What tools do you use to save money?
To name a couple we have found recently:
- GoCardless – we use GoCardless to automate our clients’ monthly payments by Direct Debit. We are able to send up to 100 invoices a month in minutes, with payments being collected and auto-reconciled in Xero by GoCardless. This means we have almost no cost associated with billing/credit control.
- Notion – Notion has a very generous offering whereby they offer up to $1,000 in credit for start-ups. We were able to use a ‘paid plan’ with all its features for several months without spending a penny!
What are common spending pitfalls, or things you think startups spend too much on?
We often see startups spending lots on recurring software that is not getting used. It comes as a surprise to them when we ask for invoices/receipts and our point of contact (usually an ops person!) either don’t know who bought it, what it is for, or both! This is generally a financial control issue.
We recommend tools like Pleo for clients of a certain size to help them manage spending limits, approval routes etc. rather than having a company card that gets passed around an office.
We also see a lot of startups spending on hiring before they have a handle on the company culture and its people operations - we think it is better the other way around. We see tens of thousands spent on recruitment fees regularly, only for those recruited to move on in a few months’ time. The companies we see with a strong culture or a big focus on company culture early on generally have very little staff turnover and in some cases no hiring costs at all.
How do you keep spending on workspace down?
Our business operates remotely and on the occasions, we meet up in person, we normally book a space that is flexible. For example, where we can pay by the hour, edit or cancel the reservation (within reason) and add/remove numbers easily. These are vital for a company that is expanding.
From our clients’ perspective, flexibility is just as important to them. Rolling contracts with short notice periods are very popular and they give growing businesses a chance to expand their workspace quickly and easily. There are companies out there with a token/credits approach whereby the cost is based on usage rather than a set monthly fee.
One thing to be careful of – if you are being offered a discount or other incentive to pay upfront, do your research very carefully and seek a professional opinion. We had one customer join us after paying a 12-month rental fee upfront, only to find out the company was insolvent and about to be closed down.
What spending have you cut in the past year? Or what areas are you trying to spend less on?
As accounting professionals, we think our spending through quite carefully and we do not really have any areas we have cut or are looking to cut down on. However, there have been a couple of occasions where we’ve signed up for software services on a longer-term plan than we ended up needing. For example, we signed up for one service for 3 years for a better price than what 1 year would cost and now, 18 months in, we wish we had gone with the 1-year plan.
One piece of advice for other finance leads at startups?
Make sure you are in control and do not be bogged down with tasks that can easily be performed by somebody more junior or by outsourcing. Over 90% of our clients are start-ups and the most common bottlenecks are the Founders / Finance leads holding on to simple finance tasks and being too busy to get them done on time.
Offload the simple stuff so you can focus on overseeing the finance function as a whole and help the company deliver on its strategic objectives.
If you would like to speak to Martin to get an independent view on your financial challenges/objectives do not hesitate to contact him (firstname.lastname@example.org) and quote this article for a free 30-minute consultation.