In Pursuit of Profit
Read our expert article below or sign up to get articles sent to your inbox.
Either way, they typically come to us with their books in disarray looking for someone that can get them back on track and put the foundational elements in place for them to manage continued growth more effectively.
Their goal is not simply to have clean books for the mere sake of doing so. Their goal is to have the kind of accurate and timely financial information needed for strategic decision-making – enabling yesterday’s growth to fuel tomorrow’s growth as well. They understand that sustainable growth must be built on a solid financial foundation.
How do quickly growing companies do this? Time after time we identify the same core elements that high-growth companies need to keep their books in good order and their accounting activities running smoothly. These are three accounting must-haves for companies going through periods of significant growth:
Growing organizations need an accounting system that can keep pace with the company’s evolving needs. But their needs do not end with their accounting software. They also need an ERP (Enterprise Resource Planning) system that can not only handle but also facilitate future growth. Really, anything related to managing transactions, tracking expenses, and generating financial reports must be able to scale as the company grows. These areas are where companies should focus their efforts when upgrading their systems. When companies need to migrate to new solutions to accommodate their growth, they should look for options that supplement human efforts with automation to gain additional efficiency and prioritize real-time visibility when it comes to financial metrics.
The Right Staff
Managing growth is not solely about upgrading systems though. Growing companies also need the right people in the right places. Remember, this does not mean having all essential roles filled – it means having all essential roles filled with people that are qualified to be in those roles. Unfortunately, startups and rapidly growing companies often end up asking too much of their existing staff (for instance, using bookkeepers in accounting roles or accountants in analyst roles). However, taking this approach can actually stymie future growth. Instead of taking a patchwork approach of asking employees to wear multiple hats, identify the roles across accounting, finance, and supply chain that are key to growth and hire experienced professionals into them to ensure they will be handled correctly. And once new roles are filled, stress the importance of communication and collaboration between departments to ensure accuracy and avoid re-work. As always, be transparent with growth plans across the organization to keep everyone on the same page.
Having the right people in the right places is not simply a conversation limited to lower level staff. In fact, it is a conversation that is especially applicable to senior leadership because your executive team will drive the strategy that fuels growth. As such, experienced senior financial leadership is absolutely essential for high growth companies. Simply put, if an organization doesn’t have someone other than the owner/founder/CEO at the helm of the business’s finances, they’re doing it wrong! If you do not want to invest in hiring a full-time CFO yet, consider outsourced options like a fractional CFO or third-party controller in the interim to tap into the expertise and insights that an experienced financial leader can provide.
An Eye on Compliance
As companies grow one of the hardest parts of change to manage is compliance. Because business regulations are always changing (and sometimes vary by company type and size), even the best intentioned companies can fall short if they are not actively working to stay on top of changes that could affect them. Be aware of changes that may impact business operations and regularly do risk assessments to determine how potential changes could affect growth. Stay abreast of applicable financial compliance requirements and regulatory matters as the company grows by either hiring someone internally to manage them or outsourcing these functions.
Strong Internal Controls
Many organizations act like compliance and regulatory requirements must be followed, but internal controls only should be followed. This is categorically false. All companies, especially those undergoing rapid growth, need strong internal controls to:
Unfortunately, when companies are growing quickly there is a temptation to be too trusting and assume that everyone new coming on board will share the same standards that the original founders do related to protecting the organization (especially at private companies). But when a company is charging full steam ahead through rapid growth it is ripe for fraud because there is so much going on that it is easy for internal controls to fall by the wayside. But these are the times when internal controls are most needed because new people are coming in constantly and processes may be straining to adapt.
When you need outsourced accounting services to get your books in order, we’re here to help! Our experienced team of accountants can get your messy books squeaky clean. We also offer accounting consulting to help advise business leaders and their teams on what kinds of system and process changes they can make to improve their functionality, timeliness, and accuracy. Don’t wait – talk to our team of accountants today!