Why is my Startup growth stalling ?
February 13, 2017
Top 10 tips for an effective digital transformation
February 16, 2017
Show all

SAAS – the four letter word which can turbo-charge your start-up

Ratna Chengappa, CFO, interim.team

SAAS – the four letter word which can turbo-charge your start-up

Many start-ups commence trading using spreadsheets to manage their core finances. It is often the best way in the beginning, but in my experience, there is a tipping point after which no amount of spreadsheet wizardry will compensate for having a good financial management system.

When I joined interim.team, I was confronted with exactly this. I started at a time when there were just a few transactions per month and so the spreadsheet which had been used to kick-start this rapidly growing company, adequately met the needs of the time. And being a Google sheet, it was “cloud-based” so it provided some of the basic benefits of a SAAS product. I constructed a “better” Google spreadsheet to get additional clarity and this allowed me to improve operations. However, as the business grew rapidly, this had a foreseeable life-cycle of but a few months.

The breaking point hit us not long after. The system which had previously worked perfectly well for hundreds of simple linear transactions, finally reached its limit with one specific requirement. It was the most demanding customer project to date, with a larger team, multiple currencies, increased billing frequency and differing international taxation settings. Accurate manual reconciliation was time consuming and becoming near impossible, resulting in delays and anomalies. In the fullness of time this would have resulted in some financial loss, irritated suppliers and unhappy customers.

I knew we had to upshift to something better, and fast – we had reached the limits of this approach.

Before one invests in software to address a specific problem, it is important to assess what benefits one is looking for. I found that apart from standardising all core financial operations, the hidden jewel in the crown was to get enhanced reporting capabilities. Having access to real-time reporting, with detailed on-demand drill-down analytical capabilities, can turbo-charge an enterprise when used effectively.

Sure, it is possible to do some of this without specialised financial software, and I acknowledge that many are perfectly happy with that approach. However, when it comes to gaining real business insight and making informed decisions, without the right tools it feels like groping in the dark, or at best, doing a lot of manual computation (which can be less accurate).

In our case, it is vital for us to analyse profitability regularly, not just across the enterprise, but also per individual, per partner, per team and per project, over different time periods and from different perspectives. This was near impossible with a spreadsheet (or at best, very time consuming and error prone), but once we had the right tools, we were suddenly empowered to make well-informed decisions based on accurate data, which in turn allowed us to confidently optimise the business model to maximise profitability.

So how did the implementation go? Having enjoyed a long career in the ERP industry, I knew we needed a simple cloud-based product which would suit a fast-moving start-up. One which was cost-effective and quick to implement, but also had the capability of scaling as the business grew. I was happy to quickly discover a multitude of excellent and cost effective SAAS offerings which fitted the bill. While there are many on the market, I limited my evaluation to the following products: FreeAgent, Freshbooks, SageOne, Quickbooks, Xero and Zoho.

Broadly speaking, they all do the same thing and I am sure one can get equally satisfying results with any of these products, but all things considered, we decided to try http://www.xero.com. It seemed to tick all the boxes and matched our company’s ethos: “urgency, clarity, delivery”.

The project was a resounding success – within just a few days (and albeit a few late nights!) we were able to migrate and reconcile all the historical bank data, setup invoicing, and most importantly, structure the organisational model, chart of accounts and tracking codes to deliver precise reporting and drill-down analytical capabilities. Once these aspects are setup correctly, the product takes care of all the intricate computations and provides enhanced financial visibility with just a few clicks. As your accountant can also use the same tools to perform routine filings, you may find you can reduce your annual accounting costs too, as it is a lot less effort for all involved.

After several months of successful operation, a financial year end and numerous insight-driven strategy shifts to improve profitability (which would have been impossible with even the “better spreadsheet”), I can safely say that we are delighted. Moving to a professional SAAS product solved all the issues previously faced and delivers 99% of what is needed.

The missing 1% is minor and not worth worrying about. For example, billing multiple currencies on a single invoice would have been handy, but given this is a simple SAAS solution and not a complex built-to-order ERP implementation, none of these minor gaps are show stoppers. I find that as the product evolves, some of these gaps are addressed. Or, one may decide to use a bolt-on product from the add-on eco-system if you need more intricate functionality – there are some pretty impressive tools out there, covering everything from CRM to Workflow.

Apart from the obvious tactical benefits, we have experienced an improvement in liquidity as we can invoice far more efficiently now and have fewer late payments. Most of the time, the system’s automated reminders are sufficient to initiate settlement of overdue customer invoices, so there is little need to intervene or escalate.

So, to summarise, the great parts of using SAAS packages like this are:

  • Fast implementation

  • Cost effectiveness

  • User friendly and simple interface

  • Cloud and mobile readiness

  • Good standard reporting tools

  • Better business insight

So, all in all, we are happy to have streamlined and standardised our financial operations. I would recommend any start-up or SME to upshift to SAAS solutions, sooner rather than later.

If you are grappling with similar business or technology issues on any scale, get in touch on hello@interim.team or +44 (0) 800 246 5735