Outsourced CFO & Accounting Services in Chattanooga
Financial leadership where America's freight highways meet gigabit fiber. Expert outsourced finance for logistics operators, automotive supply chain manufacturers, insurance services companies, and technology firms navigating the distinct economics of Tennessee's most strategically located mid-market city.
The Chattanooga Business Landscape
Chattanooga occupies one of the most strategically valuable geographic positions in the American Southeast. The intersection of Interstate 24 and Interstate 75 creates a freight crossroads that connects Atlanta, Nashville, Knoxville, and Birmingham—four major metro areas, all within a two-hour drive. This is not a coincidence of geography; it is the foundation of an economy that moves physical goods at a scale that belies the city's modest population of approximately 185,000. Trucking companies, freight brokers, third-party logistics providers, and warehouse operators cluster along the interstate corridor, making Chattanooga one of the most logistics-dense metros per capita in the Southeast.
Volkswagen's decision to build its only U.S. assembly plant in Chattanooga's Enterprise South Industrial Park transformed the city's manufacturing economy. The plant, which produces the Atlas and Atlas Cross Sport, employs roughly 4,000 workers directly and supports a supply chain of automotive parts suppliers, plastics manufacturers, metal stamping operations, and logistics providers that extends throughout Hamilton County and into neighboring counties in Tennessee and Georgia. The Tennessee Valley Authority, headquartered in Chattanooga since its founding in 1933, provides both institutional employment stability and some of the lowest industrial electricity rates in the nation. Unum Group, a Fortune 500 disability and employee benefits insurer, leads a financial services cluster that includes dozens of insurance agencies, third-party administrators, and benefits consulting firms.
And then there is the fiber. EPB, Chattanooga's municipal electric utility, launched the first citywide gigabit fiber optic internet service in the United States in 2010, and has since upgraded to offer 25-gigabit residential speeds. This infrastructure attracted a wave of technology companies, remote workers, and digital services firms that has diversified the local economy in ways that city planners could not have anticipated a decade ago. For business owners managing $5M to $50M in revenue, Chattanooga's layered economy offers multiple growth paths—but each path comes with financial complexity that demands more than a bookkeeper and a spreadsheet.
I-24 / I-75
Freight Crossroads
Four major metros within two hours
VW Assembly
~4,000 Direct Jobs
Automotive supply chain anchor
No State
Income Tax
Tennessee business advantage
Logistics and Freight: Managing the Economics of Movement
Chattanooga's logistics industry is built on a simple premise: if you need to move goods through the Southeast, the I-24/I-75 corridor is among the most efficient routes available. Trucking companies headquartered or based in the Chattanooga area range from owner-operators running five to ten trucks to fleet operators with hundreds of units generating $20M or more in annual revenue. Freight brokerages match shippers with carriers and earn margins on the spread. Third-party logistics providers manage warehousing, distribution, and transportation coordination for manufacturers and retailers who prefer to outsource those functions. Each of these business models has distinct financial characteristics that require tailored accounting and financial management.
For trucking companies, the financial management challenge centers on per-mile economics. Revenue per mile, cost per mile, fuel cost as a percentage of revenue, driver compensation and retention costs, equipment depreciation, maintenance reserves, and insurance premiums all must be tracked and managed at the unit level—meaning per truck, per route, and per lane. A fleet operator running 50 trucks might generate $8M in annual revenue but operate on net margins of 3% to 6%, which means that a small deviation in fuel costs, maintenance expenses, or driver turnover can swing the company from profitable to unprofitable in a single quarter. Equipment financing decisions—whether to buy, lease, or finance trucks and trailers—have multi-year implications for cash flow, depreciation, and tax position that must be modeled before commitments are made.
Freight brokerages face different financial complexity. The brokerage model generates revenue on the spread between what the shipper pays and what the carrier charges, but that spread can fluctuate dramatically based on market conditions, seasonal demand, and fuel prices. Working capital is critical because brokerages often pay carriers on 30-day terms while collecting from shippers on 45- to 60-day terms, creating a persistent cash flow gap that grows as revenue scales. Many growing brokerages turn to factoring—selling receivables at a discount for immediate cash—but factoring costs compound quickly and can erode margins if not managed carefully. A finance team that understands freight brokerage economics can model the true cost of factoring versus a traditional credit line and help the business owner make the working capital decision that preserves the most margin over time.
