As your company continues to grow, the roles and responsibilities in your teams begin to evolve with it; Your finance team is no exception. Throughout the early, growth, and late stages of your business, your finance department's personnel, responsibilities, and tools need to adapt to meet the needs and scale alongside your company. Understanding both how your finance department should grow as well as the meaning behind those changes is important to make sure you're not left scrambling to keep up.
Early stage is all about nailing down the basics: invoicing, account receivables, bookkeeping, etc. At this stage, your finance team is going to be lean, which is perfectly fine—you’re just starting out, so transaction volume will also be lighter. Having one or two finance personnel to handle all the basics will be suitable at this rate. This might mean an outsourced bookkeeper to record your monthly transactions and a CPA to help file your taxes and ask questions as they come up during the year.
This is also the perfect time to start developing your finance plan and processes as you start ironing out all the wrinkles in your product and sales process. Once you’ve established your product and understand how to sell it to your customers, you can develop financial models and forecasts. Make sure to use the data from your customers to make accurate, defendable forecasts; don’t just choose high targets without being able to prove how you can actually get there! Taking the time to build out a realistic budget up front will save time for your team as you grow. Having a good grasp on your processes and mastering the metrics that matter will put your company in a good position to scale.
Logically, you’d think that as your company starts to grow, your finance team headcount would have to grow at the same rate in order to keep up with transactions. However, simply adding headcount within the finance department is not the smartest move. Instead, your focus should be on assembling a lean finance team that is efficient and works well together.
Obviously, hiring will be a part of this process, but try to steer clear of over-hiring just because you see an increase in sales and revenue. To supplement your smaller team and make sure you’re set up to properly scale, you’ll want to be looking at software and other automations that will help your existing finance team be more efficient in their operations. Not only will this help you maintain an efficient, lean team, but it will aid your finance personnel in making informed decisions backed by data. Investing in software for invoicing/billing will be a game changer. For SaaS, companies such as Stripe, Chargebee, SaaSOptics, Recurly, etc. are your best bet.
The growth stage may also introduce new pricing plans and expansion revenue opportunities into your product. You should make sure your finance team is ready to incorporate these factors into their financial processes (including upsells into your strategy, etc.). As your company scales, your business model and offering may evolve as well. Being adaptable is key here and making sure your finance team is supported and trained is crucial.
At this point, your finance function switches over from a role purely focused on transactional numbers and bookkeeping into a more strategic function in nature. Consider bringing on a CFO or VP of Finance to lead the finance team at this time. This leader should be focused on capturing key insights from the financial models, forecasts, and dashboards to make well-informed decisions about company operations.
However, the CFO and the rest of the finance team may not have the capacity to develop and maintain accurate models and forecasts, especially when you want to keep an efficient, lean team. That’s where outsourcing comes in handy. Outsourcing accountants to handle the nitty gritty numbers will lift a huge load off your finance department and leave them time to focus on strategy and analytics. Side note: Outsourcing your financial models and dashboard reporting with KPI Sense is also a time-saver and will leave your finance team with accurate, dependable data and forecasts that they can trust their decisions on.
Once your company reaches maturity, there’s not much more hiring needed within your finance team especially if you’ve been able to develop a solid financial process that was able to withstand the growth stage. The only additional team member you might want to recruit is an in-house account or controller. While the outsourced bookkeeper might still cut it, having an in house accountant will understand the nuances of your company better at this level of transactions and growth.
Now the focus shifts on maintaining your business and reaching profitability. Your CFO will focus on the efficiency of each metric and operation. There will also be a shift back toward invoicing and payment collection as you’ll want to make sure that the company’s growth and expansion into new regions and markets is smooth. Making sure your transactions and processes in place are able to manage the high, global transaction volumes that come with maturity. Revisiting some of your softwares and seeing if there is a need for any upgrades will be essential at this stage. You may have outgrown your accounting software such as QuickBooks or Xero, and your company may need a more sophisticated ERP system like NetSuite or Sage Intact.