August 5, 2021
Opinion

The Briefing: First controller at a startup? Your priorities for the first 100 days

,

Editor’s note: The Briefing is our series highlighting strategic projects and insights from experienced finance pros. Follow us on LinkedIn or Twitter to get alerts for new briefings.


Brace yourself—being the first controller at your organization means you’re likely stepping into a place with messy books, poor controls, and inadequate cash flow management.

But being the first controller can also be hugely rewarding. You get to establish key accounting policies, influence strategic decisions, build out the function, and write the first financial books. 


I joined Ramp in March 2021 as the company’s first controller. My very first step was to set a list of priorities to guide my first 100 days. If you’re also the first controller at your workplace—or you’re a CEO hiring your first controller—here are a few things you might want to focus on. 

Summary
Many things will vie for your attention, but your ultimate priority is to establish the company’s financial history.
Key learnings
  • Don’t assume that the records you’ve received are accurate. Start with the transactions from the first day that the company was formed and work your way forward. Trust but verify.
  • When you’re managing many million dollars, it doesn’t make sense for you to chase after $100. Focus on big-ticket items and establish a materiality threshold for your policies.
  • Frame your role as a partner and you’ll find it much easier to roll out new policies and enforce compliance.


Priority #1: Prepare audited financial statements 

9 times out of 10, you’re hired because your company is facing its first audit. It needs someone to clean up the mess and establish some internal controls. While bookkeeping can be outsourced, this work requires internal attention. 


I’ve worked for 4 startups and each time a looming audit was the reason why I was brought on board. In Ramp’s case, the team had just closed a $150M debt financing deal with Goldman Sachs in February 2021, which required us to provide audited financial statements by the end of August. 

"I’ve worked for 4 startups and each time a looming audit was the reason why I was brought on board"

Choose your auditor wisely. Should you work with one of the Big Four or a smaller audit firm? I'd look at the state of your accounting records: if they’re fairly clean, by all means, get the stamp of approval from one of the Big Four. If you're lacking some key controls, processes, and documentation (like we were), a medium-sized auditor might be a better fit. We went with Mazars because they understood our situation and were willing to adopt a substantive audit approach. 


Through the process of preparing for the audit, you'll acquire a better picture of your company’s accounting and reporting capabilities—and potential gaps. This will help you define your long-term reporting and accounting roadmap.


Priority #2: Establish your company’s financial history

Another project that you’ll want to get started on right away is documenting your company’s key financial processes. The ultimate goal is to document a verifiable financial story of the company that will meet the needs of all of your stakeholders: investors, financial partners, founders, and employees. 


To tell this story, you need to gather the facts. Start by reviewing all transactions and journal entries booked from the day that the company came into existence. What you need to verify: 

  • All transactions are tied to valid invoices and bank statements
  • All expenses are properly classified in your accounting system
  • All the money from your investors and the equity are tracked in the capitalization table
"The ultimate goal is to document a verifiable financial story of the company"

Even if others have done some of this work, you need to start from day 0. Don’t assume that the records you have are accurate. Dig out the old invoices buried in people’s emails. As all auditors know, if it is not documented, it’s not done. Your job is to trust but verify. 


Priority #3: Create controls and processes

When I first started digging into Ramp’s records, I uncovered several issues that are common to most startups. Check for things like:

  • Capitalization of your IP: Is the value of the software you’re developing captured in your books?
  • Equity accounting: Is your equity properly booked? Do you know the value of your employee stock compensation?
  • Payroll cleanliness: How is payroll being handled? Are employees being paid timely? Are bonuses and commissions being paid out properly?  
  • Cash disbursement: Are invoices routing to the right place? Who reviews the invoices? Are vendors being paid on time? 
  • Month-end close: Are you delivering timely and accurate statements to your management team and financial stakeholders? 
"If you have $100 million dollars to manage, don’t waste your time chasing $100"

Start establishing appropriate accounting policies, but make sure to keep your focus on big-ticket items. One mistake that finance teams often make is trying to account for every dollar and losing sight of the bigger picture. If you have $100 million dollars to manage, don’t waste your time chasing $100. Set a clear materiality threshold.


For example, with our capital asset policy, I decided that only individual items over $5,000 will be added to the balance sheet as fixed assets and depreciated over a reasonable period. Laptops and equipment under $5,000 are expensed directly. It just wasn’t worth our time and energy to keep track of 100+ computers (note, this doesn’t prevent the IT team from having proper inventory controls for these assets). Choose your battles.


Priority #4: Educate your organization and build partnerships

At high-growth startups, spending tends to be decentralized. Employees are empowered to spend what they need to get their job done. To build a healthy spend culture, it's especially crucial that you 1) create and enforce controls and 2) educate the employees about what is allowable and what is not. 


For instance, in Ramp’s early days, employees coming into the office used to expense their lunches. However, most were unaware that lunch expense was a taxable benefit that impacted their W2s. The issue also raised a question of fairness because remote employees didn’t get the same benefit. I worked with our People Ops and Product teams to create and publicize our T&E policy, which was then enforced by Ramp’s platform. Now employees clearly understand what types of expenses would be covered by the company and the kind of documentation they need to provide.

