When startups expand beyond the seed stage and raise significant venture capital to accelerate growth, resources in finance often take a backseat to sales and marketing.
Jon Anderson, CFO of Bozeman, Montana-based B2C clearing and payment provider Payouts Network, talks about how he grew the finance function of his Series A company as it rapidly expanded, and what CFOs at other startups can learn from his experience.
What key lessons can other early-stage CFOs take away from your experience?
Series A is a special time in a company's lifecycle. The company probably has a product and has some interest in the market. They are often led by founders or visionaries who have understandably invested most of their limited resources into product development and early efforts toward sales and marketing. Fundamental functions such as finance, operations, risk, and human resources often lag behind.
Quality financial and reliable operational data are difficult to come by, and the CFO role is often filled by senior accountants who rely on unsophisticated infrastructure. With that in mind, there is a lot to do to start building a solid foundation and weather the growth and challenges that come with this stage.
First, don't wait to build the financial infrastructure. Align financial and operational data with your business, products, and plans. Clarify cash position and burn, sales pipeline and attributes, margins, unit and customer economics, and the KPIs that drive your business.
This level of insight helps management make informed decisions and manage capital effectively. Each of these components directly impacts a company's ability to succeed. It requires you to roll up your sleeves and dig into the details, but it doesn't have to cost a lot of money.
Second, build relationships, processes, and collaboration. Many CFOs tend to stay in their lane, but collaborating across departments is essential at this stage. Companies are still maturing, and data is just data until it becomes actionable information.
CFOs can provide insights that inform strategy, highlight risks, and help course-correct in real-time. This can only be achieved by building trust and collaboration across the leadership team. Transparency and process go a long way in increasing alignment and clarity.
Finally, concentration is essential. In a startup, it's easy to get distracted by the shiny things. But with a lean team, limited capital, and a viable product, it's important to stay focused on the North Star. From infrastructure to integrity to transparency, all of the above will help you stay on track.
How can you go beyond traditional reporting and strategically partner with Payouts Network's board of directors to not only ensure financial oversight, but also proactively advance and support the company's growth goals?
The composition and dynamics of a Series A company's board of directors are fundamentally different from those of a later-stage organization. At this stage, the board often includes the founders in addition to the major investors who have acquired a significant stake. At Payouts Network, we are fortunate to have a board of directors comprised of strategic investors and experienced operators – individuals who understand the challenges of building and growing a business.
One of the benefits of this stage is the natural adjustment for growth. The Series A investors made a conscious choice to support the company's current strategy. They may bring their own opinions on how to scale, but unless there is a major disconnect, gaining support for an initiative is usually smoother. This alignment facilitates faster, more confident decision-making.
Yet transparency is the foundation for sustained coordination. Clear and consistent communication about performance, funding needs, opportunities and risks builds trust and confidence. Whether board members come from a management or investment background, we understand that challenges are part of the journey. Honest dialogue builds trust and ultimately leads to stronger support.
During my time at another company, I saw firsthand how transparency and open dialogue bring boards and management teams into alignment with difficult realities. This means we are well-positioned to succeed as part of a larger organization. That clarity led to successful acquisitions that could grow the product.
Beyond traditional financial metrics, what non-financial metrics and strategic insights are you prioritizing to inform critical business decisions? And how do you ensure these insights are effectively communicated and acted upon throughout the organization?
We track a set of leading and lagging indicators for each function of the business. In addition to comparing performance and goals, monitor trends and anticipate risks and opportunities. We have built disciplined weekly management meetings and pipeline reviews to ensure execution and accountability. In my experience, meetings are too often updated by default without a clear outcome. We've been intentional about changing that culture.
In sales, track qualified lead volume, opportunity pipeline, win/loss ratio, and conversion funnel. These will tell you how your revenue is trending and where you need to improve performance.
Customer Support monitors support ticket to payment ratio, ticket categories, resolution times, and more. These metrics help identify root causes and direct product improvements that improve customer experience and reduce costs.
Engineering reviews the speed of sprints, incidents and outages, and the business impact of roadmap efforts. These metrics help you evaluate system performance and make informed staffing and prioritization decisions.
As digital transformation accelerates, what emerging technologies and data analytics trends are likely to have the biggest impact on finance functions in the coming years, and how are finance teams preparing to effectively leverage them?
AI automation is steadily changing the way finance and accounting teams work, especially at the intersection of process efficiency and data analytics. There are three areas I am particularly focused on: autonomous regulation and closure. This has the potential to shorten closing cycles and improve accuracy over time. Prediction prediction. Supports more flexible and data-driven scenario planning. Enhanced analytics capabilities allow you to gain more meaningful insights from both structured and unstructured data.
Preparing to use these tools effectively starts with organizing your data house. At Payouts Network, we've focused on making data available. This allowed us to tackle automation without burdening engineering. By using AI tools to assist with scripting and configuration, finance teams can now be directly involved in processes such as billing, accruals, and reporting. As a result, the preliminary completion schedule was just a few business days.
For payments companies, collating data from financial institutions, merchants, and networks is complex. We are currently automating these reconciliation workflows. This means teams can move from manual spreadsheet work to higher-value exception handling. We will continue to further refine these efforts as technology develops, but they are already contributing significantly to our scalability.
