Raising capital is a very challenging yet rewarding necessity for a technology and emerging growth company. The months, if not years, of bootstrapping have finally led to a capital infusion designed to propel a startup to the next level. Whether it’s a pre-seed, Series D, or anything in between, the next steps of capital and investment management are crucial to continued success.

With the increase in capital, startups find themselves in a position where their revenue is not the only thing growing. With the transition from the startup phase to the next growth phase, there is an inevitable increase in transactional volume and complexity. The simple process of updating an excel schedule, only a few hours a month, is quickly becoming outdated.

Decision-making relies on real-time and accurate reporting. With the forementioned growth, product and service offerings begin to diversify; and with this process there is correlated growth in types and amounts of expenses. Given this, a company must begin to grow and scale processes that enable decision-makers to have granular insights into product, service and department activities.

The combination of transactional volume and complexity and the need for enhanced financial reporting can at first be a difficult process to digest. The accounting department’s staffing and sophistication now require an investment to accommodate these challenges.

Scaling the Accounting Department

Increased Transactional Volume

What used to be a process managed through a single credit card and bank account, which were reconciled with minimal time and resources, has now become an overwhelming monthly task. These tasks are frequently managed by a process owner who wears many hats. The Accounts Payable and Receivable process now requires time and resources an organization has challenges allocating.

Centralized Accounting

As physical offices no longer bind workforces, the diversity and location of workforces are now one of the company’s most important features. While the skills and resources are vital in the new working environment – they come with increased administrative challenges. An invoice can no longer be placed on a desk marked “Approved” for payment, nor can an ERP system be stored on a local network. The new hybrid work model requires a centralized accounting solution, securely accessible from anywhere and an updated process to align as an organization.

Segregation of Duties

The importance of controls in the accounting process cannot be understated. A control environment is needed to ensure the company’s resources are properly and securely handled. Controls ensure order to cash and purchase to pay cycles from initiation to processing, to posting and that collection/payment are properly implemented. These controls are vital in ensuring a company’s assets are safeguarded against misappropriation and theft.

Increased Accounting Complexity

Companies are faced with a variety of complex financial accounting and reporting challenges. High risk and complex areas such as Revenue accounting, Capitalized Software Costs and Stock Based compensation require the skill and attention which a company may not have available internally. These challenges can be unforeseen and are likely to have tax and financial reporting implications and will be subject to external scrutiny.

Increased Financial Reporting Requirements

Decision-making relies on real-time and accurate reporting. With the forementioned growth, the company’s product and service offerings begin to diversify and with this comes correlated growth in types and amounts of expenses. To scale with this growth, it is vital to implement a robust Financial Planning and Analysis (“FP&A”) process. As revenue and costs diversify, an organization must also begin to track its finances at a department level to identify growth and concern areas. The creation of cost centers such as Cost of Sales/Revenue, Sales, Marketing, R&D, SG&A, etc. allows decision makers to have access to operational reports allowing a company to have granular insights into product, service and department activities.

As your business grows, you want to focus on continuing your growth and serving clients while having solid financial management in place. This is where outsourced accounting systems and services (OASyS) and CFO Support Services come in.

Benefits of Outsourced Accounting and Finance Services

  • Accurate information on a timely basis
  • Ensure your vendors are paid, journal entries are made and your financial statements and management reports are accurate, on-time and meaningful
  • Elimination of recruiting, training and managing accounting staff

Whether you are looking for automated bill pay, process automation for routine manual tasks in accounts payable, accounts receivable and the like, staff assistance for accurate, up-to-date month-end reports, or even AR/AP Clerk to CFO services, we can fill those gaps and strengthen your internal accounting and finance teams.

Contact Us

For more information on this topic, please contact a member of Withum’s OASyS team.