In a recent episode of the podcast, three experienced CFOs – Corinne Hua, Chris Sands, and Marc Zablatsky talk to us about “Spend Management and Driving Growth in 2020”.
In this spend management session, we cover:
- Monitoring spend and budgets effectively to extend your runway
- Establishing a spending policy that is fair but catches spend leakage
- Implementing cost controls around spending that is proactive
- Increasing internal controls through an approval process around spend
- Approaching change management to get your team on board
Business spending tends to happen in silos in organizations. For instance, whilst marketing is busy spending money on advertising, other departments like IT, HR, and Operations are also chipping away at the company budget. It’s easy for a company to run into trouble and out of cash when you don’t know exactly where your money is going.
Many SaaS startups who didn’t adapt quickly to the changing economic conditions have, unfortunately, gone under in 2020. At the very least, they’ve locked down spending due to the lack of funding and loose spend controls. That’s where spend management comes in…
Understanding what people are requesting, where money is spent, and how spend is approved is a company lifeline for founders and CFOs of software startups. In short, every dollar saved can be reinvested in programs to grow revenue and extend runway.
Downturn or not, spend analysis gives companies greater control and oversight into the use of company resources.
Here are a few of the top-level takeaways:
“How does an organization drive efficiency? It’s really around standardization, in my opinion.
Think about what the world looks like in a recession. Now, is a good time to get discipline around some of our process metrics, define what’s important to the business, define what success looks like against those metrics, and really manage to it in a repeatable way and kind of build the culture around performance against those metrics.
So I think during a recession, when you’re less focused on driving the absolute most amount of growth is a good time to look at some of those efficiency opportunities.”
Chris Sands, CFO of Mineraltree, on how to leverage a downturn as an opportunity to drive efficiencies
“We planned for different top line outcomes that considered new sales, what would happen to our existing customer base, we stress tested cost structures against various assumptions, and made sure we prepared to weather all those scenarios.”
Marc Zablatsky, CFO for Startups at Burkland & Associates on action plans that leadership laid out during the downturn
“Have a longer term vision, whether it’s a couple quarters or a couple of years. At least it aligns people on what the company is trying to accomplish and how your team can get there. Once you have that plan, it is amazing what happens when everybody starts working towards that plan.”
Corinne Hua, CFO of Thinkific, on how on a growing tech startup can continue to drive towards profitability.
As a bonus, here are a few other resources. As we only had a short hour to cover the topic of procurement transformation, we hope you find these valuable!