November 4, 2021
3
MIN READ

The 5 must-have tools for startup and scaleup CFOs

Finance

The startup CFO relies on the delicate balance of skill, processes and - the subject of this blog - great SaaS tools.

by
Grace Wildsmith

When a startup has matured to the point where roles, responsibilities and operations need to be formalized, the startup CFO becomes the beating heart of the business.

That’s an identity note on startups.

Compared to traditional CFOs, the startup CFOs typically have a very distinctive role from the classic number-cruncher profile.

Beyond establishing core financial processes and reporting requirements, the startup CFO needs to be close to the founder and know the business well (In fact, 25% of startup CFOs make it to CEO). They typically manage the people and legal functions, recruiting top talent, managing the funding runway, and literally keeping the lights on. 

So how do CFOs arm themselves for such a journey?**

The short answer is by building a great team, arming themselves with powerful software and building smart processes. But we want to talk about software.

Software tools are the modern-day weapons that enable CFOs to reach their goals and accomplish their objectives. Today, those are SaaS tools, and these are the top categories any startup CFO has on their radar: 

  • People and pay management
  • Equity management  
  • Accounting
  • Billing & subscription management
  • Financial planning and analysis

The thing is, as we've written before, there are tons of SaaS tools out there to choose from and it’s becoming an increasingly saturated market. But which ones are truly the game changers?

To find out, we’ve chatted with several of our customers’ CFO’s, to pull together the definitive list of must-have tools for startup and scaleup finance teams.

People and pay management**

If a finance department is the beating heart of an organization, talent is the oxygenated blood that keeps the body alive and healthy.

Fundamental tasks like payroll management, onboarding and compensation are often overseen by a startup’s CFO. For staff to remain productive and engaged payroll must be completed on time and compensation fair and reflective of their work. Get these wrong and a firm risks culture issues and employee attrition.

Good talent processes pay dividends, so don’t cut corners – especially when you’re growing quickly. Look for tools that save you time by automating complicated processes and give you and your employees visibility across a range of data sets. 

Cledara’s top pick: Bamboo HR

At Cledara we recently brought on Bamboo HR for all our people needs. The software covers everything from onboarding new employees and analysing people data to managing the payroll and compensation. 

Alongside a payroll function, its compensation offering allows you to track hours and request time off, so staff can be fairly remunerated for their time. This is particularly useful for any rapidly growing startup where overtime can easily go unnoticed, resulting in higher employee churn and burnout.

Meanwhile, its data and analytics function provides a centralised data log, so information is not only stored safely but can also be used to create HR reports instantly to help make data-driven resourcing decisions around workflow. 

Pricing for BambooHR varies and is available upon request. Companies can request a free quote here.

Honorable mentions: Human resources software solutions and outsourced service provider ADP, the cloud payroll solution BrightPay and the automated payroll service for small businesses Gusto.

Equity offers** 

To attract the best and brightest, a common form of compensation offered by startups is equity. 

Failure to manage stock options correctly can have huge consequences for both shareholders and the company, draining resources and creating internal bottlenecks.

To avoid this, startup CFOs use a cap table management platform to keep tabs on contracts, shareholder registers and employee shares. 

Cledara’s top pick: Capdesk

Capdesk allows founders, employees and investors to digitize their equity, options and warrant transactions on one centralized platform. 

The tool issues equity online, generates IFRS 2 and GAAP-compliant share-based payments reports and automatically lapses contracts if an employee leaves before the end of the agreement. Its employee dashboard means staff can track their shares and watch their value increase as the business grows. Its partnership with the crowd-equity platform Seedrs also gives shareholders easy access to the booming secondaries market.

Prices for Capdesk’s services start at £50 a month for small startups. “Growth” and “Scaleup” firms need to request a quote. Pricing information can be found here.

Honorable mention: Caps management software Carta.

Accounting**

Accounting has come a long way from the days of manually entering employee expenses, managing corporate cards, and sending out client invoices. Now payments are processed instantly and all of the accompanying tax paperwork generated in minutes.

Finance teams at this stage of growth are looking for solutions that are scalable, user-friendly, and have pricing scaled to budget tiers. They should also support automation and integration efforts.

Cledara’s top pick: Xero

The simple and user-friendly design makes Xero the go-to accounting software for any small to medium sized business. At Cledara, many of our customers are Xero users.

Xero allows you to check your bank balances, process expenses, raise and pay invoices, and create customised reports - including cash flow statements, profit or loss accounts and VAT return - instantly.

Accessible from any device, the software also integrates with other electronic payment apps such as PayPal, GoCardless and Stripe.

Most importantly, Xero is built for scaling, meaning that the packages can comfortably accommodate your progression and growth so you don’t get stuck down the line.

Xero’s starter package designed for sole traders, new businesses and the self-employed costs £12 a month, while its premium offering is priced at £33 a month. A full list of prices can be found here.

Honorable mentions: Cloud-based accounting software Freshbooks and the business management and accounting software Netsuite for later-stage scaleups. 

Billing & subscription management**

Billing and revenue management are cornerstones for driving sustainable growth, especially for an organisation that relies on SaaS subscriptions to drive revenue.

To maximise sales and drive customer satisfaction, finance teams ensure that each booking is completed correctly and takes into account any discounts or other specific obligations.

Cledara’s top pick: Chargebee

Chargebee is a one-stop-shop for all subscription management needs. It offers support across the entire subscription life cycle, including recurring billing, invoicing and trial management. 

Not only can you modify pricing, provide coupons, and conduct campaigns via its platform, the software also enables you to interact directly with subscribers to build strong customer relations and reduce cancelations. 

Chargebee offers monthly and annual pricing depending on revenue, in multiple currencies. The platform is free to use for early-stage startups with a revenue of under £80k, but for larger scaleups monthly fees range between £379 and £445. A full list of prices can be found here.

Honourable mentions: Paddle, the revenue delivery platform for SaaS 

Financial planning and analysis**

A startup CFO’s duties go beyond those in a ‘traditional’ company. They’re key players in the strategic planning of how the business will move forward. 

An in-depth understanding across budgeting, planning and forecasting is used not only to make major decisions such as when to expand internationally, but also to generate fresh investment and keep investors in the loop.

Relying solely on spreadsheets and manual data entry, accurate calculations could take weeks to send over to investors. This can look unprofessional and even damage relationships. 

Cledara’s top pick: Metabase

Metabase is a particularly powerful tool that can transform how startups interact with their investors and the firm’s growth leaders. This tool collates insights from across the business, in an easy-to-read format that is ready to be used in either an internal board meeting or an external catch up with a VC. 

With just a few clicks, a CFO can pull together easily digestible financial reports for investors that incorporate revenue, customer churn, customer lifetime value and employee data. 

Services range from $85 a month to $500, but businesses can access an open-source “manage it yourself” version of Metabase for free. A full list of prices can be found here.

Honourable mentions: Collaborative financial planning and automated performance analysis tool Abacum.

How startup CFOs can balance priorities**

The role of the startup/scaleup CFO is far-reaching, and the tools on this list can support leaders in their long-term growth efforts. 

A key challenge is for startup CFOs to balance the need for quality tooling with the effort to keep SaaS spend in check. As the financial gatekeeper of their organisation, they have the ability to make these decisions, select their tools, and steer the company in the right direction.

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Grace Wildsmith

Grace is Cledara's in-house financial accountant, who thrives in businesses with fast-paced growth. Grace's role is to provide insights to the wider business, she has been heavily involved in cross-functional projects stretching across the introduction of global benefits, financial modelling and KPI reporting procedures.

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