When we start planning for a new year, things often look rosy. We might set sweeping goals and make ambitious projections. Then, the reality of life settles in. As the year gets underway, the busyness that comes with running a business has probably already presented an obstacle.
That means it’s time to prioritize. As you choose where you’ll focus the time and energy you actually have in 2025, make sure you include one category: financial management.
No matter what you sell or who you sell to, managing your company’s finances can make or break you. That doesn’t mean this effort needs to be back-breaking, though. We have some suggestions to help you achieve efficient financial management this year.
What’s required for efficient financial management
First up, it helps to clarify what, exactly, you need to do to properly manage your company’s finances. To simplify things, we’ve broken them into three categories:
Managing the day-to-day
Ideally, you’ll get to a point where this category is a light lift. To do that, you need to implement the right tools (e.g., accounting software) and procedures (e.g., financial procedures and policies manual).
To make your financial management as efficient as possible, look for tech tools that make it easy to:
- Create and monitor budgets
- Track cash flow
- Create financial reports and statements, especially your income state, balance sheet, and cash flow statement
- Manage — and, ideally, automate — accounts payable and receivable (AP and AR)
- Track and categorize expenses, ideally flagging unnecessary or overly high expenses
- Maintain your capitalization table (cap table)
The right fintech (financial technology) stack can make your daily financial management a lot easier. Just make sure you don’t overspend on software. There are plenty of solid free and low-cost options out there if this budgetary line item is a concern.
Looking ahead
Strong financial management goes well beyond keeping up with daily revenue and expenses. It’s equally important that it enables you to gather data and identify trends so you can plan ahead. Some of the metrics you want to be measuring here include your company’s:
- Assumptions, including budget assumptions, revenue assumptions, and expense assumptions
- Burn multiple
- Profitability
- Return on investment (ROI)
- Debt ratio
Tracking these metrics enables you to see the trajectory your company is on which, in turn, enables strategic decision-making. In other words, it powers efficient financial management.
Again, the right fintech stack should make this a lot easier. But you want to have someone with financial expertise in your corner, too. That person or team can help you make sense of your numbers to most accurately forecast your business.
Meeting investor demands and tax authority requirements
Best practices and your company’s specific needs aren’t the only things driving your financial management to-dos. You also need to be prepared to report what’s required to your investors and local, state, and federal tax authorities.
Get clear on what documentation your investors will want to see. Best case scenario: create templates in your fintech tools to automate those reports. That way, you can quickly pull them whenever investors ask to see those numbers.
Similarly, what’s required for your taxes shouldn’t be a surprise. Work closely with an accountant to figure out what you need here. If you plan to claim the R&D tax credit, for example, that probably means closely tracking the time certain employees spend on specific activities so you can report it to the IRS.
In short, efficient financial management for external reporting requires two steps. First, figure out what you need to report and when. Secondly, develop internal processes to capture and organize that information as easily as possible.
Getting an efficient financial manager on board — in the most cost-effective way
All of the above probably doesn’t sound overly easy. And that’s because it isn’t. Even with the most sophisticated fintech stack behind you, strong financial management is a lot of work.
Fortunately, that’s work you can delegate. Even more good news: that doesn’t have to mean hiring a full-time finance person.
Instead, you’ve got a couple of options here:
- A fractional CFO: This type of chief financial officer works for your company in a contractor capacity. That means you can scale their hours up or down as you need them (e.g., up during tax season or when you’re planning a round of fundraising, down when things are lean). It also means you get the expertise of a C-suite finance executive without needing to pay a benefits package for them.
- CFO advisory service: If you live in a state where employment law is tricky (e.g., California), hiring finance support as a service rather than a contractor can help you avoid issues. The service is tailored to your business’s needs and can deliver all of the benefits of a fractional or full-time CFO.
Choosing either a fractional CFO or a CFO advisory service makes your financial management much more efficient. Instead of things falling onto your desk, you send them to your CFO. Whether that’s a contractor or service, the person or team handling the to-dos has extensive expertise they can apply. As a result, they can tackle things much more quickly and strategically. All told you get the financial tracking, forecasting, and compliance you need in an efficient — and cost-effective — way.
Specifically, your CFO advisory service or fractional CFO can manage any key aspects of your company’s financial management. That includes:
- Automating financial processes
- Budgeting
- Burn rate and cash runway monitoring
- Developing and updating your cap table
- Developing your financial policies and procedures manual
- Identifying and monitoring key performance indicators (KPIs)
- Financial modeling
- Forecasting, including cash flow
- Support in hiring, training, and coaching any on-staff finance employees
Every company should make it a point to strive for efficient financial management in 2025. That striving gets a whole lot less tiring when they bring in the right partner to manage it. To get a cost-effective way to improve the financial processes, tracking, and projections at your company this year, consider CFO services or a fractional CFO. We offer both, so you can start by talking to our team.
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