The startup guide to simplifying financial workflows

Written By

Dan Kang, VP of finance at Mercury

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As a founder, navigating the financial intricacies of your startup can often feel overwhelming, especially when your core focus is driving growth and innovation. Simplifying these processes not only alleviates your burden but also sets a robust foundation for your company's future. This guide delves into essential financial areas to prioritize, practical strategies to streamline operations, and the strategic role of outsourcing in your fast-evolving financial ecosystem. With these tips in mind, you'll be able to hold down the financial fort confidently until the time when you're ready to make your first finance hire.

Key financial focus areas for founders

Becoming a finance expert as a founder won’t be the highest leverage way to spend your time. You should understand what’s happening with the business on a fundamental level, but should also focus on freeing up your time to stay focused on customers and product in the early days as you work to PMF and early growth.

What this means in regards to balancing financial operations with other priorities as a founder is that you have to be selective with your focus areas. It’s fine at this stage to focus your attention on nothing more than the fundamentals and less on strategic stuff. Once you bring on your first finance hire, it will be that individual’s job to think more about things like the unit economics of your business and your financials in the context of your growth strategy. But at an early stage, you as a founder can simplify things by prioritizing the basic but key financial operations that will keep your startup running smoothly. These include:

  • Payroll: Ensuring your team is compensated accurately and on time is non-negotiable, and this might include paying yourself as well. This is a pretty direct reflection of your company's reliability and respect for its workforce.
  • Basic bookkeeping: Accurate record-keeping is foundational for understanding your financial position and making informed decisions. You don’t necessarily need GAAP-compliant, audited financial statements at this point, but you should have the basic financials in place.
  • Customer payments: Streamlining the process of receiving payments affects your cash flow and, by extension, your business's operational viability.
  • Vendor payments: Timely payments to your vendors preserve essential business relationships and prevent supply chain disruptions.
  • Cap table management: Keeping a precise record of equity ownership helps ensure that you’re maintaining accurate records, which can be especially tough in the early years of a startup where your dozens of shareholders might include a handful of friends, family, and angel investors.
  • Taxes: Understanding and meeting tax obligations avoids legal complications and financial penalties.

Depending on your specific industry, there might be an additional item or two on this list that you need to focus on as a founder, even pre-finance team. But for the most part, this list of seven basic finance functions will cover 90% of what your finance focus should be as an early-stage founder.

The other thing to note is that while strategic financial planning doesn’t need to be a huge portion of your time as an early-stage founder, it is important to understand your business well enough that you can at least glean basic insights into your business model’s sustainability and scalability. You should understand the basic financial aspects of your business including how you're doing on acquiring and retaining customers, what revenue growth looks like (just a basic understanding of this is okay), and how any hiring, marketing, or vendor spend is expected to impact your burn rate and cash runway in the future.

Understanding the role of outsourcing to simplify your financial workflows

Knowing where to direct most of your focus as a founder is step one, but step two is understanding how to best tackle those focus areas while keeping things as simple and reliable as possible. Outsourcing is an easy way for founders to unlock more time while resting assured that the operations are running smoothly. But it’s also important to be mindful about what you choose to outsource since there are certain functions that benefit from a more intimate understanding of your business model, or that relate to more sensitive company information that you’ll want to limit access to.

For the most part, you can outsource almost all of the core functions mentioned above to an extent, at least until your company hits a level of scale where it makes sense to think about investing in a finance team. Here’s how it looks in practice:


In the very early days of your company, this is probably easy enough for you to run on your own depending on where your employees are located. (There are logistics around payroll that will get more complicated with interstate or international team members.) In the event that you do want to outsource this — either because you have a more complex team structure or your company has grown — there are plenty of cost-effective professional employer organization (PEO) services that are focused on serving startups and can help you manage payroll, benefits, and HR.

Basic bookkeeping and payments

It can be tempting to punt bookkeeping to when you hire an operations or finance person, and to just rely on your bank account activity as a good enough solution until that point. But failing to get your bookkeeping in order early will mean that you’re just flying blind on how your business is truly doing, which can set you up to make poor financial decisions. So getting a bookkeeper in your corner sooner rather than later will help ensure that you don’t overcomplicate things down the road, and that bookkeeping partner will also be able to help manage vendor and customer payments.

