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Typical Cost of Outsourcing Finance and Accounting Services

How much does outsource accounting cost? It’s a natural question to ask when you start researching options for your company’s current and future finance and accounting needs, but it does not have an easy answer. We’ll explain what goes into the cost of outsourcing accounting services and the factors that should be weighed as you consider the total cost to your company.

In-House Accounting Vs. Outsourcing

The cost of outsourcing accounting services is sometimes, but not always, the driving reason to look into in-house accounting vs. outsourcing. The initial cost you may be quoted will depend on the complexity of the services involved, the level of expertise you need, and the extent of the work you need covered. Very often, these needs will evolve over time.

In the short run, significant cost efficiencies are likely to be realized when bringing in outsourcing accounting services rather than going through the process of recruiting and making the commitment to full-time hires for your finance organization. At this stage, it may not be in the budget to take on several employees’ payroll and associated benefit costs, and you may not have enough hours worth of work to keep them occupied. By outsourcing multiple accounting functions or roles, you can make it so that your day-to-day accounting needs are covered by experts who require no ramp-up time and very minimal training on the ways your company operates.

There’s another way that cost efficiencies can be realized, but it may not be obvious at first. If you decide to work with a finance and accounting consulting firm that connects you with a breadth of experience and knowledge across its consultant base and partner ecosystem, you would be provided the level of services and expertise you need only when necessary. You would not have to pay for more than you need.

At the same time, these experts could introduce vast improvements to the way your finance function operates, by introducing and streamlining your financial operations in transformative ways that would lead to greater efficiencies over time. A firm like RoseRyan does not introduce changes just to introduce changes, but rather we tailor our advice to what your company needs at this time and what you are open to handling at this moment.

Under this outsourced accounting services model, you could start out with coverage of your day-to-day accounting and bring in a higher level expertise as your needs expand, including, on a part-time basis, controller and CFO level expertise.

Improved Efficiency

Many fast-growing startups are in the following scenario: They struggle to grasp what the future may hold because their financial information cannot be relied upon. By updating their financial systems to more closely align with the company’s current, more complex operations and providing insights that can help leadership better understand the possibilities that lie ahead, an outsourced accounting and finance team will make the overall finance function more efficient—and more useful.

Generally speaking, this is one of several reasons that the cost of outsourcing finance and accounting services tends to be lower than the cost of hiring in-house staff to perform these functions.

Greater Flexibility

All of the above can be done without the commitment of full-time employees and all that entails. Companies that use outsourced accounting can dial up or dial up their reliance on outsourced finance and accounting experts as their needs change.

Growth Potential

As an outsourced accounting team can be a key enabler of growth, they may be relied upon for longer than initially anticipated. Their day-to-day involvement may evolve as your company does discover a need to bring in more full-time employees. With an outsourced accounting team that knows your business, they will continuously look out for growth opportunities and ideas for your company to be successful.

The Full Picture: Understanding Outsourced Accounting Services Cost

By outsourcing finance and accounting services, businesses can focus on their core competencies and improve their bottom line. This is a factor that should be included when considering the savings and cost of outsourcing accounting services. If you are interested in learning more about outsourcing finance and accounting services and the many benefits of doing so, reach out to the experts at RoseRyan.

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How to Grow Your Startup as an Entrepreneur

Is there any role more challenging than an entrepreneur who has a promising startup? The future may look bright, but the odds are stacked against you: Half of startups fail in their fifth year, according to the U.S. Small Business Administration. But it’s not enough to succeed past the first, second, or fifth year mark—you also need to constantly be thinking about how you can grow your company. Here are some tips that can help put you in the right direction.

Take a hard look at your financial situation.

If your company is extremely young and you’re wondering “When will my startup need an accountant?” you probably need to focus on building out your finance function before you can think about building out the entire company even further. Many emerging growth companies find that outsourcing accounting is more cost-efficient and effective at this point than taking on full-time hires as they can gain access to top-level expertise in addition to a range of specialties when they are needed. This is often more desirable than taking the risk of overhiring when you are not yet ready for more than a bookkeeper and perhaps one accountant for startups.

What are the benefits of outsourced accounting for startups? Among the many benefits are a full spectrum of accounting skills from one of the accounting firms for startups. By choosing a finance and accounting consulting firm, you can have access to many of the best accountants for startups and their expertise. They can help you build out a finance function that eventually will have full-time roles but that right now would benefit from specialists and expertise. These pros can lay down a more solid foundation and help you prepare to build a more sustainable business.