"How do you combat the 'bad cop' stereotype? The best method I’ve found is to seek out allies within the company"

How do you combat the “bad cop” stereotype that comes from enforcing policies? The best method I’ve found is to seek out allies within the company. People Ops and Legal teams are great partners if you need to develop new policies, evaluate existing ones, and ensure compliance. Department heads also wield great influence; partner with them on strategic projects and ask for their help in return to educate their teams.

Build trust from the get-go by letting people know that you’re here to help. When I meet people, I like to tell them that my first priority is to safeguard the assets of the company—and the best assets of any company are the employees. I explain maintaining a healthy cash flow is always at the top of my to-do list because it ensures that employees get paid on time.


Priority #5: Future-proof your accounting team

As you get to know your organization, gather inputs on how you should build out the finance function. But don’t make the mistake of building your team for near-term needs—you need to be building the team for the future.

"You need to be building the team for the future. Ask execs where the company is going in 2, 4, 6 years"

Ask execs where the company is going in 2, 4, 6 years. What’s the eventual exit strategy? If the team is planning to IPO vs acquisition, that has a big impact on who you should hire. You need to bring in people with controls and audit experience. 


Accounting experience is not enough; your team members need to be well-rounded. Consider the teams that you will be partnering with and where people are located. People Ops needs payroll specialists with broad knowledge of local and international regulations. Engineering needs someone who can partner with them to create reporting tools and systems. Given the focus of Ramp, our Product team needs finance specialists who can advise them on accounting flows within the platform. Good collaboration skills are key. 


100+ days in 

It’s been 157 days since I started and we’ve made tremendous progress across these 5 priorities. We’re on track to deliver our first set of audited financial statements. Our accounting books are pristine. We’ve reduced the time it takes to close our books from 4 weeks to 10 days (Ramp’s accounting automation features have been pivotal). I have weekly meetings with our Engineering, People Ops, and Product teams to work on critical pieces of our accounting roadmap. 


We’ve made key hires and have plans to keep expanding the team. Interested in joining? Check out our careers page—we’re looking for folks with ERP business strategy, and payroll experience in particular. Not only will you get to join a company that is scaling fast, but you’ll also get to shape a product that is transforming how finance teams work.

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Edwine Alphonse
Financial Controller, Ramp

Born and raised in Haiti, Edwine has lived in Canada, France, Grand Cayman, and currently resides in Boston with her family.

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The Briefing: First controller at a startup? Your priorities for the first 100 days

August 5, 2021
by
Edwine Alphonse
,
Financial Controller, Ramp

Editor’s note: The Briefing is our series highlighting strategic projects and insights from experienced finance pros. Follow us on LinkedIn or Twitter to get alerts for new briefings.


Brace yourself—being the first controller at your organization means you’re likely stepping into a place with messy books, poor controls, and inadequate cash flow management.

But being the first controller can also be hugely rewarding. You get to establish key accounting policies, influence strategic decisions, build out the function, and write the first financial books. 


I joined Ramp in March 2021 as the company’s first controller. My very first step was to set a list of priorities to guide my first 100 days. If you’re also the first controller at your workplace—or you’re a CEO hiring your first controller—here are a few things you might want to focus on. 

Summary
Many things will vie for your attention, but your ultimate priority is to establish the company’s financial history.
Key learnings
  • Don’t assume that the records you’ve received are accurate. Start with the transactions from the first day that the company was formed and work your way forward. Trust but verify.
  • When you’re managing many million dollars, it doesn’t make sense for you to chase after $100. Focus on big-ticket items and establish a materiality threshold for your policies.
  • Frame your role as a partner and you’ll find it much easier to roll out new policies and enforce compliance.


Priority #1: Prepare audited financial statements 

9 times out of 10, you’re hired because your company is facing its first audit. It needs someone to clean up the mess and establish some internal controls. While bookkeeping can be outsourced, this work requires internal attention. 


I’ve worked for 4 startups and each time a looming audit was the reason why I was brought on board. In Ramp’s case, the team had just closed a $150M debt financing deal with Goldman Sachs in February 2021, which required us to provide audited financial statements by the end of August. 

"I’ve worked for 4 startups and each time a looming audit was the reason why I was brought on board"

Choose your auditor wisely. Should you work with one of the Big Four or a smaller audit firm? I'd look at the state of your accounting records: if they’re fairly clean, by all means, get the stamp of approval from one of the Big Four. If you're lacking some key controls, processes, and documentation (like we were), a medium-sized auditor might be a better fit. We went with Mazars because they understood our situation and were willing to adopt a substantive audit approach. 


Through the process of preparing for the audit, you'll acquire a better picture of your company’s accounting and reporting capabilities—and potential gaps. This will help you define your long-term reporting and accounting roadmap.