When considering the right partner here, one thing to keep in mind is you’ll want to select a firm that understands your business model and industry. You’ll also want to avoid treating this like a partnership where you simply hand over the reins and leave it there. This is an area of outsourcing where you’ll probably be most involved, giving your bookkeeper room to set up your finance operations but also taking some control yourself to ensure that you’re setting foundations that will scale. This means a few things in practice:

  • You’ll want to play an active role in mapping what the workflows will look like so that it’s clear what the roles and responsibilities will be between you and your bookkeeper. For example, maybe your bookkeeper will handle all vendor payments and customer invoicing, but you’ll be more involved in approving major expenditures and will review monthly financial reporting. This could also involve things like aligning on your vendor payment terms or SLAs to ensure timely payments.
  • Take control of what your chart of accounts and cost centers should look like. Having the right setup here can make a big difference in your ability to understand your business well. Think about this as the data structure for understanding your business.

The area where you might actually opt not to outsource to your bookkeeper is customer payments. It will largely depend on volume but, in general, managing customer payments will determine how quickly cash comes into your business and could require more discussion with customers that you’ll want to own more of in the early days.

Cap table management

This is typically something that your corporate counsel can help you manage, but if you don’t have retained corporate counsel yet, this could be something that it’s easy enough for you to manage on your own in the earlier days of running your startup when shareholder count is relatively low and not many equity transactions are happening. At this point, it’s mostly about ensuring clean and accurate records. There are useful tools like Carta or Pulley that you can leverage for easier cap table management that we recommend using from day one, whether you’re managing it or leaving it to your corporate counsel to do. Given equity ownership information is sensitive, be mindful of who you entrust with access internally and externally.

Did you know?

To help you find the best tools for simplifying your workflows in finance and beyond, Mercury Raise created the Software Stack, a guide to top-tier startup tools and platforms, curated with the help of our extensive founder community. We’ve also got a range of partner perks that Mercury customers can leverage to get the best deals on their preferred tools.

Explore the Software Stack


Even if you’re not profitable yet, there are still plenty of tax considerations to take into account at any and every stage of your startup’s journey. Outsourcing this work to a tax firm or certified public accountant (CPA) — ideally one with industry experience — will help ensure compliance and that you can take advantage of any tax benefits. Things a firm or CPA will help you get ahead of, depending on the nature of your business, include:

  • Annual or potentially quarterly franchise taxes that your company (even if unprofitable) will owe if you run a C-corp.
  • Tax assets over time, including accumulated losses (NOLs) and credits that can offset future taxes. (Note: Good tracking here early on will mean much less pain in the future.)
  • R&D credits that can help offset payroll taxes (real near-term cash savings) and/or future income taxes.
  • Sales and use tax liability if applicable to your company depending on the nature of your business and your areas of operation.

Working with a fractional CFO

Depending on the level of complexity your company is dealing with, another outsourcing option is to work with a fractional CFO who can ultimately own all of the above. If you have customers and/or employees dispersed globally as well as multiple legal entities, for example, there might be a lot of complicated considerations on the operating and reporting side. The same goes if you have a complicated revenue model and lots of custom contracts, or if you’re dealing with physical goods or a complicated supply chain and need to track inventory, COGs, etc.

In cases like this, a fractional CFO can be a cost-effective way to leverage the expertise of a high-level financial executive while maintaining a level of flexibility. If you go this path, make sure to select your fractional CFO as if you were making a leadership hire on your team versus thinking of them purely as a temporary contract solution. They can play a big role not only in building and leading financial operations but also being a thought partner for you particularly as they may have experience at multiple other startups.

Owning the process of contextualizing financial data

While we’ve already established that founders shouldn’t be too bogged down by financial strategy in a company’s early days, you’ll still be best positioned to understand your startup’s financial performance in the context of your business. While some bookkeepers offer services around delivering business insights, they don’t always have the full picture or detailed customer and product data to provide a substantial level of depth.

For this reason, it’s worth owning this part of your company’s financial workflow yourself rather than outsourcing it — but you should still approach it with simplicity in mind. To that end, there are plenty of financial analytics tools that can help here, but even a simple spreadsheet can be sufficient enough. The main goal should be to understand and track a few basic financial metrics and data points:

Growth and product data

The goal here is to understand revenue over time and the different levers that drive it. Trends in your customer numbers, retention rates, engagement metrics, and any relevant segmentation or quality measures (e.g., paid user versus free trial users, or monthly active users) will offer valuable insights into your customer base. Things like the top channels that new customers are coming from, and your customer acquisition costs, will help shed light on growth trends. Beyond customer metrics, you should also assess the metrics in the context of your business model — e.g., sales funnel and ARR if you’re a B2B software company, transaction volumes if you monetize payments — will help you understand your growth over time and where you may need to focus more of your time.

