Your business has grown. Has your finance function kept up?

The experiences described in this article are from Gayle’s previous roles, not Clear Consulting Partners client case studies.

When you're starting a business, the finances can be relatively straightforward. You know the customers, you're across the big expenses, and your bookkeeper keeps Xero ticking along. There might be a spreadsheet or two. Nothing particularly alarming.

Then the business grows. Five people become 15. Then 30. There are more customers, more transactions, more decisions and considerably more questions about where the money is going.

But the finance function can still look much the same as it did five years ago. Same person, same reporting, same approach. Just with a much longer to-do list.

Nobody deliberately decides that the financial information should become less useful as the business gets bigger. It tends to happen gradually, while everyone is busy doing their actual jobs.

You find out how last month went when this month is nearly over

If the monthly accounts aren't ready until the middle (or end) of the following month, the numbers might be accurate. They're just arriving a bit late to help with some of the decisions you've already made.

I've worked in businesses where getting a clear monthly result was a major exercise, and others where reporting wasn't really happening at all. Establishing a consistent close, clear responsibilities and a sensible reporting timetable made a huge difference. In one business, we got month-end consistently completed by the third business day.

The point wasn't to win a race to close the books. It was to give management information while there was still time to do something with it.

Revenue looks terrific. The bank balance is less enthusiastic.

You win another customer. Sales are up. Everyone's flat out. So why doesn't it feel as though the business is making more money?

It might be that the new work needs extra staff, overtime or subcontractors. Maybe pricing hasn't kept up with costs. Maybe one service is doing brilliantly while another is quietly absorbing the profit.

I've seen businesses focus heavily on the headline revenue figure without having a clear view of what individual services, teams or customers actually contribute. And it's very difficult to improve profitability when you don't know what's driving it.

A useful management report should help answer questions like: Which work makes us money? Where are costs changing? What should we be doing more of, less of or differently?

If the answer to every question is 'I'll get back to you once I've pulled a few things together', there's probably room for improvement.

Your bookkeeper has become the entire finance department

The person who started by keeping the accounts up to date is now handling payroll, supplier payments, debtors, reconciliations, reporting, cash flow questions and whatever else lands on their desk before lunch.

They might be brilliant at their job. But being excellent at bookkeeping doesn't automatically mean they should also be responsible for financial modelling, commercial analysis, controls, system design and advising on every business decision.

At some point, even the most capable person needs either more capacity, more support or access to different experience. Sometimes all three.

And no, adding 'strategic finance' to their job description doesn't magically create another 15 hours in the week.

Everyone has a number. They are just not the same number.

Ask how the business performed last month and you might get revenue from the sales system, expenses from Xero and a forecast someone updated on Friday. Each number has a perfectly reasonable explanation. Together, they don't tell a particularly clear story.

Financial reporting becomes more valuable when everyone agrees what they're measuring, how it's calculated and where the reliable information comes from.

That doesn't mean building a dashboard with 47 charts and a colour for every possible outcome. It means a handful of meaningful measures, available consistently, that help people make decisions.

Personally, I'd rather have five numbers everyone understands and trusts than 50 that need a meeting to explain.

Before you hire another person or buy another system…

It's tempting to jump straight to a solution. Another finance hire. Another reporting platform. Another spreadsheet (because clearly what we need is one more spreadsheet).

Sometimes you do need more people or better technology. But first I'd want to understand what's actually missing.

Is the team short of time, or short of senior experience? Are reports late because of the workload, or because nobody has agreed who owns the close? Is the information unreliable, or is it simply being presented in a way that doesn't answer management's questions?

Those are different problems. They shouldn't all get the same expensive answer.

What does the business actually need?

Not every growing business needs a full-time CFO. Equally, not every finance problem can be solved by asking the bookkeeper to do a little more.

Sometimes the best next step is a short review of the finance function: what information the business needs, what's currently produced, where the bottlenecks are and whether the team has the right support.

From there, the priorities might be a better month-end routine, clearer cash flow forecasting, more useful management reporting, some coaching for the existing team or help with a specific project.

It doesn't have to turn into a six-month transformation program with a steering committee and an impressive slide deck. Unless you really enjoy steering committees.

A question worth asking

If your business has doubled in size, has the way you manage and understand its finances changed too?

Or are you expecting the same people, reports and processes to keep doing the job, just twice as hard?

Growing a business is challenging enough. Having reliable information about how it's actually performing shouldn't be another mystery to solve every month.

More articles

• We're Making a Profit. So Why Is There Never Any Money in the Bank?
• 10 Signs Your Business Needs More Than a Bookkeeper or Accountant
• Go Slow to Go Fast: The Hidden Cost of Just Getting Things Done
• Are you spending time, or investing it?