The Startup’s Dilemma: Strong Growth but No Grip on Finances

In the world of startups, a common challenge emerges: rapid growth paired with a lagging finance function.

I’ve seen this firsthand as a CFO. At Groupon, for example, revenue was doubling every single month! We (the finance team) often find ourselves scrambling to keep up with the business. 

Through plenty of trial and error, I learned how to take control of the financial side of things—especially cash flow, which is absolutely critical.

Recently, I’ve been working with a promising SaaS company that’s landing multi-million dollar contracts and gaining serious market share. But behind the scenes, their financial operations were treated more as an afterthought than a strategic partner.

 The CEO knew they needed a more structured approach to finance but wasn’t sure where to start. That’s where I came in. My goal was to transform their finance function from a compliance checkbox into a strategic powerhouse.

Diagnosing the Financial Health

Our first step was to take a deep dive into the company’s financial capabilities. I always conduct a diagnostic before working with a new client! 

We analysed existing data and interviewed key stakeholders to map out a clear path for fixing existing issues and planning ahead.

What stood out immediately was that their financial reports were purely compliance driven—essentially useless for making informed decisions. 

To fix this, we implemented monthly account closings and introduced management reports that actually told a story. These reports highlighted revenue streams, expenses, and profitability in a way that was actionable and insightful.

Turning Budgeting into a Strategic Tool

The company had an annual budget, but it was more of a formality than a functional tool. 

We shifted to a monthly budgeting process, which allowed for real-time adjustments based on actual performance. This “living budget” became a cornerstone for decision-making, not just a spending cap. 

We also introduced detailed variance analyses, which gave the team insights into revenue performance and operational efficiency. This helped them avoid financial surprises and stay on top of their numbers.

It was actually encouraging to see the executive team debating budget misses—it showed they were truly engaging with the results. Before, board meetings were tense affairs where the founders struggled to explain the numbers. Now, they were in control.

Planning for Sustainable Growth

With ambitions to expand into new markets, we built several forecast models to evaluate potential growth scenarios. Each model was tailored to specific situations, using a bottom-up methodology. This created realistic revenue projections balanced against the costs and risks of expansion. The models allowed the founders to set actionable goals instead of chasing vague aspirations. Scenario planning also prepared them for potential challenges, like slower customer conversions or unexpected expenses.

Building a Reliable Financial Function

To ensure our strategies were built on solid ground, we moved from cash-based accounting to accrual accounting, which provided a much clearer picture of the company’s financial health. We also revamped the Chart of Accounts to make reporting more meaningful and streamlined the month-end closing process to reduce errors and save time.We also revamped accounting processes from billing to month end. The end result was more streamlined and much less error proned.

Focusing on What Matters

We zeroed in on key metrics like revenue per employee, gross margins, net revenue retention, and Average Revenue Per User (ARPU). We ditched vanity metrics that didn’t move the needle. This focus helped the founders concentrate on what truly impacted the business, laying the groundwork for more advanced metrics as they grew more comfortable with their financial data.

After implementing these changes, finance is no longer seen as a compliance chore—it’s now a core strategic tool. The founders eagerly dive into management reports at month-end, a clear sign that effective financial practices are empowering their scaling journey.

If your startup’s finances are struggling to keep up with its growth, it might be time for a transformation!