Priority #2: Establish your company’s financial history

Another project that you’ll want to get started on right away is documenting your company’s key financial processes. The ultimate goal is to document a verifiable financial story of the company that will meet the needs of all of your stakeholders: investors, financial partners, founders, and employees. 


To tell this story, you need to gather the facts. Start by reviewing all transactions and journal entries booked from the day that the company came into existence. What you need to verify: 

  • All transactions are tied to valid invoices and bank statements
  • All expenses are properly classified in your accounting system
  • All the money from your investors and the equity are tracked in the capitalization table
"The ultimate goal is to document a verifiable financial story of the company"

Even if others have done some of this work, you need to start from day 0. Don’t assume that the records you have are accurate. Dig out the old invoices buried in people’s emails. As all auditors know, if it is not documented, it’s not done. Your job is to trust but verify. 


Priority #3: Create controls and processes

When I first started digging into Ramp’s records, I uncovered several issues that are common to most startups. Check for things like:

  • Capitalization of your IP: Is the value of the software you’re developing captured in your books?
  • Equity accounting: Is your equity properly booked? Do you know the value of your employee stock compensation?
  • Payroll cleanliness: How is payroll being handled? Are employees being paid timely? Are bonuses and commissions being paid out properly?  
  • Cash disbursement: Are invoices routing to the right place? Who reviews the invoices? Are vendors being paid on time? 
  • Month-end close: Are you delivering timely and accurate statements to your management team and financial stakeholders? 
"If you have $100 million dollars to manage, don’t waste your time chasing $100"

Start establishing appropriate accounting policies, but make sure to keep your focus on big-ticket items. One mistake that finance teams often make is trying to account for every dollar and losing sight of the bigger picture. If you have $100 million dollars to manage, don’t waste your time chasing $100. Set a clear materiality threshold.


For example, with our capital asset policy, I decided that only individual items over $5,000 will be added to the balance sheet as fixed assets and depreciated over a reasonable period. Laptops and equipment under $5,000 are expensed directly. It just wasn’t worth our time and energy to keep track of 100+ computers (note, this doesn’t prevent the IT team from having proper inventory controls for these assets). Choose your battles.


Priority #4: Educate your organization and build partnerships

At high-growth startups, spending tends to be decentralized. Employees are empowered to spend what they need to get their job done. To build a healthy spend culture, it's especially crucial that you 1) create and enforce controls and 2) educate the employees about what is allowable and what is not. 


For instance, in Ramp’s early days, employees coming into the office used to expense their lunches. However, most were unaware that lunch expense was a taxable benefit that impacted their W2s. The issue also raised a question of fairness because remote employees didn’t get the same benefit. I worked with our People Ops and Product teams to create and publicize our T&E policy, which was then enforced by Ramp’s platform. Now employees clearly understand what types of expenses would be covered by the company and the kind of documentation they need to provide.

"How do you combat the 'bad cop' stereotype? The best method I’ve found is to seek out allies within the company"

How do you combat the “bad cop” stereotype that comes from enforcing policies? The best method I’ve found is to seek out allies within the company. People Ops and Legal teams are great partners if you need to develop new policies, evaluate existing ones, and ensure compliance. Department heads also wield great influence; partner with them on strategic projects and ask for their help in return to educate their teams.

Build trust from the get-go by letting people know that you’re here to help. When I meet people, I like to tell them that my first priority is to safeguard the assets of the company—and the best assets of any company are the employees. I explain maintaining a healthy cash flow is always at the top of my to-do list because it ensures that employees get paid on time.


Priority #5: Future-proof your accounting team

As you get to know your organization, gather inputs on how you should build out the finance function. But don’t make the mistake of building your team for near-term needs—you need to be building the team for the future.

"You need to be building the team for the future. Ask execs where the company is going in 2, 4, 6 years"

Ask execs where the company is going in 2, 4, 6 years. What’s the eventual exit strategy? If the team is planning to IPO vs acquisition, that has a big impact on who you should hire. You need to bring in people with controls and audit experience. 


Accounting experience is not enough; your team members need to be well-rounded. Consider the teams that you will be partnering with and where people are located. People Ops needs payroll specialists with broad knowledge of local and international regulations. Engineering needs someone who can partner with them to create reporting tools and systems. Given the focus of Ramp, our Product team needs finance specialists who can advise them on accounting flows within the platform. Good collaboration skills are key. 


100+ days in 

It’s been 157 days since I started and we’ve made tremendous progress across these 5 priorities. We’re on track to deliver our first set of audited financial statements. Our accounting books are pristine. We’ve reduced the time it takes to close our books from 4 weeks to 10 days (Ramp’s accounting automation features have been pivotal). I have weekly meetings with our Engineering, People Ops, and Product teams to work on critical pieces of our accounting roadmap. 


We’ve made key hires and have plans to keep expanding the team. Interested in joining? Check out our careers page—we’re looking for folks with ERP business strategy, and payroll experience in particular. Not only will you get to join a company that is scaling fast, but you’ll also get to shape a product that is transforming how finance teams work.

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