KEY TAKEAWAYS
- Learn why the finance function should grow with your business
- Understand the concept of cash flow, compliance, and clarity
- Discover when to bring in outside help
Every business dreams of growth, but as one’s company grows, the way they manage money and the finance function needs to grow too. Don’t trust me? According to the US Small Business Administration(SBA), the reason behind 82% of small business failures is poorly managed cash flow.
This is why cash flow is like the lifeblood for a business. It is very important for daily operation, stability, growth, etc. Without enough cash on hand (liquidity), a company can fail badly even if it is profitable on paper.
The finance function plays an important role in this process as it supports the company’s cash flow, regulatory compliance, and operational clarity. With the help of this blog, let’s learn more about it.
When one’s business is small, tracking money is pretty simple. But as A startup grows, things get more complex. More people, more transactions, more rules, which creates the need to scale up their finance function.
When done right, it can make a big difference. It helps leaders make smart choices, manage risk, and prepare for the future. To achieve this, having a finance function that evolves as the business scales is very important.
Expansion frequently demands a commitment of resources, like skilled workers, new technology, strong infrastructure, and enough stock. Here, cash flow is not just about having money in the bank. It’s about understanding how cash moves in and out of one’s business, and also making sure that the business doesn’t run out of it at the wrong time.
There is an incredible quote said by Carlos Slim, a successful businessman and investor, that ‘All businesses make mistakes. The trick is to avoid large ones.’ One should avoid mistakes like these:
Clear decisions need clear information. Finance isn’t just about looking back; it’s about looking forward. So look at forecasts, not just past results. Try to align the finance with strategic goals so that you will be able to measure your progress with the right matrices.
Apart from this, invest in tech tools that make reports clear and easy to use. Even a simplified dashboard can make a big difference. All of these things might seem like a lot, but they are important for insights.
Why do everything alone when extra expertise can help greatly? What does it mean? Well, sometimes businesses face challenges that teams can’t handle alone, like complex taxes or preparing for investors.
A cloud-based financial partner like ORBA Cloud CFO can support in situations like these. It can also help with financial modeling, fundraising preparation, or building a clean month-end close process, etc. Having an expert helping hand like this can create a lot of difference in efficiency.
To manage a larger business, you need a stronger system and people.
a. Think Modular, Not Monolithic: No, need to face everything at once. Begin by establishing a robust foundation, with clear and organized accounting and a steady payroll system that works smoothly.
b. Choose Scalable Technology: Pick accounting and reporting tools that can handle more data and users as the business grows.
c. Prioritize People Skills: No doubt, technical skills are essential, but one can’t ignore the importance of communication, critical thinking, and adaptability. So, train your team accordingly.
Finance has more potential than people think. Instead of seeing finance as just a place to invest money, think of it as a powerful tool for growth. No matter, your business is small or big, a good financial team that grows with your goals would be a smart decision.
If a business takes the finance department seriously, the finance department will not just protect the money but also become a reason for the business’s growth.
Yes, ChatGPT can help create a cash flow statement.
Simply with the help of technology, automate tasks, improve collaboration (between different departments), train your staff, etc.
Its main functions are investment decision, financing decision, dividend decision, and liquidity management.
It helps by giving a view of the business’s financial health.
