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Overview
Most agency owners can point to a healthy profit margin on paper and still panic about payroll by the third week of the month. In this episode, John Jantsch sits down with virtual CFO Jody Grunden to unpack why that gap between paper profit and material cash exists, and what to do about it before it becomes a crisis.
Grunden walks through the specific cash and forecasting habits he installs in marketing and creative agencies: how much cash an agency should always keep on hand, how to build a forecast from team capacity instead of a static budget, and how weekly subscription billing changed the way his own firm sells its services. The conversation also covers where agency owners tend to overspend without noticing, and how to tell whether a sales pipeline is realistic given the size of the team delivering the work.
This episode is for agency owners and marketing consultants who want a clearer read on their numbers between financial reports, and for anyone thinking through when it’s the right time to bring in financial expertise to help the business grow with confidence.
Guest Bio
Jody Grunden is a partner and virtual CFO practice leader at Anders CPAs and Advisors. He co-founded Summit CPA Group in 2002, building one of the first fully remote accounting firms in the country and moving clients from hourly billing to weekly subscription billing years before that model became common. Summit merged with Anders in 2022, and Grunden now works almost exclusively with marketing and creative agency owners. He is a Forbes Finance Council member.
Key Takeaways
- Keep at least 10 percent of annualized revenue in the bank at all times; agencies that want to run more conservatively should aim closer to 30 percent.
- Build forecasts around real, non-financial drivers, headcount, expected billable hours, and average bill rate, rather than a static budget checked after the fact.
- Moving from hourly billing to a weekly subscription model lowers the perceived risk of signing on, since clients commit to a small weekly fee instead of one large project number.
- Fees should scale with company size rather than stay flat, and any planned annual price increase should be disclosed to clients upfront.
- A forecast is only useful if it’s checked against the sales pipeline. If a team can’t realistically generate the leads a forecast assumes, the forecast needs to change, not the excuses.
Great Moments
- [01:15] – Grunden traces his entire virtual CFO model back to one cold call from a marketing agency in Rhode Island in 2004, back when he was doing all his client work in person.
- [04:23] – Grunden describes how “profit” used to be treated as a dirty word by agency owners, and why educating clients on margin came before any of the financial systems work.
- [16:34] – Grunden explains how Summit restructured its offering into three service tiers plus an a la carte menu, letting clients build their own scope instead of negotiating one flat fee.
- [19:55] – Grunden explains why Summit switched from billing in arrears to billing on the first day of the week or month, and why the change generated zero client pushback.
- [22:38] – Grunden recommends using Bill.com’s Divi cards to isolate every software subscription onto its own card, making “tool creep” easy to spot and cut.
Memorable Quotes
- “A good CFO holds you accountable the same way a personal trainer does. You show up because you know they’ll be there and you already paid for it.” — Jody Grunden
- “Whether you review your numbers weekly or monthly doesn’t matter. What matters is doing it consistently, good or bad.” — Jody Grunden
- “We used to charge every agency the same flat fee, but a thirty million dollar company needs a lot more from us than a one million dollar company. If you don’t scale your fee to size, you start losing money on your own clients.” — Jody Grunden
- “Profit used to be a bad word to agency owners, but in reality, in order to grow, you need profit.” — Jody Grunden
- “Cash is your biggest KPI. The more cash you have in the business, the more it means you’re doing things right.” — Jody Grunden
- “A CFO takes your accounting information and helps you make the decisions that get your agency where you ultimately want to go, instead of just reporting on what already happened.” — Jody Grunden
Resources
agency finance, agency KPIs, agency profitability, cash flow management, financial forecasting, fractional CFO, small business finance, subscription billing, virtual CFO, weekly billing
