Building a finance function from the ground up

Building a fi nance function from the ground up

Good 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 sensiঞ ve fi nancial informaঞ on, keeping staff costs in check, or wanঞ ng complete control. These reasons, while undoubtedly valid for start-ups and smaller operaঞ ons, grow increasingly impracঞ cal as your business grows, explains Carlo Gualandri, Founder and CEO, Soldo. The most successful entrepreneurs learn quickly that accounting and fi nances are the lifeblood of business and deserve to be treated as such. Seম ng up a fi nance funcঞ on is therefore criঞ cal for planning, especially forecasঞ ng on fi nancial 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 fi rst

The three essenঞ al building blocks for an emerging fi nance funcঞ on are a bank account, payroll and accounting so[ ware. They will form the foundaঞ on for the subsequent work your fi nance 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 fl ow, pay suppliers, sort out taxes, and calculate profi ts. It’s therefore sensible to use it to its fullest potenঞ al. However, before setting up your financial funcঞ on, determine whether your current business account is compatible with the technology you want to use, off ers the services and integraঞ ons you need, and whether the banking fees are compeঞঞ ve. Treat fi nding 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 benefi ts for your business. To supplement your business cash account to help you do more, consider addiঞ onal tools such as so[ - ware for payroll and accounting. Take the ঞ me to examine the various so[ ware off erings to fi nd a soluঞ on 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 fl ow in real-ঞ me.

Small business, big data

Mining the trove of financial data your fi rm generates daily can yield useful informaঞ on for managing your business more eff ecঞ vely. Ensuring your fi nance team has accurate, and even real-ঞ me data at its disposal will enable them to idenঞ fy opportuniঞ 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 fl owing in and out of the business can be the key to demonstraঞ ng fi nancial health and organisaঞ on, o[ en making it easier to convince investors of the viability of your proposiঞ on. Investors will be more willing to part with their cash if the business has an effi cient and prepared fi nance 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 . Operaঞ ng without an effi cient spend management soluঞ 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 prioriঞ es to spend on. Almost a fi[ h (18%) said that they didn’t have

enough financial insight to make eff ecঞ ve spending decisions. Setting up the finance department presents the ideal opportunity to address spend management and get complete fi nancial visibility. Forward-looking businesses should also consider spend automation, since automaঞ ng repeঞঞ ve tasks will free up ঞ me for the fi nance department to focus on more complex, analyঞ - cal tasks.

It’s all about scalability

Although it feels challenging to predict what’s coming next in the current climate, businesses can sঞ ll make decisions while seম ng up a fi nance department to ensure it can scale alongside a growing business. The fi rst point is to select so[ ware that is likely to be supported for the foreseeable future. Cloud-based pla orms present a big advantage here since they are much more likely to receive ongoing a‚ enঞ on and even regular updates. Automaঞ on is another necessity for scalability as it takes care of many of the tasks that scale linearly with a growing workforce, such as data input and receipt tracking. Without an eff ecঞ ve fi nance funcঞ on, a business is much more at risk of failure. A slick fi nance department running at full ঞ lt can increase profi tability, streamline processes, spur growth, and ensure long-term sustainability.