With cutting-edge technology and scientific advancements at their fingertips, the Software and Biotech industries are facing tremendous pressure to grow rapidly and to push boundaries because the sky’s the limit for potential in that industry space.
However, the speed of financial growth within these industries does not always match their capacity to manage finances, creating challenges for companies as they try to scale.
Managing financial processes and regulations can be complex and time-consuming, taking focus away from their core business within the Software and Biotech companies. Moreover, these industries are highly competitive, and companies are constantly seeking ways to innovate and differentiate themselves.
In a period of rapid growth, accounts receivables may outrun sales or the ability to collect payments, making you a debt collector instead of focusing on the core business. Without the ability to collect efficiently, your cash flow will be affected and this can result in short-term liquidity problems that may have a negative impact on crucial areas of your business. Projects can be delayed by not spending enough; conversely, spending too much can also deplete funds.
At the right pace of growth, businesses can make accurate forecasts and budgets, which is crucial to keeping projects running according to plan. The finance team needs to have the ability to properly track, manage and project cash flow to avoid creating a backlog for the team. Otherwise, it can lead to challenges and ultimately result in a failure to effectively manage cash flow and crucial deadlines.
- Some companies in the tech industry can encounter problems with accounting for revenue costs, including accruals, sales commission, cost of goods sold, rebates, and refunds. Knowing when to record or recognize revenue may be confusing if your business receives payments in advance, or unearned income from customers or clients.
- The accounting software your tech business uses is crucial to the accuracy of your business finances. Not only does the right software aid a smoother tax filing process, reliable record keeping provides investors with a clear and accurate view of your business, maximizing the potential for investment into new tech innovations that keep your business at the leading edge.
- Lack of accounting expertise is another tech industry pain point. Problems can surface in financial processing and analysis, restating earnings or amending errors in financial statements, as well as auditing and managing payroll. When there is a rapid increase in the volume of transactions, will you have adequate internal systems and procedures in place?
- Compliance – The latest ASU accounting standard issued by the Financial Accounting Standards Board and International Accounting Standards Board on revenue from contracts with customers is just one example of how changes to regulation can affect your financial position. A lack of awareness of the changing landscape of financial regulation can lead to a mountain of unnecessary stress that takes focus away from your day to day operations.
How Do You Solve These Problems?
Take the proactive approach!
Consider outsourcing some or all of your accounting services, which is an increasingly popular trend for emerging growth companies. By utilizing a scalable model, companies can leverage fractional CFO and accounting services to handle their financials, freeing up some time and resources to focus on driving innovation and growth.
Instead of worrying about their financials and outsourcing accounting services, software and biotech companies may rather focus on some of these key aspects of their business:
Innovation/ Research and Development:
Innovation being the lifeblood of software and biotech companies, it is what sets them apart from competition and what allows them to push boundaries through introducing new software, for example, or for further developing an existing product.
Marketing and Market Research:
Not only does a good product guarantee success in software and biotech industries, effective marketing and constant market research could also be considered determining factors of success. Companies in this industry need to always be aware of the latest trends and technologies to be exploited in the market, hence the need to understand customer behavior and identify new opportunities through market research.
Business Development:
Companies must also prioritize the business development side of their business in order to grow and scale by building strategic partnerships, exploring new markets, and developing new ways of offering their services. These strategies give them a competitive advantage over competition, sometimes allowing them to determine pricing of products in the market and most importantly grow their market share.
By outsourcing their financial processes, software and biotech companies can also reduce accounting errors, streamline their operations and ultimately save time.
In the face of rapid growth, hiring and retaining experienced financial professionals can be challenging. There is an immense benefit to seeking fractional help in this space. The fractional model allows companies to access top-tier financial expertise without the stress that comes with managing a full-time accounting team.
Bright Balance Accounting provides fractional CFO and accounting services to software and biotech companies, allowing them to focus on their core competencies while experts handle their finances.
We provide software and biotech companies with a comprehensive suite of financial services which include accounting, bookkeeping, tax preparation, forecasting, and financial analysis. Our team of experts is always looking for opportunities to be a part of your success story. Get in touch with us at info@brightbal.com or explore our website and let us know how you would like us to partner with your business.
