Finding the best financial solution for your growing business is a challenging task but one that leaders cannot ignore. Without a solid financial department, SMEs can fail to recognise patterns in their day-to-day activities or even make crucial mistakes with their financial reporting. A rapidly growing business is a welcome problem to have but a problem that needs careful consideration.
In this article, we will outline what strategies organisations can utilise to maintain adequate finance function while scaling the business.
It All Starts With Effective Financial Plannin
As we have discussed in our previous post, effective financial planning is vital for any company – both to ensure that their cash flow is utilised properly and to acquire funding.
However, only 22% of organisations come close to their forecasting figures, knocking off significant profit margins or missing out on lucrative business opportunities. So, how can you make sure that your finance function will keep up with the scaling of your business?
Different Strategies for Different Business Stages
It is natural that an organisation gradually grows out of its financial solutions throughout its lifecycle and several contributing factors need to be considered on how to expand.
Depending on the stage of the business, different resolutions can be assessed to deal with the fluctuating flow of cash and greater complexity.
Basic Financial Function to Support the Seed Stage
At a seed stage, most organisations’ business activities are limited to basic functionalities such as payroll and expenses, particularly if they have limited financial resources available. At this point of the growth cycle, hiring a single member of staff committed to maintaining basic financial systems such as payroll and cash flow management might be a straightforward option.
However, companies that are looking to grow need to understand early on that a booming business can rapidly bring in higher volume and complexity that can cause complications in a restricted financial function.
As a result, bringing in an external financial advisor or introducing a carefully selected financial automation software to support a company’s changing needs could be an excellent option to consider. Tapping into external financial help can give business leaders the breathing space to freely explore the next steps in their journey.
Expansion and Growing Financial Needs
Once companies enter an expansion stage, the financial function needs to take a more strategic approach. Financial activities are no longer limited to ‘monitor and control’ but to proactively aid further acceleration with the help of financial forecasting and reporting.
Producing in-depth financial analysis can make or break the future of a business. On the other hand, when companies accelerate their growth, they often find that the best allocation of their full-time resources lies elsewhere.
Flexibility and freeing up resources to focus on different business activities is one of the main reasons organisations are looking to use external financial partners in 40% of the cases, allowing companies to allocate their employees more strategically.
Setting up an effective and flexible financial function will ultimately enable your company to accelerate organisational growth seamlessly while remaining in control of your business accounts.
External financial partners can help businesses keep up with the changing demand and complexity of a growing company and allow business leaders to focus on more strategic activities.
Reach out today and bring us on board to help you with your scaling business.