Believe in your vision yet be prepared to adapt.

Your vision is what you got here, to a place where you can take the next step and inquire about your company’s growth capabilities. The support and guidance of finance and accounting experts can help ground you and discover what is possible at this time. They can help you assess the status of your finance and operations and explore whether the financial foundation you have built thus far needs solidifying—can it handle the growth you are envisioning or is it time to adopt more robust accounting systems?

If you do not have the visibility into your business to understand how it is truly performing today, then any plans you have been making for tomorrow are questionable. Finance and accounting experts can help you refine your vision based on more reliable information and help you with forecasts you can trust. 

Know where to turn to ask for help.

When you’ve been focused on creating your product, developing your app, or perfecting a device, it’s easy to get tunnel vision. But to go beyond the offering you are making to the marketplace and to turn your company into a sustainable, growing business, you need to ask questions. Seek out the advice for the areas of the business that do not fall under your expertise, such as the finance side of the business.

A startup business accountant could, perhaps on a part-time basis, cover your day-to-day accounting, depending on the size and complexity of the company. If you’re running a tech company, you may find that accountants for tech startups, those who have steep experience in your industry, would be most beneficial.

And you may find that even if your business is not big enough yet to fill the traditional executive-level roles, you can access CFO-level expertise on a part-time basis, to acquire insights about the growth potential of your company and access advice on what investors will be looking for so that you can fund your growth plans.

Be open to taking risks—it’s part of the journey.

Some level of risk is par for the course when you’re an entrepreneur. But how much, and what are the risks facing your business? Experts can guide you on these answers, to help you understand emerging risks that you may not be aware of when you are focused on other matters.

Surround yourself with a great team including accountants for startups.

When looking for support and guidance, you want a company that has helped businesses like yours. Accountants who specialize in startups will understand your perspective and your challenges, and they have been in the world of emerging growth companies for so long that they can adapt their advice to your exact situation.

These finance pros will not only provide you with great advice, they can help you get the work done—from creating a workable tech stack and providing you with timelier information about your business to guiding you on a growth strategy that is doable for your startup.

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Your Accounting and Finance Function: Own It or Outsource It?

For various reasons, the finance function at many emerging growth companies is ripe for outsourcing. The entire function could be covered by an accounting and outsourcing services firm, which can take on the day-to-day accounting, or piecemeal, as the startup begins working on scaling or sees a need to develop one position but only for a few hours a week, such as a part-time controller. What accounting jobs can be outsourced, and where do you find outsourcing accounting companies? This article explores this topic, by looking at the benefits of both outsourced accounting jobs and keeping the responsibilities in-house.

Why Outsource Accounting Services?

The reasons to outsource accounting services vary, but typically, for a VC-backed startup, the company has either a skills gap or a bandwidth gap and needs help fast. For a fast-growing startup that hasn’t had a chance to establish much of a finance function—perhaps one bookkeeper is doing his or her best to run the show—there’s the option of entrusting a finance and accounting consulting firm to handle the entire finance function.

These financial consultants can put in place the many layers needed for a robust finance function, at a pace that works for the company. For the most immediate needs, this may entail setting up processes that work for the company, such as closing the books in a timely manner and creating a tech stack that makes keeping track of the companys’ many internal and external transactions easier and more efficient. CFO-level advice can be relied upon, perhaps in small doses at first, to help guide the company on strategic decisions and represent the senior leadership team on finance matters during board presentations.

The Benefits of Outsourcing Your Accounting and Finance Function

Why outsource accounting services? Here are some of the many reasons:

  • Bringing in expertise that’s currently missing within the company. Finance and accounting expertise involves a particular viewpoint that is sometimes missing in young companies, when the specialties of the leadership are centered around innovating and running the business. By relying on the services of outsourcing accounting companies, you can tap specific skills only when it’s needed—you do not have to take on the risk of hiring full-time staff just yet.
  • Creating efficiencies when resources are tight. An outsourced accounting and finance function will not weigh down your payroll and benefits plans. Consultants work incredibly efficiently and would never be sitting in the office waiting around for the clock to hit 5 p.m. When your budget does not account for a full-time CFO and/or controller at this time, relying on a part-time CFO or part-time controller could be the perfect solution. Also, by partnering with an outsourced accounting services firm, you would be able to tap the firm’s wide range of finance skills under a flexible model.
  • Tapping experts who can make a seamless transition. Getting a person up to speed on your business and how things should be done in the finance function can take some time, unless you are outsourcing the work to experts who are adaptable and accustomed to jumping in to get up to speed on a company. By their nature and experience working in similar situations at similar companies, finance and accounting consultants require very little ramp-up time and are fully focused on the job at hand.

