Mangopay CFO: There’s No Replacement for a Healthy Balance Sheet

There’s nothing simple about growth, and there’s nothing basic about financial fundamentals.

In light of ongoing macro challenges and a softening economic landscape, savvy chief financial officers (CFOs) are doubling down on protecting their balance sheets and prioritizing healthy growth that ensures profitability.

That’s according to Carlos Sanchez-Arruti, CFO of payments solution provider Mangopay, who emphasized during a conversation for “PYMNTS CFO Series: What’s Different?” that March’s mini banking crisis has “validated the discipline that CFOs need to have around cash management and treasury.”

“[Finance leaders] can’t forget that at the end of the day, cash is king — and it’s important to carefully manage cost and cash while being able to enable growth and separately maintaining a certain level of cushioning,” said Sanchez-Arruti, adding that this often comes down to a CFO’s ability to balance trade offs the right way.

He underscored that in today’s environment, it is important for finance teams not to let “hype, growth, and market opportunities” get in the way of the CFO’s ultimate responsibility of safeguarding the assets of the company and shareholder value.

Balancing Growth and Sustainable Profitability

“The moment you start thinking short-term, it is over. It is OK to sometimes lose the short-term trails of profitability to enable sustainable long-term growth. Your job as CFO is not to be the ‘yes man’ to the CEO, your job is to create that healthy balance between supporting the growth strategy but also pushing back and sometimes being unpopular. At some point, you are going to have to pay the piper,” says Sanchez-Arruti, noting that CFOs mostly work for shareholders and investors, and are tasked with maintaining and protecting a business’s value at all costs.

As businesses across industries start to look inward and examine their own operations to identify and accelerate efficiencies, getting back to the basics of a strong cash position and pacesetting across realistic growth targets is just one approach companies are taking.

Sanchez-Arruti highlights the importance of ongoing discipline around management of funds and underscores the importance of establishing a “solid controllership and treasury foundation” to help strategize and support business growth “without losing sight of where the cash is going, and how you maintain it.”

He said the mini banking crisis was a “wakeup call” for many companies and many CFOs to go back to basics and pivot from a “sexier focus on just growth” toward one that relies upon concrete fundamentals of controllership and making sure organizations have the proper mechanisms to ensure visibility over their working capital and long term profitability.

Building Productive Partner Ecosystems

At the end of the day, Sanchez-Arruti said, CFOs need to treat their company’s financials the same way they would treat their own retirement fund — by not putting all their eggs in one basket.

“[Banking relationships] are the bloodline of the services we provide to our customers, but it is not just a tactical relationship — it needs to be a strategic one as well, where we really get our operations involved with our banking partners to make sure we win across the board, whether it is receivership, controllership, strategic growth, but also win on the ability to improve our own profitability,” he said.

The Mangopay CFO emphasized that building this style of cooperative and productive relationships can help finance leaders “keep their ear to the ground” in terms of what is happening in the market and what the banks themselves are hearing around new technologies, emergent data capabilities and other relevant bits of information.

Beyond that, Sanchez-Arruti said that what he’s looking for in spreading company “eggs” around various relationship “baskets” is the same across all providers: someone willing to understand Mangopay’s needs and provide the capabilities that allow the business to succeed.

“We want to have banking partners that allow us to understand what we need to do in terms of integration, data management, what we need to do in terms of real time KPIs that allow us to monitor everything that has to do with the flow of funds between our customers, our banking partners, and our end users,” he said.

“It’s not just about managing funds — it’s about ensuring a symbiotic relationship where the more we benefit, the more they benefit,” Sanchez-Arruti added.