Basic P&L

Understanding your startup’s income statements will help you understand the financial health of your company over time. You don’t need an accounting degree to understand an income statement. Take time to understand and go over with your bookkeepers who should be providing monthly reporting here. Some things you should be able to understand are:

  1. How revenue is recognized and how it’s been trending in context of the growth and product data mentioned above.
  2. What does your gross margin profile look like when considering costs directly related to delivering your product - helps you understand for every dollar of revenue, how much you actually have afterwards to pay employees, invest in growth, etc.
  3. What you’re spending to acquire customers through sales and marketing spend (e.g. Google/Facebook ads, sales team, customer events, sponsorships)
  4. What you’re paying for employees and related expenses like benefits and payroll taxes
  5. How much you’re spending on vendors like software providers and professional services
  6. How your operating profitability is trending over time and how your revenues are growing relative to costs

Remember, your income statement is only as good as the data fed into it. Work with your bookkeepers to ensure accurate capture of financial transactions and that they have enough context on bigger items to account for them properly.

Cash and runway

For most startups, unless you’re working with physical goods, your cash is the biggest thing you’ll want to understand on your balance sheet. You’ll want to track your cash balance over time to understand cash flow patterns based on how you earn revenue. For example, if you’re charging annual subscriptions upfront, your cash flow profile will look different than a company that charges in arrears based on usage. Having a clear understanding of this will allow you to better forecast your cash position at any given time, which can help with more informed decision-making.

Additional tactics for simplifying your financial workflows

Outsourcing aside, there are a few more things to consider when minimizing the complexity of your financial workflows as a founder:

Choose tools with care

When selecting tools that help you offload tasks, think about what will enable as much automation as possible while integrating seamlessly with your accounting software. You should also focus on using tools that make categorizing and tracking spend as easy as possible, as well as ones that will be able to scale with you over time. Changing tools can be a time-consuming and painful process, so it’s helpful to look ahead.

Establish some basic controls

As you begin to hire and delegate various tasks, the ways that things can go wrong or company money be misused, even if accidentally, increases. Use banking and financial tools that’ll help you set strong controls on who can do what with the company’s money and what types of actions require approval. For example, your company issues employees their own company cards for specific spending, you can set financial controls by creating custom card limits or merchant-locked cards.

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Invest in employee training

A financially literate team can significantly reduce the founder's burden. Educate your team on financial protocols, from expense reporting to budget adherence, ensuring everyone contributes to the company's financial hygiene. Even if it feels early, establish clear policies that everyone can easily follow, and distribute the workload when it comes to recordkeeping. For example, if employees have access to team-level or individual corporate cards, create a system by which they can categorize their own expenses to help streamline expense management. (And again, the tools you’re using should ideally allow for this.)

Build the habit of recordkeeping

You should have clear records of every dollar that’s come in and out of your business, and you should also save and organize all contracts and agreements in a centralized place for easy reference whenever needed. It’s much harder to try to remember why certain transactions occurred on what terms and to dig through your email inbox to try and find old agreements or chains. This’ll be crucial when preparing financials and during financial audits. Having a shared process to manage this across the company will make life a lot easier in the future.

Focus on setting a solid financial foundation

Remember that at this point, one of your main financial responsibilities as a founder, other than keeping operations running smoothly, is ensuring that you’re taking the right small steps to make the future state of your company’s growth a lot less painful. Establish clear financial processes from the start, ensuring they're scalable and adaptable to your business's growth. This foresight reduces the need for time-consuming overhauls or corrections down the line. Think of it the same way you would think of technical debt in software development: if shortcuts in the code will help you get to the finished result faster but create a clunky, difficult-to-maintain code system that becomes a problem down the line, then it’s probably something that was worth doing right — or as right as possible — the first time. This applies to your finances. Get things in as close to good shape as possible.

For founders, simplifying financial operations is not just about reducing workload; it's about creating a solid foundation for sustainable growth. By focusing on key financial areas, strategically outsourcing, and methods for streamlining operations, you can ensure that your startup's financial backbone is not only resilient and scalable, but relatively easy to manage. This approach frees you to concentrate on what you do best: driving your business forward.

Written by

Dan Kang, VP of finance at Mercury

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