Controllers Council recently held a panel discussion on How Finance Leaders Can Improve Performance Amid Uncertainty, sponsored by Bill.

Our expert panelists included Steve Emberland is VP of Finance at Delphix, a technology company based in Redwood City, California. He has over 30 years of experience and he’s been a controller multiple times. He had a public accounting career at PWC and ENY and has an active CPA in California. Ashley Griesshammer is controller at Lovevery in Boise, Idaho. It’s an E-commerce company in children’s education. And she has both a CPA and a CMA. And education from University of Michigan, Grand Valley State University for Masters of Accounting and a Stanford B School certificate. And lastly, James Blake is a controller at Ensoma a biotech firm in Boston, and he is a CPA in Massachusetts and an alum from PWC and CFGI. He earned degrees from Boston College, both a bachelor’s and a Master of Science.

Following are key takeaways to this discussion. If you are interested in learning more, view the full webinar archive video here.

What are your top “uncertainties” that you are managing?

James: One of the biggest uncertainties right now is where the economy’s going, or if not there was recession on the horizon. We’re coming out of the last 10 years or so of a very big boom in DC funding, especially to small biotechs up in Boston. That’s obviously a big industry. Now we’re kind of going into a new uncertainty and a new phase that we haven’t experienced in 10 or 12 years at this point.

Ashley: I think general economic uncertainty for different reasons, and I would also say second thing is kind of movement in foreign currencies and just general geopolitical risk.

Steve: I’ll call it a looming recession. It seems like recession has been redefined. I have an economics background, so there’s a definition for what a recession is. It seems like we hit that, I think sometime last year. But regardless of whether we’re in a recession or whether we think it’s forthcoming, for us that creates a longer sales cycle.

The other thing I would say is talent. It’s really having to manage more with less. And frankly, I’ve been in accounting, finance for a long time and that’s always been the case, so it’s nothing really that I’m unfamiliar with. But nonetheless, when the economy is the way, it is and the markets are such, where companies are laying off and we’re seeing it in the news almost daily, we really have to learn how to do more with less. And I think the last thing I would say is, as it relates to teams and people, is keeping people engaged, keeping people motivated, keeping people connected.

What key performance indicators (KPIs) do you think are most important to measure and report?

Ashley: I think the answer to this will depend on what industry and type of business you’re in as well, but I can just share some of the ones that we’re both concerned about. Obviously, sales growth, very important, but at the same time, we are Venture Capital Act, we raised a Series C in 2021, and I think everyone’s seen a lot of headlines lately about layoffs happening in the tech space, these big backed companies that way over hired and are now laying off people. That’s something we thankfully have not had to do. And I think that’s because one of the most important things we look at is what is our headcount in payroll growth, compared to what our sales growth is.

James: The key metrics are, where is that cash going? So, which programs that we’re trying to bring either to an investigational drug, or a candidate selection or whatever it might be, where’s that cash going and how far along are we towards that research goal or that potential clinical goal? With that in mind, that’s really the main financial KPI, but it’s often synced up from a board perspective with the scientific KPIs.

Steve: Average contract duration is what we annualize and in our situation that number’s been dropping. That’s an important number for us that we report monthly. And then I think I referenced churn as well. So that’s the thing, if you have these shorter contracts or duration is shortening, then the likelihood of churn goes up.

I think another key metric is just to gauge how your employee base is doing. There’s a lot of anxiety in the world and fear and uncertainty and layoffs and recession and high interest rates. And we can get bombarded with all this negativity. And it can bring you down. And if it brings you down and you’re not around people, by the way, because a lot of us are working remotely or home and not in the office. That can really have an impact on just how you feel, how productive you are, how engaged you are, and that has an impact.

What types of planning do you undertake in your department and/or company?

Steve: We have an annual budgeting cycle, but we forecast, we have an FP&A team, and I think monthly, we are updating. So, it’s basically a rolling forecast that we put together. And we have multi-year forecasts as well. But I would say, we’ve got pretty good discipline on the FP&A side as it relates to interacting and working with department heads and other leaders in the organization, to really monitor and manage our corporate spend. We do use a platform called Adaptive Insights, which I think is serving us well right now. Our department, finance and accounting, is no different than the rest of the organization as it relates to planning and budgeting.

Ashley: We do an annual budget and then also my team also creates department budgets out of that, which we then share with marketing departments, our creative department, product development department, all that kind of stuff. We also manage a rolling forecast, so updating our forecast to actuals and just really fine-tuning that throughout the year. A lot of our revenue and subscription is driven through paid advertising. There are certain times in the year where that’s more efficient than others. So, we’re constantly recalibrating, “Should we be spending more now? Should we be pulling back?” Outside of finance and accounting, we do a very comprehensive corporate planning. We call it our roadmap.

James: The basic’s very similar in the annual forecast and budget, and we also update very frequently. I’ll admit I am a little more peripheral on this as far as our divisions go, but somewhat involved. We’re lucky in the fact that we’re a smaller company, that we can have the budget heads very involved just because they’re directly oversee their teams and each of their teams is five to six people.

One twist that we have, especially being in fundraise mode the last year until December, and always in fundraise mode, I guess, is we are constantly under, our budget is constantly under flux as to who we’re talking to and what types of funds we expect to raise. So, we have a basic base plan.

What processes, systems or technologies did you/will you implement to manage uncertainties?

Steve: We went live on Coupa. Coupa is a business spend management solution. We went live literally 10 days ago, and so the pleasure of being the project manager, project lead, that was a decision that was made last year. You have to make an investment. I wouldn’t say it’s cheap, but it’s worthwhile and I think it’s got a solid ROI.

Ashley: Our team, since I started at Lovevery, we were on QuickBooks, which I’m sure a lot of startups start on QuickBooks. And as we grew just needed to move to a more robust ERP system. We ended up choosing NetSuite and we’ve gone through, I would say multi phases of implementation with that. But about six months ago we finally completed a full order to cash automation. Every transaction is very small, and we have hundreds of thousands of orders that go out the door every day. We’re not working with a big contract with one customer. So, having visibility into exactly what has shipped, what revenue has been recognized the day that I open NetSuite is great for us.

James: We’re very much a QuickBooks company right now, every intention to do NetSuite at some point in the future. But given the environment of finances, budget is always the first to go. We got the processes that we have in place. I think with that though, in the QuickBooks in our current existing environment, systems and processes to identify where that spend is going.

We do have Prendio, which does kind of fill up a similar need. That does allow us to outsource, and they come with a group called Buyer Procure. We’re able to outsource a good amount of our procurement activity just given that our team is so small. But what’s good about Prendio is they also allow for similar tagging in our bill.com, in our QuickBooks where we can have the appropriate classes and programs and whatever it might be, in those POS and in those orders so that everything’s integrated in their APIs. 

To view the complete webcast, download full webinar here.

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