Catalina Gorla and I are talking with Jen Gabler, administrator and CFO who takes wild-west entrepreneurs and shapes up their organizations so they can actually survive and grow.
Catalina: So what would be a summary of what you would tell a startup it should think about when it’s ready to think about being a serious company?
Jen: When a company is transitioning from an early R&D stage, entrepreneurs should implement best practices in the areas of controls and governance to scale the business profitably and use capital efficiently.
There are twelve basic controls and processes to ensure that your company can ramp up successfully:
- Authorization Matrix – In an early stage company, it is important to list the transactions that result in cash outflows and who in the company has the authority to make those decisions.
- Cash Reconciliation Process – Starting at the inception of your company, every month you need to have someone reconcile your bank account activity to your accounting system records.
- Purchase Order Process – The person proposing a non-routine purchase should document what the purchase is, how much it will cost and what budget line item the cost should be booked against.
- Expense Policy – You should distribute a document stating what will and will not be reimbursed by the company.
- Payroll Controls – You should absolutely outsource the processing of payroll to a payroll service company like ADP.