Your startup is doing gangbusters, and all of a sudden you need to scale rapidly to continue to innovate and meet consumer demand. This is the ideal scenario for any entrepreneur, but rapid success comes bundled with a series of staffing challenges that need to be met.
Seeking quality in-house talent takes both time and effort, and the accounting department is often not the first thought on an entrepreneur’s mind. As you’re looking to onboard salespeople, customer reps, and other front-line staff, your one or two bookkeepers/accountants are working themselves to the bone. This is a common problem – A Gartner study confirms that 57% of business backend departments feel that they have more to do and less money to do it.
Some of the common issues faced by finance teams unprepared for rapid expansion include:
Increases in accounting errors (in 2013, US Businesses accrued nearly $7 billion in IRS penalties due to accounting and tax errors)
Low company/accounting morale due to overwork
Unforeseen costs related to your current contract with an online accounting provider like Pilot or Bench
These are truly costly concerns, and an overwhelmed financial team is not able to help you identify inefficiencies in your spending. Financial mishaps are also one of the major drivers of why 90% of all startups fail.
On the other hand, a financial team that has access to as many resources as are required at any given moment can help you identify drivers of success and curb your spending across the board. To truly empower your business for success, you need to ensure you’re employing a financial solution that is truly scalable to meet your needs.
Can’t I scale up my online bookkeeping or accounting services like Pilot or Bench?
We celebrate both Pilot and Bench for providing small startups a low-cost advantage to keep their finances in order without breaking the bank. As you scale upwards, however, your financial systems and reporting need to scale up as well.
Pilot Bookkeeping and Bench Accounting are two of the top online financial management services available to tech startups and early-stage growth companies. Both services make use of AI and automation to categorize your business bank and credit card transactions to keep a running ledger with minimal human intervention. This approach helps keep their costs down.
However, the complexity of business finances exists on a spectrum. Pilot and Bench are great solutions when you’re in the pre-seed funding or initial seed funding stage of growing your startup, and your finances are still relatively cut and dry. Once you’re actively generating revenue and looking to earn your coveted Series A Funding, you’ve likely outgrown your relationship with these accounting solutions.
Both Pilot and Bench start at a low monthly price point on one-year contracts. Most clients we have worked with started on their initial pricing plan, found it to be great for a while, but soon found the cost ballooning.
“We were getting nickeled and dimed to death” is an oft-repeated phrase we’ve heard from those who ended their relationship with Pilot and Bench. Both solutions offer extended or expanded services at an additional price point, and this ends up creeping up on people. Many customers who were initially happy with their relationship with these services quickly found their one-year contract and a-la-carte program add-ons they soon required financially untenable.
Pilot and Bench do not take the place of a chartered accountant or ensure you adhere to Generally Accepted Accounting Principles (GAAP) standards – which is an absolute must for many investors looking into your business.
In-House vs. Outsourced Accounting
When you’re a scrappy startup, it can often feel like the types of services you’re told you need are out of your reach. It’s tempting to stick with your bootstrapped accounting team or take on more responsibilities yourself – but before long the burnout will become untenable.
Meanwhile hiring people directly takes a lot of time, and it can be hard to truly get the measure of someone’s capabilities if you don’t have a lot of background in finance. As you scale, you’ll have to continually expend effort on this process, adding more salary and benefits to your overhead, and if one of those people you hire doesn’t work out you’ll have wasted lots of time and effort on onboarding.
These common issues in trying to source in-house talent are often what leads people to work with an accounting and CFO firm – but they stay for the many benefits.
A joint survey by CPA.com and Bill.com asked 1,700 professionals who employ client accounting services on how they benefit their business. The results showcase the potential of transformative impact for companies of any size:
Saves Time: 80% of the respondents say that outsourced accounting services provide them more time to focus on their business.
Easier Accounting: 68% said implementing best practices from their outsourced accounting firm made their accounting easier.
Increased Profits: 28% report that following advice from their outsourced accountants resulted in increased profits.
Some businesses may only need a day or two of accounting services every week, and you’ll save plenty of money on needing to pay for full-time salaries and benefits. Then as your needs grow you’ll be able to draw from the many resources available to a firm including:
CPAs and Bookkeepers
CFO or Controller Strategists and Consultants
Accounting Software and Process Specialists
Venture Capital or Private Equity Specialists
Here are some of the many ways an accounting firm can help transform your business as you rapidly scale upwards.
Ways an accounting firm can transform your business
Financial Management and Forecasting
An accounting firm will oversee the financial and accounting functions of your company. They will help develop internal accounting controls, provide regular financial reporting and guidance, and make sure there are proper checks and balances in all accounting matters.
Companies whose business models are dynamic benefit the most from financial forecasting and projections. Strategists will develop financial statements and rolling forecast tables that project up to 12-months out so that you can allocate resources to meet your goals.
Cash Flow Management
Cash flow statements that incorporate net income, long-term assets, stockholder equity, and liabilities. Through regular evaluation of cash flow, they also help include cash improvement programs.
An accounting firm will also put together presentations and attend business meetings to aid in the acquisition of more funds from investors and lenders.
Scale Your Business
When you’re ready to scale your business, an accounting firm will help you make the right moves to do so with a healthy game plan.
They can help you scale successfully by:
Ensuring your financial infrastructure is ready
Determining the most cost-efficient tax structure
Applying for multi-state registrations if applicable
Helping obtain financing and apply for loans
Performing financial forecasts and financial risk assessment
Implementation of new accounting and reporting systems
Rather than having to invest time to train new finance staff and expect them to keep up with the latest developments in accounting technology, an accounting firm is already up-to-date with the best practices in the field. The implementation of time and expense tracking and labor cost allocation accounting systems will allow you to make smarter decisions without having to put as much work in.
Reporting systems make it easier to identify both positive and negative trends that allow you to optimize for peak efficiency, and easily share numbers with stakeholders in a digestible format.
Tackle Financial Challenges
It can be helpful to bring in an accounting firm when you are struggling financially and need help righting the ship. The earlier you bring in expert advice, the easier it will be to get back on the path to financial health.
Issues an accounting firm can help remedy include:
Poor cash flow and profitability
High business overhead
High client churn
Inability to raise capital
Debt management and loan repayment
GCG is a Financial Partner to Some of Silicon Valley’s Top Startups
Greenough Group’s client accounting and bookkeeping services are highly sought by both small businesses and rapid-growth tech startups alike. GCG’s client roster includes some of Silicon Valley’s most respected investment funds and rapidly growing companies. We have supported more than 800 organizations—some on a short-term basis and others over many years—across a range of technology-related industries.
GCG is the preferred accounting services firm of executive Tom Rowley, who has utilized GCG’s services in several of his ventures: “I’ve brought GCG into my last four startups. Getting finance running smoothly, as quickly as possible, allows me to focus on building the business. Hiring GCG is one the first things I do.”
Our reputation for accuracy, senior attention, and exceptional client service has made us one of the financial community’s most highly recommended back-office services firms. Contact us today for a free consultation and learn how we can help you focus on growing your business.