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Scale-up Guide: Are you scaling your business with the optimal finance function?

Finding the right finance function solution to effectively support your growth is a challenging and time-consuming task, but one that business owners looking to scale fast need to tackle. We offer an overview of key factors you should consider to grow successfully.

It is essential that you have a strong finance function in place. This means having readily available and robust financial information that is prepared efficiently and allows you to make sound business decisions. Poor financial information could have an impact on the success of investment rounds as incorrect financial reports could cause delays with securing funds.

As your business grows, you are likely to outgrow your finance function several times. The balancing of your finance structure is a delicate art, and will be primarily driven by what is affordable to your company as well as your stage within the growth cycle.

To help you with this, we have included 5 factors to consider in deciding which finance function will work for you:

1. In-house expertise

Be honest about what existing in-house expertise you possess.

2. Capacity

Be clear about your capacity to perform financial and administrative tasks, and don’t underestimate how long these can take. 

3. Complexity of business models and transactions

Your finance function needs to support your business model and have the ability to effectively manage your transactions, which may be complex or lack uniformity. 

4. Level of automation in accounting software 

An accounting software application may be the right solution for you if want to spend less time on processing your finances. The level of automation in these systems directly reduces the amount of hours required to produce accounting records, or close periods. Your accountant should be able to advise you on which software is most appropriate for your business.

5. Cost

You might find cost to be a deciding factor in which finance function you need, and the variety of costing options may be confusing. We find that early stage companies generally wait too long before making their first finance hire and end up, for example, with a bookkeeper when they should be employing an accountant. Alternatively, they hire a newly qualified finance director when an experienced person is required. Therefore you should speak to an adviser to avoid underestimating the value of an effective finance function.

During your business lifecycle stages, the following solutions are likely to provide you with optimal financial function support:

Start-up

Operation: Less complex structure, minimal cash, low volume of transactions.

Your need: To keep costs low, and produce key financial information for investors.

Solution: Predominantly outsourced bookkeeping function to ensure basic financial information is properly maintained.

 Outsourced solution

Scale-up

Operation: More complex structure, higher volume of transactions.

Your need: To produce more financial information for audit, investors and the bank.

Solution:

In-house support can perform basic accounting processing.

An outsourced finance function with more extensive services and a responsive team can deal with a higher volume of transactions and greater operational complexity, e.g. monthly management accounts, larger payroll, VAT advice and tax advice.

Combined solution: in-house and outsourced

Established / Ready for exit

Operation: More complex structure, large volume of transactions.

Your need: To keep costs low and produce key financial information for investors and the bank.

Solution:

A full time in-house finance function can perform majority of accounting work.

An outsourced function can advise on particularly specialist or complex areas, e.g. tax, share options, statutory reporting and valuation work.

 Mostly in-house solution

 

Finding an effective finance function that will align with your growth is likely to be challenging, and it can take time. We hope the above overview will be useful in finding the optimal solution to achieve your scale-up goals.

Download our Scale-up Guide: innovative financial advice to help you grow

We have created the Scale-up Guide, a practical guide that covers 20 topics on a wide range of financial advice. Download the guide to sense check and develop your understanding of the key financial considerations to take into account in order to scale-up your business successfully. 

Looking for more information?

Click here to sign up to our scale-up mailing list. Alternatively, if you have a query about any of the topics in this article, get in touch below through the enquiry form.

About the author

Cliff Carter

+44 (0)20 7556 1419
Carterc@buzzacott.co.uk
LinkedIn

Click here to sign up to our scale-up mailing list. Alternatively, if you have a query about any of the topics in this article, get in touch below through the enquiry form.

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