Laying the Groundwork: Setting up Your Key Finance Systems


Creating finance systems for your company may not be high on your list. When they’re just starting out, most startup founders don’t give much thought to the financial aspects of growing their business. That’s a mistake.

Financial infrastructure isn’t just about tracking expenses and paying bills. It’s selecting the right tools and putting into place the systems and processes that will not only help you to manage all of your finance needs — but also position you to take your company to the next level.

While each company is different and has unique financial needs, there are some things that all founders should consider when creating key financial systems. Perhaps most importantly, you need to take into account your current situation. Your financial strategies will be vastly different depending on whether you are pre- or post-funding.

Pre-Funding Financial Strategy

Prior to funding, your company is in a state of serious development. Keep things as simple and low-cost as possible as you set up your basics. Here are a few key items for you to focus on now:

  • You’ll need a simple accrual-based accounting structure with reporting processes. This will act as the foundation for your financial infrastructure.
  • Open a business banking account. You need to set up a workable system for accounts payable that includes segregation of duties and manual checks.
  • Separate personal and business expenses. An obvious step, but one that many entrepreneurs skip.
  • Keep records of receipts and invoices (either physical copies or in the cloud). While the IRS regulation is $50, it’s easier just to keep them all.
  • Be aware of tax obligations. Future tax trouble can be avoided, if you take the right steps now.
  • Collect payments. In the early days, you’ll want to use Stripe, Paypal, or checks. But as your company matures, you’ll want to look into payment gateways and authorize.net, Intuit, and Bank as well as SAS for recurring payments, like —Recurly.
  • If you have payroll to manage, again, you’ll want to keep it simple. For now, you should just be looking for a payroll provider like —Paychex, ADP, Intuit. And be mindful of payroll taxes.
  • Keep on top of your stock records from the outset. Proper stock administration management will save you from future confusion down the road.

Most important of all: do not do your own accounting. I repeat: Step away from Quickbooks…quick! Hiring a professional accountant is a worthwhile investment that will save you time, infinite hassle, and, down the road, money.

Post-Funding Financial Strategy

Post-funding, your financial strategy will shift and deepen. You’ll still need to focus on the basics , but you’ll face new financial concerns as well. Now that you have investors, they will want to see clean financials. Starting clean saves you the herculean task of future clean-up, and allows for accurate tax reporting. And this isn’t just a nice-to-have: it’s necessary for a 409A valuation. Post-funding you should:

  • Hire a professional to help you with your operational and project accounting as well as longer-term financial strategies around forecasting and to help you to establish the processes for tracking costs. In other words, outsourcing your bookkeeping is not enough; you need a senior finance professional to help with strategy.
  • Maintain compliance by reporting financial statements in accordance with generally accepted accounting principles (GAAP)
  • Cash-flow forecasting and cash management. Controlling your cash and keeping a low burn rate is essential.
  • Figure out a larger scale payroll solution. Now that you have funding, it’s a practical choice to seek out a full-service HR solution such as Algentis, TriNet although this will also require greater awareness of your HR strategy.
  • Everything that you do from day one sets the foundation for future growth. The steps you take to create your finance systems will reflect on your company’s financial standing and shape its growth. —Most importantly — it gives you a better understanding of your business: your current situation, key milestones, and funding objectives.


David Ehrenberg is the founder and CEO of Early Growth Financial Services, an outsourced financial services firm that provides early-stage companies with accounting, finance, tax, valuation, and corporate governance services and support. He’s a financial expert and startup mentor, whose passion is helping businesses focus on what they do best. Follow David @EarlyGrowthFS