The Reasons to Keep Some Accounting and Finance Roles In-house

When your company matures out of its early stage status, that’s when you may start leaning toward having more of your accounting and finance roles in-house. If there is enough work to fill at least a 40-hour workweek, and there’s a clear long-term need for a role, this answer becomes more clear. You will still want to keep connected with your favorite of the outsourcing accounting companies as issues will arise that may require occasional CFO-level expertise and interim finance help. Examples of these issues include preparing for your first audit, needing to get your company “investor ready” for going public, or a new accounting standard needs to be implemented.

How to Decide Whether to Outsource Accounting and Finance Skills

The best resource for helping you decide whether to outsource certain accounting and finance skills or whether to hire someone full-time is actually an outsourcing expert. An accounting consulting firm that puts its clients first will be honest and forthcoming about what is best for your business—even if that means transitioning away from providing outsourced accounting to your company in the near term. These consultants can help you determine what type of skills and experience you will want when hiring and they could mentor that person as well, if appropriate.

Questions to Ask When Deciding Whether to Outsource Accounting and Finance

Do we have the information needed to make a clear decision on hiring in-house vs. outsourced accounting jobs? Before going through the hiring process, the more immediate answer could be getting the financial house in order to get a better handle of the company’s current needs.

What don’t we know? This is where a CFO’s expertise is invaluable. These experts offer an entirely different perspective on the business and will bring to light issues facing the business that probably few if anyone knows to question or see.

Is our team overwhelmed? Outsourced accounting and finance experts are often needed for a strategic project, to give the team some relief as they lead or support an initiative, such as addressing a technical accounting issue or going through the process of restating financial statements. In other cases, a finance consulting firm could help train current members of the team or pinpoint what type of skills are needed over the long term.

Could the finance function operate more efficiently? If the team is lacking in finance know-how and operating on accounting systems that have not kept pace with the company, it may make sense to turn to an outside resource to turn things around. Any change in operations becomes a challenge—and change led by insiders often takes longer than anyone has time for. Experts who are in tune with the latest best practices and systems will introduce efficiencies quickly—and effectively.

Where Can I Find Outsourced Accountant Services?

Whether you are looking to develop a finance function at your emerging growth company or need to supplement the team with outsourced accounting expertise that would raise the level of the entire function, RoseRyan can be there for you. Our Emerging Growth consulting solutions are made to be flexible to a company’s needs at this time and will be adjusted as the company grows. Reach out today to find out how we can build your tech stack, provide you with access to an outsourced CFO, and cover your day-to-day accounting for as long as you need us.

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5 Ways to Drive Growth in Emerging Growth Companies

There’s a sweet, satisfactory milestone that emerging growth companies hit when leaders find themselves asking, “How do I increase business growth?” more than they go around wondering, “How can I keep this company alive?” When survival mode makes way for starting to realize an emerging growth company’s potential, business growth drivers become more important for the company to tackle.

So, what are the main ways to drive business growth? We offer some of the more common factors that can influence a company’s success below.

5 Ways to Drive Growth at Emerging Growth Companies

If your startup has proven to have a solid foundation for taking the company to the next level and you have venture capital backing or other funding to support a strategic move, then it could be time to turn attention to business growth drivers.

What are the types of business growth? Business growth falls under two categories: organic or inorganic. Depending on your current resources, you may be leaning toward expanding with the help of another company, through an acquisition—which would be a quick, “inorganic” way to expanded market share and increased sales—or your company may have the capital, stamina, and capabilities to take another approach (“organic”) by expanding on its own.

1. Diversify Into New Markets

Of course, expanding into another market, either geographically or with a new product or service, is no guarantee of growth. To explore the option of entering a new market, you will want to have an understanding of what other companies like yours have done, and what brought them success or failure in this effort. An understanding of demand for where you’re branching out will be a must.

Expert scenario planning can help you decide how to approach this business growth plan and whether it seems feasible at this time in light of current market conditions, key risks facing your company, along with future assumptions.

