If we were to rank the longest-running terms in business jargon, “silo” has to be up there. Whether it’s applied to systems or departments or even teams within them, strategies aimed at breaking them down are always in vogue.
Among the ultimate silo-busters are innovative finance and treasury leaders – like the ones we heard from during a lively panel discussion at the recently held Boston Fintech Week. By sharing financial information in ways that are accessible and applicable to departmental goals, they’re acting as guides and connectors in the business.
The big role technology plays in all of that was a theme of the packed session, “Set to Grow: How to Build an Effective Finance Function as a Startup,” held at MassMutual’s Boston offices. The discussion was moderated by Janelle Tartaro, Managing Consultant at CrossCountry Consulting, and panelists included Eric Brown, SVP, Finance and Treasurer, Flywire; Sean Barrett, Associate Director for CrossCountry Consulting; and Jake Liebersohn, Finance Manager at Laika. The panelists ranged in experience, stage of company growth, and focus, and their wide-ranging conversation provided some advice on major questions startups and growing companies often have when it comes to scaling the finance team and using technology.
When is the best time to move to an ERP system?
Two common triggers for startups and growth companies moving from, say, QuickBooks or Xero, to an ERP system like Sage Intacct or NetSuite, according to Sean Barrett, who focuses on midmarket ERP implementations at CrossCountry Consulting, are: No. 1 – when there’s been a lot of growth from a revenue perspective, say a new product line has been introduced and technology needs to be added to scale efficiently without loading up on headcount. No. 2 – if there’s funding coming in tied to a growth mandate and you need to hit the ground running.
Prior to its IPO in May 2021, Flywire had implemented NetSuite to run accounting and finance processes, something that was critical to meeting the rigors of reporting, controls and process required of a public company, Eric Brown shared at the session. Having this foundation is also important to driving continual improvements – such as faster close and bringing together more data to analyze project management costs to understand what people work on from a cost perspective and inform product development.
“NetSuite is key to helping us get there,” Brown said.
Who should some of the first accounting and finance hires be for a startup?
Jake Liebersohn was the first finance hire and employee No. 9 at Laika, which builds SaaS technology that automates many of the processes and steps to take to comply with some of the most stringent security frameworks and mandates. The New York-based company secured its Series B round of $35 million last year, and is currently running accounting and finance processes on Xero and SaaSOptics.
For his first finance hire, Liebersohn brought on a staff accountant. Next, he pushed for a sales operations hire. It’s perhaps a unique approach, but shows how cross-functional the finance team at Laika actually is. Finance and marketing and sales work closely together – with his team providing analytics that tie revenue data back to marketing activities. This helps to inform what worked and what didn’t – even something as seemingly small as a new newsletter launch.
“Finance is the one with all the key details to empower executives to make the right decisions,” Liebersohn said.
At a public company like Flywire, Brown reminded the audience it’s important to be constantly thinking about who your audience for the data is. Flywire is analyzing data not only for the business, but to tell the story of the business to investors.
“Analytical data is crucial not only for the business decisions, but for educating investors about the business,” Brown said.
How can the finance function be best prepared for the next stage – whatever that is?
To best position the company for whatever is next, one tip Liebersohn shared was to focus on data quality and how the data is structured, in a way that will scale. For instance, a strong focus on data warehousing in the early days ensures the data is in a format that is easier to migrate to a new system or even push to newer data repository technologies such as data lakes.
Barrett recommended ensuring that foundational processes – such as billing and contract management – are standardized and not overly customized. Highly customized billing contracts may work fine for 10 customers a month, but won’t for 100 or 1,000. It’s a lot easier to get something correct at the start, than to re-do something that has been in place for a while, he said.
On a similar note, Brown, who has experience working with midmarket ERP systems like NetSuite all the way to enterprise systems like Oracle Fusion, recommended taking a standardized approach when implementing the software. It’s natural for the team to want the system to work with the process as it currently is, but resist the urge to retrofit. As much as it makes sense, trust the functionality out-of-the-box and the best practices for those workflows that are already configured.
What’s some advice around building strong finance teams?
It’s no secret that building out the accounting and finance function is often low on the list of priorities at the beginning of the life of a startup, and investments in finance often play second fiddle to pretty much everything and everyone else even at larger companies. Being able to make finance data actionable is a big part of driving more investment.
Something important to remember if the company is making the leap to implement an ERP system is that going through this exercise can be a huge job, according to Barrett.
“Don’t expect there to be no impact on their day-to-day,” Barrett said, adding that setting clear expectations and planning proper resources is crucial.
To create an environment that encourages both excellence and innovation, be approachable, ask questions and listen a lot, Brown recommended.
“Get people thinking outside of the box,” Brown said.