Floor It with FinOps: How to Fuel Your Small Business for Growth

You’ve worked hard to build your business, and it’s starting to grow. You're gearing up to acquire new customers by investing in marketing and hiring sales staff. You're excited about the possibilities of how far your business can go. You’re gripping the wheel, heart pounding as you push the engine towards the checkered flag of success. But what if that engine sputters? What if the gas gauge dips towards empty just as you're about to cross the finish line?

That's where financial operations (FinOps) come in. It’s the high-octane fuel and precision tuning that keeps your business roaring. In the early days of any business, finance or financial operations (FinOps) could be as straightforward as closing a sale, sending an invoice, processing the payment, and recording it in your general ledger. But companies quickly discover that if they want to expand, they need to ramp up their FinOps for higher speeds, whether this means establishing a dedicated team or onboarding professional tools. 

This guide is your roadmap to improving your FinOps as you take your business from a sputtering start-up to a high-performance company. Buckle up because we're about to show you how to unlock your business's full potential.

Financial Operations: A Comprehensive Overview

FinOps covers a company’s financial system, processes, plans, and policies. It helps establish key performance indicators (KPIs), monitors payment collection, processing, and reconciliation, and provides insights to make businesses more resilient and efficient. It also often involves using cloud-based tools and software to create a centralized and integrated financial management system.

FinOps goes beyond the traditional concept of bookkeeping and into data analysis and strategizing. FinOps looks for more efficient ways to process payments, keep accounts receivable (AR) low, and automate repetitive tasks to enhance accuracy. Additionally, professional FinOps can help businesses comply with tax laws and other regulations/standards.

The following list outlines essential tasks integral to FinOps

• Accounting
• Budgeting
• Regulatory compliance
• Expense management
• Cash flow management and analysis
• Investment management (including tools/services/personnel)
• Financial planning

In recent years, FinOps priorities have increasingly focused on enhancing a company’s financial performance through real-time data analytics. This encompasses the identification of market prospects, cost-saving opportunities, and investment returns. According to a survey by the Centre for Economics and Business Research, 80% of businesses saw their revenues increase because of real-time data analytics.  

How FinOps Helps Small to Mid-sized Businesses Scaling

Modern FinOps integrates sound financial practices with technology to help businesses establish a strong foundation for expansion. It helps companies achieve financial health that keeps operations running smoothly by maintaining liquidity and capital and has long-term sustainability. Without a forward-thinking financial management strategy, businesses will struggle to expand. Some common pitfalls FinOps can help you avoid include: 

• Cash Flow: FinOps should monitor patterns and trends, potentially identifying shortfalls before they escalate into significant issues. A lack of this expertise might lead businesses to overlook early indicators of cash flow issues, such as delayed payments, increasing AR, overspending, or declining sales. 

• Financial Visibility. FinOps establishes budgets and accurately forecasts future financial requirements through continuous monitoring of cash flows and liquidity. Without this expertise, businesses may struggle to manage their finances effectively, misallocate funds, or fail to capitalize on potential market growth opportunities.

• Funding opportunities. Without data-driven FinOps, companies may struggle to attract potential investors if they fail to demonstrate that they have solid financial planning and strategy in place. Moreover, FinOps professionals and financial analytics tools can assist companies in meeting stringent financial backing requirements, including presenting the business’ long-term viability and demonstrating that they have the systems to responsibly manage grants and funding.

The Five Pillars of Peak Performance: Benefits of Professional FinOps

A finely tuned FinOps system can significantly improve your business performance. Here are some of the benefits you can expect to gain:

1. Long-term Sustainability:

‍FinOps offers a framework for budget control, financial analysis, and risk management. For instance, by analyzing historical data to identify sales trends, FinOps aids in making informed decisions regarding inventory management, staff management, and budget allocations. In addition, tech-enabled FinOps can break down profitability by product line, customer segment, or location, facilitating the identification of areas exceeding expectations or underperforming.

2. Strategic Cash Flow Analysis:

‍FinOps offers insights into cash flow patterns, such as the impact of customer payment terms on the business's liquidity. This data can empower leaders to implement proactive strategies to adjust credit policies, negotiate improved payment terms, or strategize capital expenditures. Additionally, FinOps can pinpoint potential cash flow disruptions, such as those arising from a client base concentrated in one sector thereby susceptible to economic downturns.

3. Regulatory Compliance:

Companies must consistently adhere to tax laws, environmental, social, and governance (ESG) standards, and anti-fraud measures. Effective FinOps ensures that businesses are compliant, often incorporating automated regulatory updates, reminders, and warnings within various tools and digital systems. Compliance extends beyond legal obligations; it comprises rigorous internal controls and procedures. Additionally, companies must adhere to financial reporting standards frequently mandated within ESG frameworks and ratings.

4. Financial Reporting:

‍Accurate and timely financial reports and data analysis, including income and cash flow statements and balance sheets, support effective decision-making. Unlike traditional bookkeeping, which often involves manual processes and human errors, FinOps enhances reporting accuracy by automating financial records and reconciliation, helping leaders implement improved strategies. 

5. Enhanced Automation and Efficiency:

A key benefit of FinOps is the automation of tedious manual tasks. Through cloud-based tools and integrations, FinOps automates processes to streamline workflows, eliminate errors, and free up valuable staff time. This allows your team to focus on strategic initiatives and improve overall operational efficiency. By incorporating automation, FinOps delivers centralized, real-time financial information that empowers leaders to make data-driven decisions faster and with greater confidence. 

Scale Up Your Business With FinOps

Establishing a strong FinOps system requires two main areas of consideration: using the right technology and finding a services provider who understands your industry or sector. While these aspects may require some time and investment on your part, the resulting benefits outweigh the initial costs.

Technology:

‍FinTechs are elevating FinOps to the next level by developing automated platforms and tools to streamline repetitive tasks, including accounting and financial reporting. These solutions eliminate manual intervention and the associated errors while providing a centralized system or dashboard for enhanced transparency and collaboration through real-time updates.

Businesses must evaluate how these third-party tools integrate with existing systems, prioritizing incremental upgrades over complete overhauls. Most importantly, businesses should inquire about the service or tool's scalability, ensuring it can accommodate future growth, such as the ability to support additional users.

Outsourcing:

‍Professional FinOps service providers analyze what small businesses need, including establishing the right processes, systems, and technology to ensure that they address specific pain points. Additionally, they boast extensive networks of suppliers and consultants possessing proven industry expertise. Look for a service provider that specializes in supporting small to medium-sized businesses, expertly navigating them through growth phases by utilizing a carefully chosen mix of tools, training, and methodologies.

Finding the right provider/partner is crucial to successfully building FinOps that fits your requirements. Businesses must begin by articulating their needs and objectives, and determining what constitutes success in FinOps for their specific niche or industry. They should identify non-negotiable features, such as customization options and payment flexibility. 

Let Decimal Take the Lead On Your FinOps

A well-oiled financial management service looks at the entirety of your business to build a repeatable and scalable template for your FinOps. Equipped with the right technology, processes, features, and an unparalleled operations-first approach, Decimal is your ideal co-pilot on the race track of success.