2. Evaluate Your Current Financial Operations

Is your company currently built to withstand a strategic change, or should some internal adjustments be made in preparation? More appropriate accounting systems and processes that match your company’s current complexities while allowing for scaling up as you make progress on your growth goals could be a wise move at this time.

3. Keep Your Eye on the Numbers

Has your company been strengthening its budgeting and forecasting capabilities—or are you still operating under a “let’s wing it” culture? Do you have a true sense of how your company truly performs—not just how you hope it is performing?

As attention turns to business growth factors and a move toward more of a business growth mindset, it may be an opportune time to bring in CFO guidance. A careful, insightful look at the numbers by a CFO expert can be telling as it is a perspective that probably does not exist within your startup’s current team. A strong, experienced CFO—on an interim or part-time basis—can look at your historic figures, put them into context against forecasts in light of your growth goals, and help you develop a workable business growth plan.

4. Build Momentum Through Partnerships

Fortunately, when adopting a business growth mindset, not everything your company does to become bigger or better has to rely on current internal resources. Developing a strong, reliable ecosystem of partners you can rely upon again and again can help move your company forward.

This involves continually working on your network, or relying on a service provider to help you build up your network of reliable partners—from your outsourcing accounting firm covering your finance function’s many layers to the legal and marketing support you will need as the company expands.

An efficient way to create such an ecosystem is to rely on trusted advisors who understand your needs, who can pinpoint the current gaps in expertise and capabilities at your company, and who you can trust to connect you with reliable partners. Trusted advisors like RoseRyan’s consultants can start this business growth process by connecting you with such service providers and also guide you when the time is right toward recruiting and bringing in full-time resources.

5. Prepare for an Acquisition

As you explore the many growth drivers that could help your company reach current and future goals, an acquisition could be worth consideration. Is there an opportunity to acquire another company to quickly expand your product offerings, bring in new talent, or connect you with new customers? Or could teaming up with another company bring you closer to your favored exit strategy?

Preparing for either type of acquisition should entail a hard look at your numbers to ensure that the decisions you will be making will be based on timely, reliable financial information—and that the information you will be sharing with another company can be trusted as well.

How Do I Create a Business Growth Strategy?

If you are wondering, “How can I measure business growth?” the answer will depend on your company and current priorities. As for driving business growth, finance experts can work with you to develop key performance indicators that can help you and your team work toward objectives and be accountable to them, in addition to evaluating your financial operations to see what needs to change before taking on new plan, as well as CFO expertise, scenario planning, and more.

As a finance advisory and consulting firm, RoseRyan can help your emerging growth company develop a business growth strategy that works for your culture and structure. RoseRyan consultants get to know the companies they advise, to truly understand the business and develop a tailored plan. Are you ready to get started on a more practical business growth plan? Reach out to the experts at RoseRyan today.

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5 Common Traits of Emerging Growth Companies

When does a startup “graduate” into the emerging growth company? While there is no strict definition of what an emerging growth company entails—unless you are looking at the Securities and Exchange Commission’s criteria for how an emerging growth company goes public—there are a few common traits of fast growing companies that would justify including yours in this category.

1. The Backing of Venture Capitalists

Venture capital funding offers an instant boost to a company’s growth plan but has another benefit as well: confidence in what’s next for the young, rapidly growing business. Venture capital bolstered the likes of Intel and Google when they were starting out as emerging growth companies, and those companies now have their own VC arms.

Attracting the attention of VCs and showing them your company is worthy of their investment can be an uphill battle—a Harvard Business School study found that for every VC deal, the firm considered 101 companies, and only 28 of those had an initial meeting with management.

What makes a company high growth? The milestone of VC funding is just one of several ways to characterize an emerging growth company, which the SEC defines as a company that has less than $1.07 billion in annual revenue. Others may look at an emerging growth company as one that is in a pre-revenue stage but shows tremendous promise.

2. Preparing for Strategic Change While Experiencing Fast Growth

Rapid growth companies that are working toward a particular strategic goal tend to act less like a startup in survival mode and more like a fast-moving and gradually maturing company. This means management may realize it’s time to line up an accounting firm to undergo the first audit, an often lengthy and complicated process that can be eased by audit readiness experts. A pre-audit evaluation can shake out any issues in the accounting and lead to tighter processes and more trustworthy and timely financial information and insights.