Automotive Manufacturing: Thin Margins, Tight Timelines
The Volkswagen assembly plant is the anchor of Chattanooga's automotive manufacturing economy, but the financial impact extends far beyond the plant itself. Tier 1 and Tier 2 automotive suppliers—companies producing stamped metal components, plastic interior parts, wiring harnesses, seat assemblies, and dozens of other components—have established operations throughout Hamilton County and neighboring areas to maintain the proximity that just-in-time automotive production demands. These suppliers typically operate on razor-thin margins of 4% to 8%, with contract pricing set years in advance and raw material costs that fluctuate monthly.
The financial management challenge for automotive suppliers is margin preservation under conditions that constantly pressure margins downward. Steel, aluminum, and polymer resin prices can move 10% to 20% in a quarter, but contract prices with the OEM are fixed. Labor costs escalate as Chattanooga's tight manufacturing labor market pushes wages higher. Energy costs, while lower than many regions thanks to TVA rates, still represent a significant input for companies running multiple shifts of injection molding, stamping, or welding operations. And the OEM's payment terms—often 60 to 90 days from invoice—create working capital requirements that grow in proportion to production volume.
Cost accounting discipline is not optional in this environment. Every component must be costed accurately, with raw material, direct labor, machine time, overhead allocation, and scrap rates tracked and compared against the pricing assumptions that were used when the contract was bid. When actual costs deviate from plan—and they always do—the finance team must identify the source of the variance quickly enough to take corrective action before the margin erosion compounds over weeks of production. For a supplier producing 50,000 parts per week, a cost variance of a few cents per part translates to tens of thousands of dollars per month. The companies that survive and grow in automotive manufacturing are the ones with finance functions that maintain this level of visibility every day, not just at quarter-end.
Insurance Services: The Unum Ecosystem and Statutory Accounting
Unum Group's presence in Chattanooga has catalyzed an insurance services cluster that includes managing general agents, third-party claims administrators, employee benefits brokerages, and insurance technology companies. While Unum itself is a Fortune 500 company with its own internal finance operations, the ecosystem of smaller companies that serve the insurance industry—or that have been started by former Unum executives—creates a concentration of insurance expertise that supports dozens of businesses in the $5M to $50M revenue range. These companies face financial management requirements that diverge significantly from standard commercial accounting.
Insurance-related businesses operate under regulatory frameworks that impose their own accounting standards. Statutory Accounting Principles, established by the National Association of Insurance Commissioners, differ from GAAP in the treatment of asset valuation, policy reserves, and revenue recognition. A managing general agent that underwrites policies on behalf of insurance carriers must track premium volume, commission income, loss ratios, and reserve development using methods that satisfy both the carrier's requirements and the state insurance department's regulatory expectations. Third-party administrators managing claims for self-insured employers must maintain fiduciary accounts, track claims payments against funding levels, and produce reporting that demonstrates compliance with the plan document and applicable ERISA regulations.
For growing insurance services companies in Chattanooga, the compliance burden is real and the cost of getting it wrong is substantial. A managing general agent that mismanages premium trust accounts can face carrier termination and regulatory sanctions. A third-party administrator that fails to properly account for claims reserves can face ERISA liability and lose client contracts. These are not theoretical risks—they are the daily realities of operating in a regulated industry. A finance team with insurance industry experience can manage these compliance requirements while also handling the company's commercial accounting, cash flow management, and strategic planning, providing a complete finance function at a cost that is far less than hiring specialists for each discipline separately.
Technology and the Gig City Economy
EPB's gigabit fiber network did more than give Chattanooga fast internet—it gave the city an identity as a technology destination that has attracted companies and talent from far more expensive markets. The Innovation District in the Southside neighborhood, anchored by the Enterprise Center and the Company Lab business incubator, has become a hub for software companies, digital marketing agencies, managed IT services providers, and data analytics firms. Remote workers from San Francisco, New York, and Austin have relocated to Chattanooga for the combination of fiber-speed internet, low cost of living, and outdoor lifestyle, and some have launched businesses that are now generating $5M or more in annual revenue.
The financial characteristics of Chattanooga's technology sector differ from those of major tech hubs in important ways. Labor costs are 30% to 40% below San Francisco and 20% to 25% below Austin for comparable roles, which means that a $10M software company in Chattanooga can achieve operating margins that would be impossible at the same revenue level in a higher-cost market. But the lower cost structure also means that pricing must be carefully calibrated—customers in larger markets may expect to pay less for services delivered from a lower-cost location, and companies that price too aggressively to win business can find that their apparent cost advantage disappears when growth requires hiring in competitive specialties like machine learning, cybersecurity, or cloud architecture.
