How To Easily Scale Your Finance Function

Chris Frey
Chris Frey|Updated November 26th 2018

by Hubble’s Financial Controller, Chris Frey

Startup finance functions are often outsourced to third party bookkeeping services – however, once the company grows to above a certain size, it starts to make sense to have an in-house finance team. The problem is, as with many small companies, the finance function is usually just one or two people looking after everything from management reporting to sales invoicing to purchase invoice inputting. As the company grows, so does the volume of transactions that need to be recorded and, before you know it, your finance team is fully occupied with transactional work.

This article is a guide on how to scale your finance function along with your business, with recommendations of software tools that can save your finance team both time and money.

Piggy bank

Before we can talk about scaling up, it’s important to evaluate the foundation of your finance function: your accounting software package. Good software is cloud-based and allows integration with various external apps and tools, where you can simply “plug” in a variety of additional tools. Not having this functionality is like having an iPhone without an app store.

At Hubble we use Xero, which is probably the most popular accounting package for startups. Xero’s tagline is “making business beautiful” with a customisable dashboard that gives you a solid overview of all your bank accounts, number of sales invoices outstanding and any bills that are overdue. Xero’s best feature is its app marketplace, where you can connect to a variety of external apps that sync with your accounting records.

We’ve found one drawback of Xero: it only works up to a limited volume of transactions, and performance starts to slow once you’ve exceeded it. Unfortunately Xero doesn’t have a product for bigger business and you need to change software once you’ve outgrown it. The next step up is to switch to another platform like Sage 50 which is also cloud-based and offers app integration.

With a solid accounting package in place, you have the right base to scale your finance function. Now you need to cut down the number of man-hours that your finance team take, one sub-function at a time, with the aim being to increase the time spent on value-adding tasks instead of routine transaction recording. The easiest place to start is implementing some software in the Accounts Payable function, then progressing to auto-recording bank transactions and finally automating Accounts Receivable and reporting.

Pain point: Manual input of supplier invoices

Solution: Automation of supplier invoice input

No one likes paying bills, but manually inputting them into software is probably even more painful than seeing your bank balance fall. At Hubble we use ReceiptBank to automatically record all of our invoices into Xero. ReceiptBank uses artificial intelligence to “read” the fields in a purchase invoice and automatically categorise them to the correct supplier account and nominal code and auto-syncs with Xero to ensure all your invoices magically appear where they need to be.

AutoEntry is also a good alternative.

Pain point: Lack of controls around invoice approval

Solution: Use a workflow tool

As the number of supplier invoices you receive increases, it gets harder for the Finance team to track who authorised the work. This increases the risk of incorrect payments to suppliers. The easiest way to address this is to decentralise your invoice approvals to your company’s management, where a department team leader verifies and approves an invoice before Finance make the payment. Luckily, software can help with this. If you already use ReceiptBank, ApprovalMax offers a customisable workflow to link expenses from ReceiptBank directly to an approver’s inbox, then back into Xero in “ready for payment” status.

Having two separate software tools in this process becomes a bit clunky, which is exactly why there are now a few providers offering this solution in one software tool. We’ve trialled Compleate Invoicing in the past, which reads and syncs your raw invoices to Xero, allows you to set up supplier rules, and also sets up approval workflows. Although some manual intervention is still required at times, using software in your AP function drastically reduces the number of man-hours spent inputting and approving invoices for payment. New software is also available from APtimise which does all of the above and also links your online banking directly to Xero, which cuts down exporting from Xero and separately uploading into your online banking tool when preparing payment runs.

Pain point to solve: Tedious processing of employee expense claims

Solution: Intelligent expense submission software

The expense claim process is often fraught with missing receipts and long overdue submissions. Expensify have developed software that lets an employee take a photo of a receipt on their smartphone which then automatically codes the transaction to the correct nominal and feeds it into your ledger. The interface makes it much quicker for Finance teams to review and approve the expense claims.

Pain point to solve: Hundreds of bank reconciliation items from a shared debit card to reconcile

Solution: Ditch the shared card and auto-allocate your expenses

For ease, startups usually use a company debit card to pay for software subscriptions and any online payments. As your transaction volume and number of employees increase over time, the number of debit card transactions feeding into your accounting software balloons, resulting in finance teams spending hours tracking down who spent what on the card and whether it was actually authorised. Often startups will share the debit card details across employees, increasing the risk of unauthorised use, especially when a transaction can be easily lost in the volume.

We’ve recently discovered a Danish FinTech company called Pleo who have designed a platform where you can issue each person or team in the company their own plastic company card. Finance set a budget on each card to control spending and, via Pleo’s platform, all card transactions are automatically mapped to nominal accounts and sync directly with Xero, which halves the amount of time you spend reconciling the bank. The app also reminds employees to upload their receipts onto the platform, preventing Finance having to chase for them. Spendesk are one of Pleo’s major competitors and also include expense claims on their platform.

Pain point to solve: Chasing up slow paying customers

Solution: Let a computer chase for you

Probably the biggest task (and challenge) in any finance department is chasing up debtors for payment. Tools like Chaser were developed to make this an easier process, by automatically sending statements for overdue debts and attaching all outstanding invoices to the email. It automatically syncs with your debtors book at a frequency that you set, cutting out the time you’d usually spend constructing emails, downloading invoices and manually sending them. Another tool, Debtor Daddy, takes this a step further, where you can escalate outstanding debts to their call centre to do the chasing for you.

Pain point to solve: Manual and Excel-heavy management reporting

Solution: Auto-analysis of your accounts

Many startups can’t afford to hire a qualified accountant in the early stages and a lot of the financial reporting tasks fall to the founders to complete. Constructing a high quality set of management accounts is time consuming, and it’s easy to miss important financial information.

There are a number of management reporting tools available that sync with your accounting software and automatically import your Profit and Loss, Balance Sheet and Cash flow statement. Spotlight Reporting allows you to input your financial data and automatically prepares charts to visualise your numbers. It makes highlighting historic trends easier and helps monitor actual figures versus budget. Another popular tool is Futrli, which also allows customisable reporting but has the added advantage of better quality forecasting, including cash flow forecasting based on your historic receipts and payments.

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