Top 4 accounting challenges businesses face as they scale up

Top 4 accounting challenges businesses face as they scale up

Although it is true that we are now more familiar with the term “startups”, which are companies that are just starting operations and need a boost to take off; we also have “scaleups”, which are companies that have been in business for some time and are now looking to scale up in the market.

Scaleups normally seek to develop all of their internal functions, and the financial function is usually the least developed. This is possibly due to the fact that, at small companies, financial reports are only used for tax or statutory compliance purposes. However, as they scale up, management will need access to more and better business information as well as financing. In that sense, adequate and timely financial information will be an essential element for safe and orderly growth. Below you can find the top 4 challenges these companies will face in this context:

1. Integration of accounting and administrative functions
At the beginning, a company may operate keeping its accounting separate from its administrative processes. For example, it can control its outstanding invoices in an Excel spreadsheet and record all transactions in its accounting books at each month-end closing. However, as operations scale up, companies will need to integrate both (accounting and administrative) processes, to avoid any errors and improve their efficiency.

Integrating the accounting and administrative functions allows having an effective control over the day-to-day operations and reduces the need to reconcile information as all the data comes from the same source.

It is important to point out that people usually resist change, as this integration involves establishing new processes and may give the impression of not being as practical at the beginning. However, once these new processes are in place and running, companies will benefit from having efficient processes and accurate information for decision-making purposes.

2. Need for information per line of business
During the first years, it may be sufficient for a company to know how many sales took place during a given month and if such revenues generate the company’s expected profits. However, when operations scale up and the goods and services offered increase, relying on a general figure does not help detect if there are any lines of business hindering the company’s profitability.

Scaling up also creates the need to access information per cost center. This data is valuable when making decisions on whether there are any lines of business that need to be reviewed or even eliminated, taking into account the impact these may have on the company’s revenues.

All companies seeking to scale up must rely on its financial reporting to avoid financial losses and to be able to achieve the objectives set out by their shareholders.

3. Financing needs
En algún momento, las empresas en escala requieren financiamiento para completar sus proyectos. Las entidades financieras requerirán informes financieros actualizados y adecuadamente formulados.

Una empresa que no es capaz de producir informes financieros oportunos o pronósticos confiables corre el riesgo de que sus acuerdos financieros se retrasen o incluso se desmoronen.

En ese sentido, las empresas deben tomar las medidas necesarias para contar con información financiera oportuna y confiable que les permita sacar adelante sus planes de negocios.

4. Búsqueda de soluciones en plataformas tecnológicas
En la actualidad apenas se utilizan documentos físicos para el procesamiento de las transacciones del día a día y los proveedores pueden enviar sus facturas electrónicas vía correo electrónico. Dichas facturas se aprueban y luego se programa su pago, creando varios hilos de correo electrónico para coordinar su reserva.

Esto puede ser factible en una empresa en las primeras etapas, pero a medida que el negocio crece, resulta ineficiente manejar todos los procesos a través del correo electrónico y es imperativo respaldar los procesos administrativos en una plataforma tecnológica. Esta herramienta debe ser adecuada, rentable, fiable y segura.

Una empresa cuyos procesos estén soportados en una plataforma tecnológica podrá visualizar datos en tiempo real y también reducir el riesgo de pérdida de información. Sin embargo, la Compañía enfrenta el desafío de encontrar un proveedor adecuado de soluciones tecnológicas. Una opción es encontrar un proveedor que permita externalizar todo el proceso con una plataforma digital adecuada.

En BDO, podemos ayudar a las empresas en crecimiento a superar rápidamente estos desafíos. Entendemos que, después de la pandemia, el trabajo remoto y la digitalización de procesos son la única forma de responder eficientemente a las demandas empresariales.