Strategic Finance: Unlocking Growth Through Your Finance Function

Summary:
Creating a finance function that is a growth enabler, not a bottleneck: the theme of the latest webinar from our Tech & High Growth experts.

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Creating finance functions that are growth enablers, not bottlenecks: the theme of the latest webinar from our Tech & High Growth experts.

Tom Watts, Associate Partner, and Nick Moran, Senior Strategic Finance Manager, led the session, drawing on their experience delivering finance, accounting, and commercial advisory support to some of the UK’s most successful startups and scaleups.

It was a gem-packed hour, so we’ve cherry-picked the highlights. If you have any questions for the team, we’d love to chat.

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Firstly, What Is Strategic Finance?

Strategic Finance is “the strategy and financial support required to scale your business by putting the company’s growth and long-term vision at the heart of the finance function.”

Examples include:

• Defining and setting KPIs to track and course-correct the organisation, and building data-driven financial models and scenario plans.
• Understanding your company’s growth ‘playbook’ – including markets, products, geographies, and acquisitions.
• Developing strategies for raising capital and preparing for M&A activity, leveraging a strong network of investors.
• Employing data and business intelligence expertise.
• Ensuring accounting and compliance standards are robust.
• Evolving systems and processes to improve internal and external operations.

Strategic Finance covers a wide range of business-critical areas. But when juggling day-to-day management, ad-hoc projects, audits, due diligence, fundraising, and more, it can be hard to focus on it. Tom and Nick shared their tried-and-tested, actionable tips.

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The 5 Pillars of Strategic Finance

#1 Key Financial Reviews & Data Preparation

“Having a strong financial review process and month-end close process is the core foundation for all the work that comes off the back of that,” the duo stated.

Clean, accessible, and trustworthy data is imperative. Without the right processes, support, and team to produce it, exploring other avenues for improvement is critical.

This data underpins strategic initiatives like fundraising, market strategy, exits, and building trust. Flash reporting and streamlined month-end processes can enhance clarity, while maintaining reliable dashboards of key metrics ensures decision-making is based on real-time information.

“One area where CFOs have issues is when they’re still using Xero, NetSuite, or another ERP system, while metrics like customer churn, average contract value, or sales data are stored in spreadsheets,” commented Nick. “We often see a lack of checks of that data back into the financials each month to ensure it all stacks up.”

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#2 Prepping for Investment in a Volatile Market

From Brexit and COVID to inflation and international conflicts, the investment climate has become increasingly volatile. These changes necessitate preparation for uncertainty.

Key questions to address:

• If you don’t raise the next round, what’s your plan?
• What alternative funding options are available?
• How will you continue pushing forward as an organisation?

Having a financial model that enables strategic planning and scenario analysis is essential.

“When raising funds, align your business ambitions with those of your VCs,” Tom explained. “Show your plans can meet their expectations through solid, reliable financial modelling.”

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#3 Building Financial Models to Win Over Investors

Best-in-class financial models withstand scrutiny, showcasing growth metrics like revenue, customer acquisition, and margins.

“Thinking about your 36-month projections and tracking them against actuals is critical,” Tom advised. “Partnering with the C-suite ensures alignment between your story, forecasts, and fundraising deck.”

Key tips for financial modelling:

• Keep it simple – avoid over-complicated spreadsheets with numerous tabs and formulas.
• Focus on unique revenue and profitability drivers.
• Regularly update models with real-time data and forecasts.

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#4 Audit & Due Diligence Made Easy

While not immediately associated with Strategic Finance, audits and due diligence can impact small finance teams significantly when underprepared.

Key considerations:

• Plan for your first audit, which includes opening balance audits.
• If your business holds significant stock, ensure auditors attend a stock take to avoid qualification issues.
• Maintain a repository of clean, updated management accounts and historical data to streamline due diligence requests.

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#5 Systems & Processes That Scale With You

From implementing software to evolving internal and external processes, scaling systems effectively is a cornerstone of Strategic Finance.

“We see a lot of scaleups using Xero longer than expected, thanks to tools in the ecosystem that extend its utility,” Nick noted.

For businesses moving to more advanced platforms like NetSuite, Tom advised taking a phased approach:

1. Replace your current systems in phase one.
2. Introduce advanced features in phase two.

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Need a Helping Hand?

Whatever your stage, our Strategic Finance team specialises in implementing commercial solutions to drive your growth strategy.