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 <br>For a seed-stage medical device company, financial planning for medical device startups starts with one question: is your biggest gap looking forward or looking back? If you need someone to build the cash forecast, plan the next raise, and talk to investors, a fractional CFO fits. If your books close late and reconciliations pile up, a controller or a bookkeeper comes first.<br>
 Start with cash, not with the org chart
 <br>Start here. Can you say, today, what cash looks like over the next several months? If the honest answer is "roughly fine," you have a problem to fix before you hire anyone. Seed-stage device companies often spend money in lumps: a prototype run, a test lab invoice, a contract engineer billed by milestone. The bank balance on Monday says very little about what will leave the account in March.<br>
 <br>Take a hypothetical case. Imagine a small team with a working prototype, a bank balance that looks healthy, and a supplier who wants a deposit before the next build. Nothing in the bank statement shows that deposit coming. The founder sees cash and assumes there is room. Then the build slips, the deposit is paid anyway, and payroll gets close. That is a timing problem, not a profit problem, and it is the most common surprise at this stage.<br>
 <br>Runway is the plain-language version of the question. It is how long the money lasts at the current spending pattern. The useful version is not a single month count. It is a list of what must be paid, when it must be paid, and which payments depend on a milestone. A test result that slips changes runway more than a small cut in software spending does.<br>
 <br>Start with four things this week:<br>
 List every bank account and card, and confirm each balance matches the bank.
 Write down committed payments: payroll, rent, software, lab work, and contractor invoices.
 Mark each payment that depends on a milestone, such as a test result or a shipment.
 Ask the CEO what happens if the most important milestone slips by one quarter.
 <br>The fourth question is the one most founders skip. The answer usually shows which costs are fixed and which can wait. Once you have that list, you have the start of a forecast. Anything you cannot answer is a gap to close first, and a fractional CFO will need those answers too.<br>
 Fractional CFO, controller, accountant or bookkeeper: who does what
 <br>These four titles get mixed up all the time, and the mix-up costs money. A bookkeeper records transactions and keeps the ledger current. An accountant prepares financial statements and tax filings, often on an annual cycle. A controller owns the monthly close, the internal processes, and the accuracy of the reports. A CFO, fractional or full-time, owns the forward view: the forecast, the funding plan, the cost decisions, and what goes to investors.<br>
 <br>The roles overlap on small teams, but the questions they answer are different. A bookkeeper asks, "Is this transaction recorded?" A controller asks, "Did we close the month on time, and do the numbers agree?" A CFO asks, "Can we make payroll in the fall if the trial takes longer?" Each question needs different skills and different time. Hiring a CFO to do bookkeeping wastes the CFO. Hiring a bookkeeper to answer runway questions leaves the question open.<br>
 RoleMain jobTypical focus at seed stageFits when
 BookkeeperRecords transactions and keeps the ledger currentBills, payments, bank reconciliations, payroll inputsRecords are behind or bank accounts do not reconcile
 AccountantPrepares statements and tax filingsAnnual financials, tax returns, audit supportTax and year-end work is the main need
 ControllerRuns the monthly close and internal reportingClose calendar, reporting accuracy, approval controlsMonthly numbers arrive late or cannot be trusted
 Fractional CFOLeads the financial plan on a part-time basisCash forecast, budget, funding, investor reporting, spending decisionsYou need forward-looking leadership without a full executive payroll
 <br>What a fractional CFO does and does not do matters. Usually they set the planning rhythm, review the numbers each month, and  Boston speak with the board and investors. They do not normally run daily payables, they do not replace the outside accountant or the audit firm, and they cannot guarantee a funding round. If a proposal promises any of those things, ask what evidence sits behind the promise.<br>
 <br>Many device startups need both an outside bookkeeper or accounting firm and a fractional CFO. The mistake is assuming one person can do both well at this stage. A clean setup is simple. The bookkeeper or accounting firm keeps the records current, and the CFO reads them, builds the forecast, and explains what the numbers mean for the next decision.<br>
 <br>Start with the table. Find the row that matches your biggest pain this month. If the books are wrong, the answer is not a CFO yet. If the books are right but nobody can tell you the runway, the answer probably is.<br>
 Building a cash forecast your board will actually use
 <br>A cash forecast is not a spreadsheet of hopes. It is a short list of expected money in and money out, updated each time something changes. For most seed-stage companies, a rolling forecast covering the next quarter is more useful than a long annual budget. Long budgets rest on assumptions that nobody updates after the first month.<br>
 <br>Start with the actual bank balance, not with the plan. Then add the known outflows: payroll, rent, insurance, software, and vendor invoices already received. Next add expected inflows, which at seed stage are usually grants, a bridge loan, or investor money with a closing date. Put a status label next to each line so the reader knows how much weight to give it.<br>
 Start from the bank balance on the forecast date, matched to the bank statement.
