CFO Spending Operating System: Part 2 of 2
Your Spending Approval Operating System; Faster & Quality Spending Decisions
CFO Best Practices: Your Spending Approval Operating System
At some point in a company’s scaling journey, you cross an invisible line.
The line where “moving fast” without rules stops being entrepreneurial… and starts being expensive and financially risky.
This is the stage where the CFO’s job evolves from approving spend to architecting a new spending operating system.
This is the stage where the Finance department makes the transition from the financial police to the financial partner. This includes the company wide leadership shift from the finance team as judge and jury to the team that enables company wide financial ownership and accountability from the CEO on down to the Department Senior Manager or Director.
At this stage, there are simple goals for this new Financial Operating System:
Faster spending decisions
Higher quality spending decisions.
Financial spending ownership and accountability
And with any “system”, this requires MVPs (Minimum Viable Processes) with a focus on “Minimum”. We aren’t talking bureaucratic large company slow approval processes. Quite the contrary. When designed properly, a great MVP Financial Operating System is stage appropriate and allows everyone to understand.
The “Why” or “Why Not” of every decision
Clear requirements for making spending decisions
I’ve personally created and customized such a system at Mozilla, Netflix, Intuit and other companies - each at their various growth stages - from under 100 employees to several thousand.
The Foundations of This Financial Operating System Include…
Company wide spending decision frameworks with approval spending levels tailored to each Leader, Department, Role
Clearly defined test, success, failure metrics used for follow-on spending decisions
Financial Ownership and Accountability
And the one critical feature many finance teams forget - the Exception/Override process
Yes, rules are required.
But rules without exceptions become bureaucracy while exceptions without accountability become chaos.
Hmmm… I like that sentence. I just may have to frame it as a new “Cook’s CFO Axiom.”
Here’s an example system - one I’ve personally created. Please take the overarching ideas and themes here and customize them for your company or your stage of growth.
Remember: taking somebody else’s system and simply installing it without customization is usually fraught with friction.
1st Principle Financial Spending Philosophy:
Ownership + Accountability; Specifically Not Permission
The healthiest spending cultures don’t treat Finance like a gate.
They treat Finance as the owner of the decision spending system - as financial partners helping leaders with their ownership and accountability for their spending.
At mid-to-late stage startups, spending needs to be governed by simple principles:
Spending must have a named owner and measurable outcomes.
Who owns the spend?
What are we trying to prove?
How will we know it worked?
When do we decide to scale it or stop it?
If you aren’t asking and answering these questions, then you’re not making an investment decision, you are making a purchase.
My Core Framework: Test → Success → Failure
A system that defines when we the spend is either Testing for ROI (Test), Doubling Down (Success), or Cutting (Failure).
Over time, I’ve communicated this to my orgs as turning spend into a portfolio of explicit bets or investments.
TEST (Prove it)
This is where most new spend belongs.
Some key operating rules in this category:
Avoid outsized bets as a first investment
Avoid fixed, long-term contractual commitments (we are in test phase after all and don’t want to be locked in if it fails
Example: Don’t sign the 24–36 month contract until you’ve proven the spending motion works or the ROI is achievable.
Define the “Testing” spend standards:
Short duration (30-90-180 days typical; maximum 12 months)
Clear minimum and maximum spending caps; many don’t realize minimums are just as important as maximums; in many spending areas the concept of minimum critical spending hurdle is required to “play the game” and spending under the minimum is just as much a recipe for failure as throwing too much money at the spend.
Defined success metrics
Pre-set decision date (“we decide after week 8 or definitely after 6 months”)
Built-in exit clauses / off-ramps
Best practice language Finance?
“Yes… but Test”
“Stage and Gate Our Investments”
“Our initial spending is to test and learn”
“We need to focus on shorter term variable costs for now”
“Once we’ve proven the spending works, we can move to more fixed, long-term spending.”
SUCCESS (Scale it)
If the test worked, you don’t need to “re-approve the same thing.”
