Over the years, Sage Intacct has worked closely with hundreds of founder teams and startups to help them scale their businesses—from raising the first rounds of financing to expanding their companies—and, for some, completing successful IPOs. These organizations chose Sage Intacct’s cloud ERP to automate complex processes, view their business from every angle and make better decisions to grow faster. Below are some of the principles and strategies we’ve learned and refined for scaling finance functions through a company’s growth phases. Join our free product portal to read the rest of this article as well as gain access to additional educational videos, white papers, case studies, and product tours.
As you attract your first set of customers, raise seed money from angels and other early investors, and (later) prepare to raise your Series A capital, finance processes are straightforward. You’re paying bills to keep the lights on, invoicing your first customers, and keeping ahead of compliance tasks such as paying state and payroll taxes. You might have an administrator or coordinator who handles many back office functions (in addition to finance tasks). And many companies we work with hire a part-time CFO to help with cash-flow management and oversee financial operations.
This is where the fun really begins for finance. Your business has been backed by institutional money, you may have raised a Series A (or later) round of financing. Your board members now expect quarterly financial statements. Meanwhile, you’ve been busy signing up new customers and your billing volumes are spiking. Your contracts are becoming increasingly complex as well.
This is precisely when you need to hire dedicated finance pros to handle (on a full-time basis) standard finance processes such as accounts receivable, accounts payable, and payroll. The first dedicated hires in finance also coincide with the need for basic financial controls, such as reconciling bank statements, proper month-end closes, and expense approvals. In addition, your business needs a CFO who can scale the team and be a strategic partner to help founders
validate business strategy from a financial standpoint.
This is an ideal time to adopt Sage Intacct best-in-class cloud ERP to help your new finance team establish their processes and controls, step up reporting and analysis, and scale up to accommodate business growth in an efficient and flexible manner. Sage Intacct can provide necessary structure, but also provide enough “pivot room” to adapt as needs change.
With the basic infrastructure in place, it’s time for liftoff. This phase is all about execution and gaining scale. Finance is the key partner by implementing efficient processes that remove barriers to sales, including billing and collecting timely payments from clients. By providing insightful analyses to the management team, you are able to identify strategic threats and opportunities.
As your business matures, so will your finance team and processes. Key new hires during this phase include a controller responsible for the transition to a rigorous, audit-ready financial reporting process. Key priorities will include tackling the difficult challenge of revenue recognition and ensuring GAAP-compliant transactions.
OK, your business is taking off and you are nearing “escape velocity.” In many instances, companies take on some pre-IPO financing to get across the finish line. This funding usually comes from a large institutional investor, such as a mutual fund. But this funding brings ever greater financial oversight. These new investors will hold your financials to the same level of scrutiny as a public company. This means your finance team must close books and report GAAP financials within days—not months—and comply with a myriad of controls and regulatory requirements that public companies face.
This dynamic drastically changes many aspects of the finance function. One key area is hiring. The profile for new hires shifts from operationally-minded people to those with stronger backgrounds in public accounting and technology. You’ll also need to have an IPO-ready financial system in place for that. (We have a great white paper that explains in
detail how you can transition to an IPO-ready finance team.)
As you can tell, there are many elements for finance to consider when scaling the business from $0 to $100 million in ARR (and beyond). At Sage Intacct, we’ve partnered with hundreds of firms, like e2b teknologies, that have successfully achieved this.
Content provided by Sage Intacct Corporation.
About Sage Intacct
Sage Intacct is a leading provider of best-in-class cloud ERP software. Bringing cloud computing to finance and accounting, Sage Intacct’s award-winning applications are the preferred financial applications for AICPA business solutions. In use by more than 10,500 organizations from startups to public companies, Sage Intacct is designed to improve company performance and make finance more productive. Hundreds of leading CPA firms and Value Added Resellers also offer Sage Intacct to their clients.
According to research from business IT consulting and advisory firm Saugatuck Technology (an ISG business), nearly 90% of businesses of all types and sizes are applying some types of Cloud-based and Cloud-related technologies to change, improve, innovate, and accelerate how they do business.Read More