 Add committed payments by due date, including payroll taxes and benefits.
 Add expected receipts, and label each one confirmed, likely, or hoped for.
 Tag every milestone-linked cost with the event that triggers it.
 Re-run the forecast every week, and write down what changed.
 <br>The fifth step is the habit that makes the forecast worth reading. Board members stop trusting a forecast that never moves. A forecast that changes every week, with a short note on why, earns trust. The tool can stay simple. Some teams keep it in a spreadsheet, while others pull actuals from QuickBooks or build the model in a planning tool such as Adaptive Insights. The discipline of comparing forecast to actual matters more than the software.<br>
 <br>The hardest line is the one labeled "hoped for." Founders tend to count a grant or a term sheet as cash before it closes. A practical rule helps: a receipt counts in the base case only when the money is in the bank or the agreement is signed with a clear date. Everything else goes into a separate scenario. That keeps the base case honest, and it keeps you from making payment decisions on money that has not arrived.<br>
 <br>Test the forecast with one short scenario. Move the most important milestone out by one quarter and see what happens to the lowest cash point. If the answer is a crisis, you have found the real planning work. Decide now which costs you would pause and who has to approve the pause, so the decision is not made in a hurry later.<br>
 Choosing KPIs for a device company before revenue arrives
 <br>KPIs at seed stage should answer a practical question: are we spending money in line with what we said we would achieve? Revenue metrics come later. Early on, the most useful numbers are burn rate, runway, cash spent against budget, and progress toward the milestones that unlock money or permission to continue.<br>
 <br>Burn rate is the net amount of cash leaving the business each month. Calculate it the same way every time, and say whether it includes one-time items. A burn rate that looks stable can hide a growing payroll line or a manufacturing deposit that hits next quarter. Put one-time items in their own row so the trend stays readable for the people who use it.<br>
 <br>EBITDA rarely fits a company without revenue or with lumpy early sales. Investors and lenders will ask for it later, once the business has operating history. For now, a simple gross margin and a clear view of the cost structure tell you more. When first sales arrive, ASC 606 governs how revenue is recognized, and that choice changes every margin number you show. Settle it before those numbers reach an investor.<br>
 <br>Milestone KPIs are where device companies differ from software companies. A test result, a regulatory submission, a clearance decision, or a supplier qualification can change the budget overnight. Track each milestone with a target date, a confidence level, and the cost that depends on it. That turns the regulatory calendar into a financial one, which is the view the board needs.<br>
 <br>Start with five KPIs at most. Too many metrics turn the meeting into a discussion of the dashboard instead of a set of decisions. Pick the few numbers the CEO would act on this month. If a number changes and nobody knows what to do about it, drop it or redefine it. A short list people use beats a long one that gathers dust.<br>
 What the first months look like and how to judge a candidate
 <br>The first months are mostly listening and cleaning up. Expect the fractional CFO to ask for bank access, the chart of accounts, recent closes, payroll records, the cap table, and every contract with a payment term. Expect questions that feel obvious. They are not. The answers show where the financial process is weak and where it is solid.<br>
 <br>Many engagements follow a rhythm. In the early weeks, the CFO builds a baseline: current cash, committed payments, open invoices, and the state of the books. Then comes the first full close, a review of how reports are produced, and a draft forecast. By the time the board sees a forecast, the team should know which numbers are reliable and which still need work. If that is not clear by then, the setup needs another look.<br>
 <br>Working relationships matter. The CEO sets priorities and makes the calls. The bookkeeper or accounting firm keeps the records. The board or investors want clear updates, not surprises. The fractional CFO sits between them and should write down who owns each deliverable. If nobody can say who approves a payment above a set amount, the setup is not finished.<br>
 <br>Judging a candidate starts with stage fit. Ask what they did when a forecast missed, and how they handled a grant, a loan, or a supplier deposit. Ask for a sample monthly package with names removed. Then ask the questions below and listen for plain answers.<br>
 What does your first month look like, week by week?
 Show me a forecast you built for a company at my stage.
 Who on my team will you need, and how often?
 What do you not [do i need a part-time CFO in Massachusetts](https://venturegrowthpartners.com/locations/massachusetts-boston-part-time-cfo-services/), and who does it instead?
 What would make you recommend a full-time hire?
