CFOs in a Start-Up: The Nitty Gritty of Numbers, Controls and Best Practice

It's your first day. You want to see last month's P&L, the balance sheet, balance sheet reconciliations with work papers, and a 30-day cash plan that extends to financial year end.

Ha.

It doesn't exist.

In a true start-up, there might be someone doing basic bookkeeping. Or the founder has been doing it themselves (oh no). Or it's been outsourced to an accounting firm that spends a few hours reconciling the bank account each month and lodging activity statements. That's where most start-ups are. It's not bad. It's just the starting point.

Either way, there are probably no accruals, no prepayments. Just bills and invoices, money flying around, some invoices sitting in someone's bottom drawer because they'd rather not deal with them, and at least one customer who swears blind they paid the overdue invoice they keep getting automated reminders about. Nobody is answering them. That customer is getting increasingly annoyed.

And then there's the balance sheet. You will find things on there that make no sense whatsoever. You'll stare at them. You'll refresh the screen. It won't help.

Month end close? Timely, locked, with a clean set of reports that don't change after the fact? Not yet.

Your first three months

Get across every general ledger account.

Understand what goes through it, how it gets there, and document the process. Fix what's broken, and kill anything that's just plain wrong. You'll need to talk to a lot of people to piece things together. Where you find something that nobody can explain, don't leave it. Find out. An unexplained balance that's been sitting there for two years is not a mystery to admire; it's a problem waiting to surface at the worst possible time.

Implement accrual accounting.

Every month, not once a year at tax time. Build a work paper for every balance sheet item and tie it back to a source document, like a bank statement. Move away from cash accounting for revenue recognition and set a clear policy. Build a revenue-by-customer file while you're at it. Someone will ask for it eventually, probably at short notice, and you'll be glad you have it. If you're working with large data sets, use AI to help create the summaries and then check them against source data.

Sort your file management.

At the end of each month, roll your files forward to the next month. Don't overwrite last month's work. Keep a checklist. A new file every month means that when something goes wrong (and it will), you can go back and find what you need. Consistent, meaningful file names matter more than you'd think. Something like Year_Month_Company_Description goes a long way toward not losing your mind six months later.

Set a month end close timetable and stick to it.

Tell the people most likely to be hoarding invoices what the cut-off is. Get invoices sent to a central finance email address rather than to whoever happened to deal with the supplier last. Once the close is done, lock the accounts. No late changes. Produce a standard set of reports from your system each month. If you're spending hours wrestling with spreadsheets to get the numbers out, the system isn't set up right.

Don't be afraid to say "we're not doing it that way anymore." But explain why.

You'd be surprised how much goodwill you build when people understand there's a reason behind the change rather than just a new CFO asserting authority.

Getting financial records to best practice is a journey. It takes sustained effort, clear communication, and the flexibility to adapt as the business changes. The goal is financial information that's accurate, reliable, and available when it's needed. That doesn't happen on day one. But it can happen.

Amy Larfield is the CFO at Compono, an Australian people and culture platform that combines hiring, culture, and learning with people insight.