Creating a Resilient Finance Organization.
I’ve worn a lot of hats over the past 20 years. My background includes fast food, parks maintenance, medical interpreting, blogging (craft soda and french fries), tax accounting, and most recently, running the finance department of a rapidly growing SaaS startup. The past few years at Gremlin have taught me a lot about the role of Chaos Engineering in software development, and what it means to be resilient.
The concept of resilience is central to us at Gremlin. It’s baked into our DNA – Chaos Engineering helps companies be more resilient to failure. Not surprisingly, the concept of a resilient company has become a topic of conversation over the past several months. A COVID-19-induced cataclysmic economic shock has tested both the preparedness and responsiveness of companies to withstand a major dislocation. Resilience. As a finance team, we apply the concept of resilience to our accounting operations; indeed, we build for it. Let me explain.
Finance team as strategic partner.
Those of us in accounting and finance live with the understanding that we are a cost center. This means that it’s important for most of us to find ways to add significant value to our companies.
If the table stakes (getting the books closed) part of our job swamps us, we won’t have the bandwidth to contribute to the more value-added activities that can help the company thrive. We are therefore motivated to build efficient operations, ones that can help us do more with less. And, also, ones that allow us to contribute to building a resilient company.
Operational efficiency allows us to accomplish the nuts and bolts of finance in a way that leaves enough time to focus on these more strategic issues. Yet there really is no clear roadmap for a finance team at an early-stage company to optimize for efficiency and achieve greater resilience. There are lots of vendors offering solutions, but finding the right ones, in the right combination, is a challenge. Solutions must fit a company’s current size and needs, and be capable of accommodating plans for the future.
Experiment and iterate.
I have taken inspiration from some of Gremlin’s core company values to approach this challenge. One of these values is to experiment and iterate. This value asks us to be bold in experimenting with novel ways to better serve our customers, community, and the company, to evaluate results quickly and adopt beneficial ideas while abandoning unsuccessful pursuits.
We fully embraced this value as we worked to improve our spend management and accounting processes. Spend touches so many people in a company; it’s a complex ecosystem of corporate cards, approvals, expense reporting, invoices, POs, AP, budgets, categorizations, receipt management, etc. Not only is it a challenge for us to execute and capture these events to the general ledger, but we also need a way for the company to control spend as it is happening.
The burden placed on our lean accounting team for onboarding a new system or process can also be significant, so we set out to get it right the first time. That being said, stubbornly holding onto ineffective solutions can be more damaging.
Clear-eyed evaluation helps us abandon the solutions that no longer solve our problems and encourages us to be open to alternative approaches that might produce better results. Embracing experimentation and rewarding learning allows us to test new approaches, to redefine the problem, and reimagine the possibilities for solutions.
As our company scaled from 2 to 90, spend management was one of the most recurring problems we needed to solve. We experimented with several approaches, starting off as crudely as manual expense reports and reimbursements through email. When that became too painful we rolled out a widely known centrally managed expense reporting tool. That solved some problems, but it relied on my small team harassing employees to clean up their monthly reports so we could close our books and run financial reports.
Our insight into spend was always delayed and spread across different platforms. We tried some other approaches to gain better control but struggled to achieve company-wide adoption. In the spirit of iteration, we took a look at the Airbase platform and saw that it helped simplify things for us. In addition to providing the consolidation I was looking for (cards, checks, ACH), it freed up our time and provided us with the tools to give more insight into, and control over, spending. The system is intuitive for my employees, efficient for my small team and, in hindsight, would have scaled with us from the beginning.
Using the right resources.
There is a second Gremlin value that I relied on in this process of building a resilient finance operation: be frugal, not frupid. This means using the right resources for the task at hand. Both excess and deficiency are frowned upon equally and should be avoided. Cash is the key to financial resilience, and the thoughtful and deliberate deployment of your capital will help your company weather challenging swings. If finance is able to provide timely and accurate insights into spend, and keep the rest of the organization lean and efficient, we are providing real value to our company.
Adopting systems that provide real-time reporting and tracking allows us to provide information on how resources are utilized within a company at any point in time, not just month end. This value-added information helps us make better decisions as businesses.
Controlling costs with a forcing function.
Being frugal can also include curbing wasted or unnecessary spending. Often, however, the cost of cutting this waste can exceed the value of doing so. This is because it can take a lot of time and energy for a finance team to track down, then correct for, duplicate spend, overcharging, zombie spend, or missed pricing breaks for subscriptions. Setting up the right tools to automate visibility into all areas of spend means that we can be frugal without being frupid.
For example, if someone leaves the company, Airbase can show me what they own – in terms of committed spending (subscriptions, services) – and I can easily reassign those spends or shut them down. Visibility into recurring charges by various vendors helps us be smart about managing our expenses without unduly taxing my team.
When our goal is to create accounting processes and systems that support resilience, we value tools that give us control without interrupting the fast-paced flow and demands of a business. Being able to dial down approval policies, so that spend cannot happen outside a new budget number, is something that can help companies adjust quickly to a disruption.
Implementing a spend platform with a “forcing function” allows our teams to have access to the resources they need to do their jobs, and also ensures that activity is communicated and approved by the right people based on the current spend policies.
Being able to ratchet up or down spend policies on the fly in a very comprehensive way across the company is invaluable. We can do this when we create the levers needed for control. Resilience doesn’t only mean being able to weather storms – it is also about being prepared for upturns, and these same levers can help us adjust quickly as the business environment improves.
A toast to resilience.
The mission of Gremlin is to find weaknesses in systems before they cause problems. As strategic finance leaders, I think that we can work to create accounting operations that do the same for our companies. Early insights, and an ability to act quickly on those insights, will help make us resilient to dislocations, whether those come from a pandemic, a competitor, or even a surge in opportunity. When we adopt systems and tools that provide real-time, clear visibility into the company’s financials, we can evaluate its heartbeat, track the flows, perceive the threats, and gain insight into patterns and opportunities.
When we are resilient, we can adapt quickly, whether that’s to withstand a blow or capture an opportunity.
Airbase offers a one platform solution to manage all non-payroll spend. It provides oversight and control over spending with real-time reporting and automatic syncing directly to your general ledger. Control all payments – physical cards, virtual cards, ACH, and checks – from one place. Close faster. Empower employees. Control spend.
Survey shows too many hours wasted on manual accounting. Automation approaches to help.
Finance teams continue to spend much time on manual tasks. Are you one of them?