The sooner you invest in experienced industry experts, the sooner you’ll have the skillset, data and plan to realise your vision. However, in the start-up stage it can be hard to know when it’s time to invest in that talent.
Tech business owners are often looking to scale and exit which means they benefit most from scrupulous financial forecasting, monitoring and management from the get-go. In short, if there’s an area of a business that falls under “plan for what you want, not what you have”, it’s the finance department.
Here’s 3 reasons to invest in a killer Fractional Finance team sooner rather than later.
A growing business needs more than compliance.
If you’ve been bootstrapping up until this point, you’re not the only one. It’s extremely common for entrepreneurs to choose the cheapest bookkeeping option while also trying to move their business forward.
Common short-term fixes
- Owners or senior management doing the bookkeeping
- A part-time bookkeeper
- A general accountant for a niche tech start-up
- A skilled employee who “takes on” the accounting
- An admin/accounting hybrid
The thing is, there will come a point where that won’t work anymore. Either discrepancies and issues begin to emerge or revenue starts to plateau. Compliance often rears its head at this point and suddenly a short-term saving has resulted in a long-term impact.
The sooner you bring the right financial experts on board the sooner you avoid this scenario.
There’s an arsenal of benefits that come with recruiting excellent financial support in the start-up phase. Clean books and compliance will be a given, the minimum standard. Your cash-flow will be managed and forecasted, KPIs established and a strategy will be mapped out and implemented.
If you’re planning on scaling, we’ll always suggest you prioritise more than compliance.
You’ll find out what “good” really looks like.
When it comes to managing your business’s finances, it’s in your best interest to know what good accounting and finance management looks like. If you’re not sure whether your current support is adequate, you can use this checklist as a guide.
Basic accounting green flags
- Accurate numbers within a week of the month end
- The numbers reflect what’s going on in the business
- KPIs are monitoring the areas of the business that you focus on as a Founder/SLT
- Cash flow is monitored
- Weekly bookkeeping
- The upcoming two quarters are forecasted
- You receive regular updates, insight and a plan for your numbers
- Timeliness is everything. Deadlines are set and met.
- You have a tech stack that complements workflow
Accounting red flags
- Chasing for numbers
- Not receiving documents on time and with consistency
- Not receiving updates
- Lack of insight into what the numbers mean
- Not having KPIs
- Having KPIs established but not being tracked
- No forecasting, unexpected tight months and no emergency pot
- A tax-season rush
- Lack of accounting systems and/or tech stack
If your business lands somewhere in the middle, with a mix of green and red flags, it doesn’t necessarily mean there’s an impending issue. It simply means your business isn’t operating to the standard it could be. That’s why it’s good to have expectations when it comes to managing the finances.
When you level up with a finance team you level up your business.
When you outsource to a tech-focused fractional finance team, rather than a CFO, you gain access to a team of experts with different focuses. You avoid the risk of your CFO “wearing many hats”. You gain so much more than simply maintaining the underlying finances. You gain comprehensive financial perspectives, dynamic strategic advice and a rigorously managed financial structure.
Ultimately, if you have plans to scale, it’s prudent to invest in goal-focused insight and support as soon as possible.
Great support is affordable.
If you don’t know what kind of costs to expect with a fractional finance team, or what you should get for that kind of investment in talent, start by booking a goals session. We’ll work out what you need, and a plan to get there, together.