3. Moving Away From an Entrepreneurial Mindset

There comes a point during incredibly fast growth when some companies begin to see that while their way of operating has supported an innovative culture and fast pace, they may have lost touch with what’s going on inside the business. This is around the time when a company could greatly benefit from the expertise of a CFO, perhaps on a part-time basis, to help build up the finance function, create an appropriate tech stack, and provide strategic-level input on the next steps the company should take.

4. Looking for a Smarter Way to Grow

Growth is wonderful until it becomes overwhelming. Emerging growth companies are at a stage where they want scalable growth. An expert finance perspective can help get them on track, by providing insights on how the business is truly performing, whether that is sustainable, and what needs to change to scale the company.

5. Expanding with New Products or New Markets

Once a company has found success with one product or service, it may move forward with another way of expansion, potentially by bringing in more talent, investing in a new product, acquiring another company, or branching out to another part of the country or overseas.

How can such an emerging growth company manage its current resources and take on more without burning anyone out and without burning through cash? This is the time when fast growing companies would want to take an inward look to ensure that management is able to tap near real time information to base their decisions—so that they can act quickly but not rashly, but with confidence in how to move the company forward.

Emerging Growth Company Traits and How Yours Can Thrive

A common theme in this article is access to critical, timely information. Leadership needs it to make the right strategic calls for the business, while potential investors and acquirers will be looking for it at critical moments of growth plans.

Is your finance function and your accounting systems providing you with up-to-date, actionable information? Reach out to RoseRyan today to see how we can bolster your finance function and set your company on a more solid path for growth.

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What a Growth Company Needs from a Strategic Growth Partner

If you’re anticipating a slowdown for your young, fast-moving company if you do not make a smart strategic change, you may be overdue for a new partnership. Even though you know your company has tremendous promise—and that hopeful thinking is backed by investors—you may still hit a point in your growth path where you have taken your company as far as you possibly can on your own, with your current team. There comes a time when another perspective and a particular skill set can help you take our company to the next level—and that is often in the form of what could be called a strategic growth partner.

What Is a Strategic Growth Partner?

A strategic growth partner may not bill themselves exactly that way—but the expertise they offer and the guidance they provide can be invaluable for pushing your emerging growth company forward on its growth track.

The word “partner” is key when doing your research on a strategic growth partner. Ideally, you will be able to find in your research and through your network a company that is less interested in lecturing or opining on what to do—a consulting firm that acts as a trusted advisor will work alongside your team to help you get the work done, while also tailoring their advice to your company’s way of working and its growth plans.

Depending on the state of your financial operations and your methods for keeping track of how your company is doing and where it’s going, there may be a need to first get tactical as you work toward a strategic goal. A strong foundation is a must for smart strategic growth—this is something you will quickly learn when working with one business growth strategy consultant or more.

What Are the Benefits of Working With a Strategic Growth Partner?

There’s a somewhat confounding statement that is incredibly true when you are running your first company or taking a unique company to the next step in its growth plan: You don’t know what you don’t know. There are questions to ask, evaluations to make of your company’s capabilities and resources, and opportunities to explore—and many of these things may not be visible to you or your team as you focus on your day jobs and what you do best—running the business.

Experts in growth strategy consulting who have supported and guided companies through various growth goals, including acquisitions and funding rounds, can prompt you to ask the right questions and steer you toward where you need to go for answers—anytime you need it.

How to Take Your Company to the Next Level

By working closely with a consulting company that can help you with strategic growth, you can gain the wisdom and expertise of strategic growth consultants who can tailor best practices to your fast-growing business.

At RoseRyan, our financial advisory firm is able to tap the full expertise of our consulting team, depending on the current and future needs of the company we are guiding toward their growth goals. Some companies first need support in solidifying their financial foundation, to determine how the company has performed and what it’s capable of, while others are on an incredibly fast track to the next step, and need to prepare for investor scrutiny or the due diligence prowess of an acquirer. Whatever step is next for your company, RoseRyan can help you get there.

Reach out to us today to learn how our strategic growth consultants can help you establish and execute your growth plans.

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Emerging Growth: A Strategic Guide to Managing High Growth

Leaders in high growth companies face a constant barrage of challenges as they attempt to stay ahead of any problems and keep on top of the pace, all while trying to build an even better, winning business. For VC-backed high-growth companies, there’s the constant need to balance moving rapidly with treading carefully to avoid burning out. Here is a strategic guide to managing such high growth.