You double down with now higher spending standards
Success decision standards:
Unit economics are defined
Spending holds at higher volumes; alerting for “diminishing returns”
Verified leading indicators (not “we got lucky”)
Repeatable process exists (not 1-time success heroics)
Spending owner can articulate the scaling plan + constraints
The CFO / Finance Leader in this category shows up as an accelerator vs a gatekeeper:
Faster approvals
Larger checks
Fewer meetings
Higher trust
FAILURE (Stop it)
Failure isn’t bad. Hidden failure is bad.
A “no shame” failure process increases speed because people stop protecting sunk costs.
Failure decision standards:
Success metrics not hit by decision date
No credible path to improvement
Opportunity cost too high
CFO job here:
Make stopping feel like leadership, not punishment.
Language to normalize:
“We didn’t lose money. We bought clarity.”
“We made a bet; it didn’t pay; we redeployed.”
The Spend Decision Architecture: From “Pushback” to “Enablement”
Move from characterizations of finance “pushing back” to finance “enabling”… by leading with the “Why.”
This is where world-class CFOs separate from average ones.
They don’t say “No.”
They say:
“Here’s the decision framework. Improve your recommendation.”
That one sentence changes the culture.
Because now Finance isn’t rejecting spend - Finance is upgrading decision quality.
The Company-Wide Operating Rules (What You Roll Out Org-Wide)
This belongs in what I call your Financial Operating Rules - the set of shared rules that let everyone “plug into” how spending works.
Here’s the baseline rule set I recommend for mid-to-late stage startups:
Rule 1: Every spend request must declare its category
Test
Success (scale)
Failure (stop / unwind)
Rule 2: Every request must have an owner
A single accountable leader. No committees.
“If you want to kill a plant, have two people water it… committees produce the same result as two people watering a plant: it either drowns or dies of neglect.”
Rule 3: Every request must have a metric stack
Leading indicators (early proof)
Lagging indicators (ROI outcome)
Guardrails (what can’t break)
Rule 4: Every test must have min-max expectations and a date
No open-ended tests. No indefinite pilots.
Rule 5: No long-term fixed commitment in Test
Finance must protect the company from “premature scale.”
Rule 6: Success gets speed
If it’s proven, approvals get faster and budgets get bigger.
Rule 7: Failure is learning. Learning is constant.
Share the whys, whens, and hows of failure to increase learning velocity.
Approval Process Design: Spend Limits + Decision Rights
Now let’s translate philosophy into an operating system.
A simple 3-lane approval model
Lane A: Within rules (fast path)
Approved by functional leader within their budget
Finance confirms classification + metrics + cap
Minimal friction
Lane B: Within budget but outside rules (review path)
Requires CFO/FP&A review
Often results in a redesign into a “Test”
Lane C: Exception / Override (explicit ownership)
CEO/COO can override rules
Must be documented as an exception
Exception owner is named
Metrics still required
Post-mortem required
The Exception Process: The Most Important Part of the System
This last “Exception” part is critical to show flexibility… and allows the CEO or COO to take ownership and accountability… and ideally makes them think twice.
Exceptions aren’t a loophole. They are a pressure valve that prevents bureaucracy and forces senior leadership to own the exception risk transparently.
Exception trigger:
A spend request violates a rule (contract term, max $ spend, risk profile, timeline).
Exception requirements:
Named executive sponsor (CEO/COO or delegate with authority)
Written rationale: why the rule is being overridden
Explicit risk statement (what could go wrong)
Defined success + kill metrics anyway
Required retrospective: “Was the exception worth it?”
Every exception becomes a leadership moment.
Not, “Finance said no.”
But, “Leadership chose to override. Here’s why. Here’s who owns the decision.”
The Spend Request Template
If you want to operationalize this, make every spend request answer these types of questions:
Category: Test / Success / Failure
Owner: who is accountable?
What problem are we solving?
What are we testing or proving?
Success metrics (leading + lagging)
Failure / kill metrics
Budget cap + duration
Dependencies / constraints
Approval path: within rules or exception?
As CFO, Your Real Job Is Decision Quality
As you scale, your role as CFO is to architect stage appropriate decision-making systems. You are the leader who ensures spending becomes a disciplined portfolio of bets.
When you do it right, people stop saying: “Finance is pushing back.”
You want to hear: “Finance gets it and is helping us go faster”.
