Building a finance function from the ground up
G
ood financial management is critical to the success of any business. Yet small business owners o en handle their own bookkeeping for reasons ranging from fear of sharing sensi ve financial informa on, keeping staff costs in check, or wan ng complete control. These reasons, while undoubtedly valid for start-ups and smaller opera ons, grow increasingly imprac cal as your business grows, explains Carlo Gualandri, Founder and CEO, Soldo. The most successful entrepreneurs learn quickly that accounting and finances are the lifeblood of business and deserve to be treated as such. Se ng up a finance func on is therefore cri cal for planning, especially forecas ng on financial ma ers and predicting cashflow – an indispensable requirement to remain profitable. But when is the right time and where do you start, especially if you’re a start-up about to enter a growth phase?
Do the basics first The three essen al building blocks for an emerging finance func on are a bank account, payroll and accounting so ware. They will form the founda on for the subsequent work your finance department will build upon and should, therefore, cater for your business’ current and anticipated future needs. Apart from being a legal requirement, a dedicated business bank account makes it easier to manage cash flow, pay suppliers, sort out taxes, and calculate profits. It’s therefore sensible to use it to its fullest poten al. However, before setting up your financial func on, determine whether your current business account is compatible with the technology you want to use, offers the services and integra ons you need, and whether the banking fees are compe ve. 54 europeanbusinessmagazine.com
Treat finding a business bank in the same way as you would any other business supplier. Research the market and shop around for the best price, service, and benefits for your business. To supplement your business cash account to help you do more, consider addi onal tools such as so ware for payroll and accounting. Take the me to examine the various so ware offerings to find a soluon that best aligns with your needs. Cloud pla orms, for instance, make it easy to collaborate online with your team from anywhere, while staying on top of your business’s cash flow in real- me.
Small business, big data Mining the trove of financial data your firm generates daily can yield useful informa on for managing your business more effec vely. Ensuring your finance team has accurate, and even real- me data at its disposal will enable them to iden fy opportuni es or inaccuracies and act on it quickly. Reliable data is also a prerequisite to attract potential investment. Having an accurate picture of the money flowing in and out of the business can be the key to demonstra ng financial health and organisa on, o en making it easier to convince investors of the viability of your proposi on. Investors will be more willing to part with their cash if the business has an efficient and prepared finance department.
Managing spend A way to track and regulate expenditure is the next item the fledgling finance department would need. Many start-ups overlook spend management early on and track expenses through employees only, which could
quickly spin out of control as the company spends more and employs more staff. Opera ng without an efficient spend management solu on is a setup for failure and can severely hamper decision making. Research by Soldo found that nearly a third (29%) of growing businesses in the UK and Ireland struggle when choosing what business priori es to spend on. Almost a fi h (18%) said that they didn’t have