Prepare to Move Quickly

As a startup moves out of the “survival” phase, and its product or service really starts to take off, operating at warp speed becomes the norm—and learning to become accustomed to the fast pace, while trying to manage the high growth, becomes a daily challenge.  There’s no room for slowing down or making errors. Hyper efficiency becomes essential and is only made possible when the right systems and processes, for the current iteration of your company, are in place.

Accurate financials, real-time information, and savvy analysis are critical for companies that are moving rapidly and want to continue doing so. This means being able to access and analyze financial data as it’s happening—so that accurate projections can take shape and you can move forward on a new product or explore a new business model. You don’t want the team to be bogged down with outdated systems and manual entries—and everyone needs to have real, updated information to understand what’s happening today so that they can react accordingly.

Up-to-the minute data is possible—yet it is sometimes elusive for younger companies as they get mired in systems they have outgrown or have not yet created processes that can be repeatable and practical (for a company experiencing or striving for a high growth strategy, the monthly close should no longer be a pipe dream).

Bring In CFO Expertise If You Haven’t Already

Do you have the expertise of a CFO who can help you make well-informed decisive moves and provide direction on what you should do next? The ongoing presence of a CFO, which can occur on a part-time or interim basis for some time, takes the company to another level as leadership will have access to another skill set and a particular perspective that can only come from someone who has led other finance organizations, is financially savvy yet also strategically minded. A CFO can advise on a rapid expansion strategy that would be appropriate for your company in addition to exploring other strategies and weighing the pros and cons of each.

Build the Right Team

How can I develop and maintain a high-growth culture? For high growth companies like those in Silicon Valley, it becomes second nature to be innovative first and to embrace the fast pace. For other companies, this can be an adjustment that depends on strong leadership and consistent, clear communication.

To successfully manage high growth and embrace this new iteration of your company—whether you are undergoing a geographic expansion plan, a move into new markets, a hiring spree, or an exploration of acquisitions—the people and resources you have matter.

How you manage your resources will determine whether you can continue being cash flow positive or whether you’ll have to constantly worry about running out of runway. In the same vein, you don’t want to burn out your current talented team. You want to continue nurturing your key players, while also ensuring that they have the support and resources to continue doing their job well.

For some parts of your company, you may find that a mix of outsourced expertise and in-house expertise provides you the right balance of giving you the expertise you need to advance your company to the next level while not over hiring.

When you are able to tap “right” people—people who can jump in and get the job done—there will be no time wasted and the job will be done properly. If these people are empowered by the latest technology systems—armed with a full tech stack—they can work as efficiently as possible and be in the know about what’s happening at your company.

Find the Right Investors

Depending on how much of a stake your investors will take on and how involved they want to be, you want to find investors who will believe in your company and stand by you. The search can involve a wide net, aided by the broad networks of the experts you trust to help you on your company’s high growth journey.

Key to this search is also being prepared to show them trustworthy and clear financial information so that they can act quickly if your company is a good fit.

Create the Right Strategy

There is no absolute surefire rapid growth strategy for any company—that’s why proper scenario planning is a must for thinking through your many options and exploring what will likely happen and what the risks are of pulling the trigger on any one move.

Working on a high growth strategy should not be done in a vacuum. You will want input on what has worked for other companies in your industry in a similar situation. You can turn to your trusted advisors for a growth strategy example that could work for your company.

Build a Culture of Growth

What strategies will help me become a high growth company? As companies expand from an operation of a few to an operation of many, siloes often multiply. By unifying the team, keeping them informed of strategic decisions and including them in helping the company succeed, they are more likely to be engaged. This means open and honest communication and a collaborative atmosphere are necessary.

Employees want to know what’s happening and that they want them to do matters. The alternative—misunderstandings and employment in the dark—can lead to stalemates and lost productivity.

Partnering Up When Experiencing Rapid Growth

When a company has a strong mix of expertise, technology that’s appropriate for its size and complexity, access to current data and insights, and an engaged workforce, it’s a company that is set up for success toward reaching the latest growth goals. Decisions can be made with confidence. The team is held accountable. Maximum efficiencies are reached when those who need to know know what to do and what they need to know. If your company is experiencing high growth yet struggling with any of these issues, reach out to RoseRyan today—and we can help.

