6 do's and don'ts for managing your finance team
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It isn’t just the talent of your finance team that determines the success of your organization. The way it’s structured can also play a major part in how your team scales, particularly in today’s workplace where the finance function has expanded in both scope and importance.
We spoke with some of the industry’s most innovative leaders on our FinOps Today podcast about how they’ve structured successful finance teams. From establishing a dedicated FinOps function to deciding on an accounting solution that works best for them, we’ve identified the most common themes that these industry leaders have leaned on to help grow their business. Keep reading to learn some of their “dos and don’ts” of structuring a finance team.
Don’t discount the value of a small, but efficient team
The finance function at promotional product distribution platform provider SwagUp only has six employees, including one director.
“That is just recent,” said CFO Artem Marshkov. “We got to $22 million [in revenue] with two people in finance. We run very lean, and finance has been on the back burner. It’s all thanks to SaaS.”
1Password's finance team is larger than SwagUp's, but still small relative to its size. They are still building out the finance team and have achieved an $6.8B valuation with 30 people on the team (as of the end of last year, which also includes data analysts), said CFO Jeannie de Guzman.
“In the beginning, when you don’t have enough people, you still find ways to get things done,” she said. “It’s not 100%. A lot of things, after a year or two, you have to clean up.”
It clearly isn't the size of your team that determines overall success. With a small but agile team, you can still achieve outsized results.
Do create a FinOps function
Mashkov describes the FinOps function as one of three branches of government within the finance department.
“Financial operations is the present,” he said. “Accounting is the past, and FP&A is basically the future. Accounting is also the controls and checks on the other teams.”
SwagUp also has a separate purchasing team within operations as it is core to the company’s business model.
“They don’t care so much about the cost, as they do about the efficiency or the order going through. We want to make sure that our margins are good overall. But for us, purchasing is an ops function, and it’s all about how quick and efficient it is.”
While it’s important to build out the FinOps function, it’s also important to make sure that various departments work together and do not remain siloed.
“There are a lot of synergies in having accounting, finance and capital markets, including FinOps, the operational aspect of how we run our business, all under one umbrella because there’s a lot of cross-functional collaboration that goes on,” said Tom Egan, CFO of real estate firm DivvyHomes.
Don’t worry about finding a single right answer for what you should outsource
The right solution for your team will depend on your specific needs and the talents of your staff. As an accounting firm, for example, Kruze Consulting does all its taxes in-house. The firm’s tax team has more than a dozen members, who have expertise in federal and state income tax returns, R&D filings, employee retention tax credits, and anything else that comes up.
Potato farm Walther Farms, on the other hand, outsources its tax prep due to the specific needs of an agriculture business.
“We have a CPA firm that a big portion of what they do is agriculture, and they focus on how to support clients like us that have these unique things, and a unique entity structure, just with the age of the organization” said CFO Josh Reeves. “Being around almost 80 years, we have some extra entities or disregarded entities, but still have some reasons to keep them around for tax reporting purposes, and then just more reporting requirements in having all those entities as well.”
Do lean into technology
Incorporating technology into the finance function made sense for Reeves who comes from an IT background.
“There’s a lot of similarities between the two parts of the business,” he said. “They’re both very mathematical and data oriented. So I was fortunate that even still in the technology side of things I was able to support and help the finance team, building new financial reports and automating different parts of the business to help them do their job better.”
Reeves’ experience has also helped him make decisions about the finance team's software stack and oversee its integration. Walther Farms’ IT manager also helps the finance team with many of its tasks.
“They work on the back-end stuff, but then also more on the front-end building out some of the financial reports and operational reports from our shipping software that we use and building some of the automations that we’re using to move data back and forth between our accounting and finance systems, and systems like Ramp, and bringing that data into our accounting package.”
Using technology to make the finance team more efficient is among the top priorities for Egan at DivvyHomes.
“And to improve our internal controls as we start to work towards accessing public markets,” he said. “I think it’s just something that’s important for us to be able to do. And, frankly, it will be much more scalable over time.”
At 1Password, finance automation is also an important focus for Guzman.
“Something we’re working on internally is to say ‘No, we want to automate,’” she explains. “We want to make your lives easier. We don’t want you to be doing that kind of work.”
Don’t feel tied to legacy corporate cards
“They’re not built with a startup accounting firm in mind,” he said. “We need to have access to 600 different clients, right? In those legacy client portals and legacy integrations… the support is horrible. Those are all things that get in our way that make it difficult for us to help the founders that have the best information to make the best decisions.”
Do revisit your structure over time
The needs of any company, but particularly startups, change as the company matures. Having the flexibility to change the structure of the finance teams to meet those evolving needs is important to success.
“We have a lot of the leadership in place to take advantage of both the opportunities that we have and the challenges that we’re going to face, and I’m excited about that journey,” said Patrick Corker, VP of Finance & Treasury at Circle. “Now, it’s about filling out the teams underneath them… As we build out the team, we can create tighter swim lanes, so figuring out where people go and giving them an opportunity to really shine within our organization is a big part of what I do.”
While your roadmap for building out FinOps at your organization will depend on your company’s age, goals, and culture, the above best practices can help you understand how other startups have found structural success. Looking for a partner to help take your FinOps team to the next level, through automation that provides speed and actionable insights? Sign up for Ramp below, and an expert from our team will get in touch.
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