire your vendor, kindly I mean those people. To me, that’s been a common thread. Taking time to speak with people that you maybe shouldn’t, giving your time to things you maybe shouldn’t and within reason. But I’d say that kindness is a big one and supporting others. Those are the two big ones for me, I love that.

Jacob Hollabaugh: Well, Matt, this has been a real pleasure for those listening who may want to learn or follow you or learn more about Eightx, maybe e-commerce brands out there who might be in need of your assistance? Where would be the best place for them to go to learn some more about you in the company?

Matt Putra: Yeah, so LinkedIn is a great place. If you go to LinkedIn, look for Matt Putra. I’ll be there. I’m pretty active, commenting, chatting all the time. My website is a great place to learn about us. Adecco. Those are the two main places I’m active.

Jacob Hollabaugh: Fantastic. We’ll link to those and more in the show notes below. Matt, appreciate the time and knowledge. Thanks for stopping by PayPal today.

Matt Putra: Thank you so much, Jacob.Jacob Hollabaugh: If you enjoyed this episode and want to hear more, head on over to soar.com/podcast to subscribe on your podcast listening platform of choice. That’s soarp ay.com/podcast.