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5 Financial Health Indicators That Matter for Startups

For emerging growth companies that have managed to survive yet are facing the quandary of how to sustain their fast growth, now could be a good time to evaluate if it’s built for continued success. These are some of the key financial health indicators for knowing whether your startup is built for speed and scalable growth.

What Is the Best Measure of a Company’s Financial Health?

Some finance and accounting experts would point to cash flow as the ultimate measure of a company’s financial health. Without cash, a company can end up on a downward spiral of overdue payments and broken credit obligations. Healthy cash flow, however, puts the company in a position to build loyalty with customers, suppliers, and other partners—a situation made possible when the company has full visibility of its incurred expenses and the ability to produce reliable budgets and forecasts.

Proper cash management and healthy cash flow also enable a company to be able to handle the unexpected—while there are specific situations that no one can predict in business, you can pretty much count on something unexpected occurring and the need to tap your cash reserves.

Other Key Financial Health Indicators

  • A strong financial foundation: Are your company’s financial operations running smoothly, or do you have only a loose view of what’s going on in the business? When you have the layers of the financial function in place (from day-to-day accounting coverage through controller insights and CFO-level advice), up-to-date and appropriate technology systems for your company size, and processes that are repeatable and practical, you have the building blocks for creating and understanding information required to make smart decisions.
  • Planning capabilities: Do you have members on your team who are forward-thinking, or is everyone looking backward or only at the present moment? Setting realistic goals, planning for various scenarios, and devising strategies usually fall under a CFO’s purview—this role’s unique perspective can be invaluable, even on an outsourced/part-time basis, for helping to keep the company continually moving forward, while constantly being aware of what’s really going within the business.
  • Capital: Cash is king, as we’ve indicated, but you also need other means for building, growing, and hiring—so you need to keep watching on your capital levels and know when it’s time to seek additional funding and where to turn. This is another prime area for a CFO to tackle, as the company explores the pros and cons of debt and equity financing and whether it’s set up to win over investors.
  • A strong support system: Another one of the company financial health indicators that may receive less attention is the ecosystem you have built around your startup. From the specialized advice you receive to your tax and accounting experts and more, you need to build a network of service providers you can trust and turn to at a moment’s notice. This ecosystem is partly what’s keeping your company strong and capable of scaling as appropriate.

What Is the Best Measure of a Company’s Financial Health?

The very best measure of a company’s financial health can depend on the company, whether it’s a pre-revenue company, or a company racing toward an IPO, preparing to seek a second round of funding, or getting out of the gate with a new product. Can the company withstand big changes? Would potential acquirers be impressed once they see what’s under the financial hood, or would the truth make them back away?

There are so many factors that go into determining the financial health of a company that it’s worth taking an assessment (a financial health index, if you will) and seeing where the company is at today and where improvements could be made.

Is it time to evaluate your company on its financial health? Reach out to RoseRyan to assess your emerging growth company today.

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4 Ways to Avoid Costly Accounting Mistakes

The different types of accounting errors that companies make range from the easily fixable to the unforgettable. While mistakes happen, and proper systems are in place to catch mistakes, emerging growth companies will want to be aware of what to look for and how to prevent them in the first place.

Common Accounting Errors and Accounting Mistakes to Avoid

What happens if an accountant makes a mistake? It’s not the end of the world when an accounting mistake happens—what matters more is when a mistake is discovered and what you do next to address it. Here are some accounting mistakes to look out for and avoid.

Underestimating what’s involved with a big accounting change: Whether your finance team is about to change its accounting method (cash vs. accrual accounting), adopt generally accepted accounting principles (GAAP), or take on a new accounting rule, the steps involved are often more challenging than anticipated. You can usually save your team in terms of significant time and headaches by understanding what’s involved and lessons learned from companies like yours that have gone through the process.

Not keeping up with technology as the company grows: Relying on spreadsheets long after it’s appropriate is a common issue for companies that began as a one or two person founder team and rapidly grew—quicker than the entrepreneurs had the time to get their bearings and put more appropriate accounting systems in place.

Similarly, some emerging growth companies become so accustomed to their starter accounting software that they drag their feet on adopting systems that would better match their size and complexity. By leaning on the experiences of other companies that successfully made a switch and trusting on the system recommendations of experts, your company could achieve an upgrade that is seamless to the team as possible. You may find during this process, as you confer with accounting and finance experts, that such an upgrade is necessary to avoid common errors in accounting.