Subscription-based technology companies face the standard SaaS financial management challenges: deferred revenue accounting, customer acquisition cost tracking, lifetime value analysis, churn measurement, and the relationship between growth investment and profitability. But Chattanooga's tech companies often add project-based revenue from consulting or implementation services on top of their subscription base, creating a hybrid model that requires more nuanced financial management than a pure-play SaaS business. Understanding the margin profile of each revenue stream, modeling the cash flow implications of the sales cycle for each, and forecasting growth with realistic assumptions about the balance between recurring and project revenue are essential for business owners making decisions about hiring, product investment, and market expansion.
TVA Power and Tennessee's Tax Advantage
Two structural advantages set Chattanooga apart from most competing markets: Tennessee Valley Authority electricity rates and Tennessee's absence of a state income tax. TVA provides some of the lowest industrial electricity rates in the nation—typically 30% to 40% below rates in the Northeast and 15% to 20% below the national average. For energy-intensive businesses like manufacturers, data centers, and food processing operations, this translates directly to lower operating costs and higher margins. A plastics manufacturer running three shifts of injection molding equipment might save $200,000 to $400,000 annually compared to the same operation in a higher-rate state, and that savings flows straight to the bottom line.
Tennessee's lack of a state personal income tax (the Hall Tax on investment income was fully phased out in 2021) creates advantages for business owners and their employees. Pass-through entity income—the dominant structure for businesses in the $5M to $50M range—is not taxed at the state level on the owner's personal return, which effectively increases after-tax income by 5% to 10% compared to states like California, New York, or Massachusetts that impose top marginal rates of 10% or higher. For businesses recruiting talent from higher-tax states, the absence of state income tax is a tangible compensation advantage that can be quantified and used in recruiting conversations.
However, Tennessee does impose a franchise and excise tax on businesses. The excise tax of 6.5% on net earnings and the franchise tax of 0.25% on net worth or real and tangible property (whichever is greater) must be factored into tax planning. The franchise tax in particular can create unexpected liabilities for capital-intensive businesses that carry significant equipment, inventory, or real estate on their balance sheets. Strategic tax planning that accounts for Tennessee's specific tax structure—including available credits for job creation, industrial machinery purchases, and headquarters relocation—can materially reduce the effective tax burden and improve cash flow for reinvestment.
What Growing Chattanooga Businesses Need from a Finance Partner
Chattanooga's economy is defined by its diversity and its strategic position. A logistics company managing per-mile economics across hundreds of lanes has almost nothing in common, financially, with a software company managing subscription revenue and customer acquisition costs. An automotive supplier tracking cost variances on stamped metal parts operates in a different financial universe than an insurance services company navigating statutory accounting requirements. Yet all of these businesses share a common need: finance leadership that understands their specific industry dynamics and can build financial systems tailored to how their business actually operates.
A finance partner serving Chattanooga businesses must be fluent in the local economic context. That means understanding how TVA rate structures affect manufacturing facility decisions, how the I-24/I-75 corridor creates logistics opportunities with specific margin profiles, how VW's production schedules ripple through the supplier base, and how Tennessee's tax environment interacts with different business structures and ownership arrangements. Generic accounting that applies the same templates to every client regardless of industry or market context will produce financial statements that satisfy the IRS but fail to support the business decisions that drive growth.
Chattanooga is also a market where business owners increasingly face acquisition interest. Private equity firms and strategic buyers are drawn to the city's growing economy, favorable tax environment, and central Southeast location. Logistics companies, technology firms, and manufacturing businesses in the $5M to $30M range are prime acquisition targets, and the quality of financial reporting directly affects how buyers value the business. Clean books, reliable revenue recognition, documented customer relationships, and defensible growth projections can add meaningful value to a sale. Building that financial infrastructure during the growth phase—rather than scrambling to assemble it when a buyer expresses interest—is the most cost-effective approach and the one that maximizes the owner's return when the time comes to transact.
Scale Your Chattanooga Business with Confidence
Get finance leadership that understands freight economics, automotive supply chain margins, insurance compliance, and Tennessee's tax environment. We work with Chattanooga businesses from $5M to $50M in revenue.