Startups, particularly those in their early stages, often operate on tight budgets and even tighter profit margins.
In such conditions, financial management can become a daunting task. Without the right tools, finance leaders in startups may struggle to keep a finger on the pulse of the company's financial health, manage expenses efficiently, forecast and plan for the future, and maintain compliance with tax and regulatory requirements.
In this post, you will learn about some of the best tools that can help finance leaders at startups meet these challenges head-on.
We've divided them into four categories: Financial Planning and Analysis, Expense Management, Cash Flow Management, and Compliance and Reporting. For each category, we provide examples of tools that have been well-received by finance professionals.
Financial Planning and Analysis
Financial planning and analysis (FP&A) is the cornerstone of any finance leader's role. It involves budgeting, forecasting, and tracking key performance indicators (KPIs), among other tasks.
For budgeting, consider tools like PlanGuru and Adaptive Planning. PlanGuru offers budgeting, forecasting, and financial dashboard capabilities, while Adaptive Planning is known for its comprehensive suite of FP&A tools.
When it comes to forecasting, Vena Solutions and Float come highly recommended. Vena Solutions offers a full suite of FP&A tools, including robust forecasting capabilities, while Float is particularly well-regarded for its cash flow forecasting features.
For KPI tracking, LivePlan and Fathom are excellent choices. LivePlan offers business plan software that includes KPI tracking, while Fathom allows for in-depth financial analysis and reporting. As far as general reporting and business intelligence is concerned, options include Power BI, Looker, Metabase and Equals.
Expense Management
Managing expenses effectively is critical for maintaining profitability in a startup. This involves tracking expenses, managing online purchases, and processing invoices efficiently.
For expense tracking, try apps like Expensify and Dext. Expensify allows for receipt scanning and expense reporting, while Dext automates data entry from receipts and invoices. Spendesk another popular option.
If you often make online purchases, consider using virtual cards from Brex or Ramp. These provide enhanced security and allow for better control over online spending.
For invoice processing, Bill.com and Tipalti are popular choices. Both these platforms automate the entire end-to-end payables process, making it faster and more efficient.
Cash Flow Management
Ensuring a smooth cash flow is another crucial task for finance leaders at startups. This involves forecasting cash flows, scheduling payments, and optimizing cash flows.
For cash flow management and forecasting, consider using Pulse, Agicap or Dryrun. Pulse is known for its simple, intuitive interface, while Dryrun offers scenario-based cash flow forecasting.
For payment scheduling, check out Melio and Routable. Both these platforms make it easy to schedule and track payments.
To optimize cash flows, consider using platforms like Trovata or C2FO. Trovata offers real-time cash visibility and forecasting, while C2FO is a platform where suppliers can offer discounts to customers in exchange for early payment, thereby optimizing cash flows for both parties.
And to help make your cash flows more stable and predictable, check out Bound (that's us by the way :)). You can minimise exchange rate risk and loss by using Bound's currency hedging technology.
People and Pay Management
For things like onboarding, compensation and payroll management technology to look into includes Bamboo HR for wide variety of needs, as well as BrightPay and Gusto for easy payroll.
Equity Management
Startups often use equity as a key incentive to attract top talent. However, not handling stock options well can lead to significant issues for both the company and its shareholders, such as wasted resources and operational inefficiencies.
To prevent these problems, Chief Financial Officers (CFOs) at startups typically rely on a cap table management system to monitor agreements, registers of shareholders, and employee stock ownership.
Capdesk / Carta and Ledgy are some good options here.
Payments, Billing and AR
These might be one of the most important tools since they are key to brining the money in :). Usual suspects to think about here are Stripe, Chargebee and Upflow.
Compliance, Tax, Accounting
Finally, finance leaders at startups need to ensure compliance with tax and regulatory requirements and generate accurate financial reports.
For compliance management, consider using software like Workiva or Diligent. Workiva offers a wide range of risk, compliance, data management, and reporting solutions, while Diligent is known for its governance, risk, and compliance tools.
For tax preparation, TurboTax and TaxJar are popular choices. TurboTax offers a range of tax preparation software, while TaxJar specializes in sales tax compliance. Anrok is often seen as a good option for things related to sales tax.
For accounting and related financial reporting, consider using QuickBooks, Xero or Netsuite. All these platforms offer comprehensive accounting and financial reporting features.
Next Steps
Now that we've covered some of the best tools available for finance leaders at startups, it's time to take the next step. Evaluate your startup's specific needs, and then explore these tools in greater depth.
Most of them offer free trials or demo versions, so you can test them out.