 <br>Be wary of anyone who cannot describe their own process in plain words. A good candidate will say what they do not handle, and will not promise results they cannot control. Their answers should sound like someone who has run a monthly close, not someone reading from a brochure.<br>
 Preparing investor reporting and due diligence before a round
 <br>Investors and lenders test your numbers, not your story. Before a first round or a loan request, expect a due diligence list that asks for monthly financials, the cap table, customer or grant contracts, payroll records, and bank reconciliations. Gaps in that list slow the process and invite harder questions from the other side of the table.<br>
 <br>Start with a data room. It is a folder, often in a secure online tool, that holds the documents an investor will request. Build it before anyone asks. Include the most recent monthly financials, the forecast with its assumptions, the cap table, key contracts, intellectual property filings, and a short note explaining any unusual entries. Keep it current, and keep a log of who has access.<br>
 <br>Investor reporting should be short and regular. A useful update covers cash and runway, progress against milestones, spending against plan, and the decisions the board needs to make. Keep the format stable from month to month so readers can compare one update with the next. A new layout every quarter makes readers wonder whether the numbers changed too.<br>
 <br>Due diligence also checks controls. Who can approve a payment? Who can change the chart of accounts? Does the person who records a payment differ from the person who releases it? At seed stage, a few simple controls go a long way: dual approval above an amount you set, a monthly bank reconciliation done by someone other than the bookkeeper, and a written list of who can sign.<br>
 <br>If you are preparing for a loan or a sale, the same discipline applies with more detail. Lenders look closely at working capital and debt terms. Buyers look at the quality of earnings and the risk of combining systems later. You do not need every answer today. You do need a clean record of how the numbers were produced, because a financing or a sale is never guaranteed, and a clean record is the part you control.<br>
 How regulatory milestones and manufacturing change the budget
 <br>Device companies carry costs that software companies rarely face. Testing, design controls, quality systems, and manufacturing scale-up can each move the budget in a single quarter. The U.S. Food and Drug Administration reviews many devices through a process the company does not fully control, so the financial plan needs room for timing that moves.<br>
 <br>Build the budget around milestones, not calendar months. For each major step, list the expected cost, the approval it requires, and the outcome that would change the plan: a passed test, a request for more data, or a rejected design. A request for more data is a common event. It belongs in your scenario planning as a real possibility, not as a footnote.<br>
 <br>Quality systems have a cost that finance teams often underestimate. Many device makers align their quality management with ISO 13485, a standard for medical device quality systems. Documentation, supplier audits, calibration, and training carry both payroll and outside fees. Put them in the budget before the first production run, not after an inspection finds a gap that has to be fixed in a hurry.<br>
 <br>Inventory and working capital need attention early. A small batch of components bought in advance ties up cash that the forecast must show. Ask suppliers about payment terms and minimum order quantities, and treat deposits as cash out on the date they are due. A supplier who wants payment before shipping can change your runway more than a new hire does.<br>
 <br>Use this checklist when you review the manufacturing and regulatory budget:<br>
 Attach each cost to a named milestone.
 Add a scenario where the most important approval takes longer than planned.
 Include quality system, calibration, and supplier audit costs.
 Show inventory and deposits as cash out on their due dates.
 <br>Start with the scenario. It is the line most likely to be missing, and it is the one that tells you whether a delay is a nuisance or a threat to the company.<br>
 A decision test for moving from fractional to full-time finance
 <br>The move to a full-time CFO usually follows a change in the work, not a change on the calendar. Watch for these signals: the forecast needs updating every week, the board asks for detail a part-time schedule cannot cover, the company is managing a large raise or a debt facility, or the finance function now has several people who need daily leadership.<br>
 <br>Start with one test. Write down the three decisions you made last quarter that depended on financial leadership. They might be a hire, a supplier payment, a pricing choice, or a step in a fundraising process. For each one, ask whether a part-time CFO was enough or whether you had to wait for an answer. If waiting cost you options more than once, the need is becoming full-time.<br>
 <br>Compare the two models on the same basis. A fractional arrangement gives you senior judgment for part of the week, usually without a full executive payroll. A full-time CFO gives you daily presence, deeper work with the team, and more control over the agenda. The cost is not only salary. It also includes recruiting, onboarding, and the time the CEO spends managing the role during the first year.<br>
 <br>Stage and size matter too. A company with a small team and a simple cost base can run on fractional leadership for a long time. A company with several revenue lines, a manufacturing partner, multiple lenders, and an active sale process may need full-time leadership sooner. Neither answer is a verdict on your business. It is a question of fit, and the fit changes as the company grows.<br>
 <br>Here is the criterion to apply to your own case. Keep the fractional model while the main financial questions can be answered in a scheduled review and decisions are not waiting on access to senior finance. Move to a full-time CFO when those delays start to cost you a hire, a raise,  [do i need a part-time CFO in Massachusetts](https://venturegrowthpartners.com/locations/massachusetts-boston-part-time-cfo-services/) a loan, or a sale. Write that down, review it each quarter, and decide with the numbers in front of you.<br>