Letting account reconciliations get out of hand: Although not core to the day-to-day business, this necessary responsibility can put a business at risk of fraud and accounting errors if the accounting team does not keep on top of reconciliations. In fact, neglecting this necessary finance responsibility could put an exit strategy timeline at risk. Companies have been known to scramble as they ready the company for a sale or IPO—and the process is much easier when it’s done than when it should be done.

Getting distracted during a restatement: The need to go back and restate financial statements is often associated with occurrences of fraud, but the fact is restatements can also be due to an honest mistake or a misinterpretation of current accounting guidance.

What happens next matters, as time is of the essence to correct accounting mistakes. To investigate such types of accounting errors properly—and calmly—it’s advisable to lean on experts who can determine how extensive the problem is and how to best address it, including how to deal with any external auditor security.

A restatement can be a burden to everyone involved but it doesn’t have to be—when you have trusted advisors who can get you through it.

How to Prevent Accounting Mistakes

How do we find accounting errors? At RoseRyan, one of the ways we may come across accounting mistakes is when we prepare an emerging growth company for its first audit. Young, fast-moving companies are often missing the level of systems and processes they need to avoid what would be considered avoidable accounting mistakes. When the time comes to undergo a first audit, those mistakes could come to the forefront—and so could a day of reckoning.

To stay up-to-date on what is happening in the business now, the company needs techniques for checking the work and an adequate number of people to make sure this happens. An expert outsourced team could cover the day-to-day accounting when the time is right for your growing startup while an interim controller could help to right the ship. When the various layers of the finance function are in place—even if it is on a part-time or interim basis in some roles—those types of accounting errors would have a hard time penetrating your company.

Ready to explore how to raise the bar of your finance function? Reach out to the RoseRyan team today.

 

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Picking the Perfect Interim Controller for Your Startup

As it becomes clearer by the day that the finance function of a fast-growing startup needs some serious help, attention often turns to a critical role: the controller. This position, which can be filled by an interim controller in the early stages of a company, can be a lifeline for a small yet growing finance team that could greatly benefit from some order and a higher level of expertise.

What Is an Interim Financial Controller?

The responsibilities of an interim controller can vary greatly, depending on the robustness of the finance function and whether it has ever had a controller. An interim financial controller or interim business controller often begins with a large task—immediately overseeing the accounting and finance function and turning it into a smooth-running machine that is timely with its obligations (payroll, accounts payable) while staying on top of accounts receivable and keeping the general ledger in order. If the emerging growth company hasn’t had a controller before, another top focus for an interim controller could be introducing a practical monthly close process and making it so that financial reports can be produced in a timely and clean fashion for management, the board, and investors.

What is a controller and what do they do for a startup? Among the many responsibilities of controllers are the management of the audit process and dealing with auditor questions. They keep on top of accounting policies and make updates as necessary. And they may manage cash flow, evaluate and renew insurance policies, and manage forecast and financial operating budgets. They may also fill an essential role as the company takes on new accounting systems and standards (such as if a startup is not yet GAAP compliant).

The Benefits of Using an Interim Controller for a Startup

As a critical backbone to the company, the finance function requires order. Otherwise, very quickly, things fall behind and so does the company at large, if it isn’t able to pay its bills or leadership does not have a handle on how the business is doing. An interim controller introduces processes and systems that they know have worked at other companies and tailor those processes, if necessary, to the size and complexity of the company. They are forward-looking and want the company to be able to continue producing and understanding financial information not just today but in the months ahead, as they make plans for the company’s continued growth. The work is never done in the finance function, but it will be more efficient once a controller gets involved.

How to Find the Right Interim Controller for Your Company

The best interim controllers are versatile by nature—they can take on various responsibilities at various types of companies seamlessly. Well-versed in all aspects of accounting, they can lead your company’s day-to-day accounting operations, streamline how financial information is gathered and parsed, in order to provide management with the level of meaningful, actionable insights they need to run the business and make the right strategic decision for the company. Multitasking is par for the course for interim controllers.

RoseRyan is intentional with how we get to know our client companies so that we can provide them with an interim controller who will become a part of the team with minimal to no ramp-up time. Our interim controllers tend to have both experience in public accounting in addition to experience at corporate finance. If your startup is ready to bring in this essential role, which could begin on an interim basis, reach out to RoseRyan and find out how our interim controller experts can help your financial function.

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