Itamar Ahrenbeck
The Finance Function for SME’s and Startup’s: The Basics
Updated: Dec 3, 2018
Finance is not about running numbers in Excel. It’s about translating your company’s vision into tangible objectives and controlling their achievements, all whilst bringing insights to key teams within the company so they can improve their performance. It’s also about making sure the company doesn’t lack resources and that the use of the latter is optimised. Finally, it’s the point of contact for your fiscal and legal partners ensuring that you stay compliant so that you can grow your business without contingencies.
In this series, we’ll be going through the key practical activities your finance department should be working on to become a valuable business partner.
Chapter I: The Basics
Improve the quality and timeliness of your information: We all know decisions should be made based on information of quality. However, the issue most companies face is that the right information doesn’t reach the right person, at the right time. Or simply the company doesn’t even make decisions based on information, but based on gut-feeling. Hence, the first step is figuring out what information each member of the team would need in order to make informed decisions, depending on his role. Then working with the finance team and implementing technological solutions and internal processes to make sure they have it available at the right time.
Understand where you stand and plan for the future Without planning, how will you objectively know whether things are going well or not? Your finance team is there to make a diagnostic of how the company is doing (on a market level as well as internally), and list the main areas that need to be improved, or opportunities/threats that need to be addressed. The next step is to work with the teams involved in order to set up a plan with practical steps and tangible objectives that can be controlled in the future.
Finance the growth and re-allocate your resources Success has a lot to do with resources and focus. In most cases, changes require new investments and/or re-allocation of resources (monetary, HR, other). It’s the role of the finance department to find ways to finance those growth projects and/or to determine which business units or areas of the company should be restructured, as the opportunity cost of not re-allocating these resources for new opportunities is higher than the short-term pain of cutting them.
Control and adjust Nothing ever works out perfectly as planned. If you don’t follow up on the objectives set out previously, they’ll be forgotten, mis-implemented, or risks and opportunities that were not at first considered could well prove detrimental to the company if not addressed quickly. In addition, timely controls help the CEO and his teams get out of the day-to-day operations and understand how their recent efforts contributed to the success of the company.
Compliance Your Finance team is the direct point of contact for legal and tax advisors. As they control the flows of money and understand the business, they are best-placed to work in conjunction with Tax and Legal advisors in order to optimize the company fiscally and legally, either for their recurring operations or for timely events such as Due Diligence or expansion into new countries.
Itamar Ahrenbeck is the CEO of YourExternalCFO, a swiss-based company that provides outsourcing services of financial management (CFO) for SME's and Start-ups in Switzerland and Latin America. #SME #StartUp #PME #CFO #finance #Financial #Management #Business #Partner #Switzerland #Suisse #Geneva #Fiduciaire #Genève #Vaud #LatinAmerica #LatAm #YourExternalCFO