What does a modern finance team look like? Gone are the days of back-room book-balancers, holed up away from the rest of the company. Now, the finance team sits at the heart of many fast-growth startups with a spotlight on them as they build an effective, efficient function.
The role of the finance team in today’s startups and scale-ups is a bigger challenge than ever. Forecasting, budgeting, fundraising and presenting to the board are all the more complex when your business is breaking new ground. For these teams an optimal tech stack is the holy grail. However, the perfect setup looks different in every company, depending on its unique needs.
As we come to the end of 2020 – a year that has required even greater resourcefulness from finance functions – we joined forces with Capdesk to speak to finance leaders in some of our favourite fast-growth businesses to learn how they shape their teams, tech stacks and outsourcing ethos for success now and into 2021.
For Lambro Anastasiou, CFO of The Modern Milkman, a grocery delivery startup founded in 2018, keeping as much as possible in-house is crucial in building a high-quality finance function that is closely connected to the business as it grows.
“I’ve found that the outsourcing model is a nice stop-gap and helped us bridge the period between the previous financial controller (FC) departing and new one joining."
“However, if you want to embed a culture of excellence with a focus on continuous process improvement, they are too removed from the day to day detail to really move the needle and it can often be more time consuming to bring them up to speed than to hire and train up internal staff who quickly pick up more detail or tribal knowledge,” said Lambro.
Currently a team of just two, Lambro and FC Marlow Upton are outsourcing back-office transactional work to Quantico, but as they grow they are bringing this in-house with a new junior accountant.
“You inevitably always bring finance back in-house in a rapidly scaling business to give you more control and a higher quality of close. I have seen some businesses retain transactional work on an outsourced basis up past Series B but they will always bring the more critical and value-added pieces in house,” said Lambro.
To support the in-house function, the team has built a tech stack which includes:
And to support some of the business-specific functions of The Modern Milkman, which has a dedicated app where customers place orders and process payments, the team are working on some bespoke software solutions to better manage payments and reporting.
“Reporting-wise, we have a lot of google sheet scripts running directly off database data but we’re in the process of migrating this across to a full data warehouse solution with a Tableau front end for analytics and visualisations."
“We are also developing the app back-end to do a lot of the heavy lifting for us when it comes to automating things like Milkman payments,” said Lambro.
For Andreas Midtgaard, CFO of office management platform Good Monday, building a finance team in a startup is all about looking ahead and creating a setup that won’t need to dramatically increase headcount as the business grows.
“Start-up and scale-up is undoubtedly constrained by runway and cash position. Increasingly, companies, especially in the early stages, are striving to be data-driven and allocate resources to activities with the highest yield, to leverage growth and competitive advantages."
“Financial data has emerged as one of the most important sources of crucial data insights. Paradoxically, you should aim for a scalable and agile finance and business intelligence (BI) department, i.e. reduce coherence between growth and headcount in the finance/BI department while delivering transparency, measurability and accuracy,” said Andreas.
For Andreas and his team, building a tech stack that handles the most manual processes in the finance department is crucial in saving his team time to work on the more high-value work, but also in its flexibility to scale as the business grows. Smart software solutions are designed to absorb steep increases in transactional volume without the need for vastly increasing headcount in the finance team.
“At Good Monday, we generally focus on having a lean and scalable finance department. Consequently, we have (initially) set our focus on decentralising the handling and controlling of supplier invoices, employee expenses and salary, as we find those tasks to be most time consuming and tasks that will exponentially increase in volume as we expand,” said Andreas
The Good Monday team has built a tech stack that includes:
“As companies grow, it also means new hires. Salary is a time-consuming task in every finance department. Consequently, we have chosen to automate payrolls by using Pento. Pento allows us to reduce manual entries and ensure that we are compliant with applicable laws. In addition, Pento allows an automated integration with our bookkeeping systems, which again reduces time spent on making entries,” said Midtgaard.
It may not be surprising to learn that a company powered by artificial intelligence (AI) uses smart, integrated software solutions at the heart of its financial processes. For Reece Howe, CFO at AI-powered public relations platform Signal AI, investing in a comprehensive software solution has given the team the accuracy, reliability and quality assurance needed.
“We use Netsuite as our accounting software, and Salesforce as our customer relationship management system (CRM). We see Salesforce as a source of truth within Signal AI, and have invested a lot in processes, automation and internal controls to connect the two and ensure that our commercial and financial reporting are totally reliable."
“The downside is the cost – it’s far more expensive than using spreadsheets and an SME accounting package such as Xero” said Reece.
Fast-growth startup Signal AI was first founded in 2013 and has now expanded to more than 150 employees across three countries. In 2016 it launched its global monitoring platform and counts Global Fortune 1000 businesses in its impressive list of customers.
For Reece, the finance team’s comprehensive software solution can scale at pace with the rest of the business, and handle increasingly complex and time-sensitive reporting and analysis with ease.
“This makes our management and investor reporting highly automated and reliable, and makes it very simple to do complex metrics analysis on demand. It’s also very scalable,” said Reece.
Scalability, quality assurance, and streamlined reporting and data analysis are the key advantages of having a strong tech stack for all three of our financial leaders. Finding the right software solutions allows their lean, multi-skilled teams to be as efficient as possible without compromising on results, especially as their companies grow.
Our finance leaders have all focused on developing systems with integrated software solutions right from the start, with the understanding that upfront investment will yield positive results for their team and the business well into the future.
Access our Top Finance Tools List to find out which tools will best complement your setup.