21 Finance and Funding Tips for Canadian Tech Startups

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2021 was the year for Canadian Tech Startups, with record-breaking funding of $156.2 Billion.

Q2 2021 saw a whopping 157% YoY increase in the funding of Canadian startups.

Source: CBInsights

However, things have gone south since Q1 2022, with a steady decline of 23% QoQ in the funding.

Source: CBInsights

The decline has been continuous even in Q1 2023. However, it is less steep than the previous year, with a 13% QoQ decline.

Source: CBInsights

High-interest rates, inflation, and the recent collapse of Silicon Valley Bank (SVB) have choked funding.

SVB’s Canadian Division has invested in the growth of Canadian Tech Startups. But, unfortunately, its sudden collapse has left a void in the market.

Investors have become selective in funding tech startups, fearing a recession. At such challenging times, securing funding and scaling becomes a daunting task.

But by keeping your finances in good condition, you can increase your chances of funding even in the current market conditions.

Here are 21 Finance and Funding Tips for Canadian Tech Startups that you can follow to secure and increase your chances of receiving investment.

1. Keep Finance Budgeting Realistic

While budgeting, make sure to track even the smallest of expenses. Keep a buffer for unexpected costs. Assuming ideal case scenarios all the time makes finance budgeting worse.

Take help from expert Financial Consultants / CFOs with extensive budgeting experience. They will help you get the budgeting right.

2. Stick to the fundamentals

Investors will want evidence that your startup has a solid business model. There should be a clear path to revenue growth and a talented team to execute the plans. Focus on building a solid foundation for your startup and demonstrating traction.

Download your copy of the Profitable SaaS Financial Model + Template to create strong financial foundations in your startup.

3. Steady Cash Flow

Cash flow management is crucial. To run the operations, a steady cash flow is a must. So monitor the cash flow and keep an eye on your cash runway. Investors will often pay attention to things like burn rate and cash efficiency.

Also Read: 5 Cash Flow Metrics to Prioritize and Track in Your Startup

4. Practice Cost-Effectiveness

Be Frugal! Often businesses overspend in the name of scaling. Determine the cost-efficiency and ROI of any overhead before spending money on it. In the initial stages, being frugal helps maintain a healthy cash flow. This allows businesses to sustain longer in cases where fund allocation gets delayed.

5. Use Finance Forecasting for Projections

Investors will often want to see your financial forecast. From revenue projections to growth, do a detailed finance forecast. Work with your financial advisors to create accurate projections to aid strategic decision-making.

6. Identify Gaps and Find Solutions 

Perform regular audits to identify gaps within your existing financial system. These gaps, if ignored, can cause issues in the long run.

7. Ensure you’re Tax Compliant

Tax Compliance is basic sanity for any firm. It’s important to be tax compliant to avoid any legal issues in the future. Tax Compliance and keeping all the paperwork handy makes the funding process smoother. It assures the investors that the firm is in good shape.

8. Save on Taxes with Smart Tax Planning

Tax planning can help you save up to thousands of dollars! There are several tax credits and deductions, such as Accelerated Capital Cost Allowance (CCA), Industrial Research Assistance Program (IRAP), and Scientific Research and Experimental Development (SR&ED) Program, etc., that you can benefit from. You can use it for scaling business operations.

9. Maintain Accurate Financial Records

Investors will enquire about historical financial records. They use it to gauge the financial health of the business. Maintain accurate financial records and keep them handy. This will help your forecasts to be more accurate as a result

10. Outsource CFO

An outsourced CFO is an external finance leader that helps manage the business’s financial operations. Outsourcing CFO services will save costs when building an in-house team. You get curated financial services from the best-in-class experts. You can focus on your product development and growth instead of managing finances.

Read More: The ultimate guide to Outsourced CFO Services for fast-growth Businesses

11. Keep Scalability in Mind

Every system should be scalable. This ensures that the company can scale faster and quickly acquire market share. Investors ask for scalability. A scalable business is more likely to attract funding.

12. Have a robust growth plan

Growth is the key, and investors are always curious about your business’s growth potential. Having a clear path to revenue growth with carefully noted assumptions will help investors to believe that growth potential is possible.

13. Leverage Crowdfunding

Crowdfunding platforms can be a great way to raise funds. It would help validate your startup’s concept. By getting support from a large group of individuals, you can demonstrate to investors that there is demand for your product or service.

14. Have clearly defined Goals

Have clearly defined SMART Goals. Classify them as long-term, mid-term and short-term. You can track these goals using KPIs and Metrics. Share the goals with the investors. This will help them understand the vision of the company. It will also give them an idea of what lies ahead—making it easier to decide.

15. Seek Expert Legal Advisory

An expert legal advisor will help you comply with all the regulatory requirements. They will also help you navigate through the legalities of the funding process.

16. Use KPIs and Metrics to identify Risks and mitigate them

Keep track of your business’s health. Use relevant KPIs and Metrics for regular reporting. A well-structured reporting in place helps identify risks at the earliest. This helps save time and money. It also makes the business foolproof against any potential threats. You can mitigate the risks well ahead of time through continuous monitoring. This would help gain investors’ confidence, especially when they avert risks.

Read More: 10 Reporting KPIs Your Business Needs to Track

17. Be prepared to negotiate

Funding negotiations can be complex, and it’s essential to be prepared to negotiate fair and beneficial terms for both parties. Understand the terms of the deal and be ready to defend your valuation.

18. Network with HNIs to find the right Angel Investor

Angel investors are typically high-net-worth individuals (HNIs). They provide capital to startups in exchange for an ownership stake. Look for investors who have experience in your industry.

They can provide mentorship and guidance as well as funding. Some of the notable angel investor communities in Canada are:

19. Evaluate Debt Funding as an option

Debt funding can be a viable option for startups looking to raise capital. Consider Interest Rates, Repayment Terms, and Collateral at the first step. Debt financing can be a good option for startups that need to raise capital and have a clear repayment plan. However, it’s important to carefully evaluate the terms and risks associated with debt financing before accepting a loan.

20. Explore government funding opportunities

The Canadian government offers various funding programs and tax incentives for startups. Research these programs and determine which ones may apply to your startup. There are multiple options, such as:

  • Scientific Research and Experimental Development (SR&ED) tax credits
  • Industrial Research Assistance Program (IRAP)
  • Canada Small Business Financing Program (CSBFP)
  • Canada Media Fund (CMF)
  • National Research Council of Canada (NRC) Industrial Research Assistance Program (IRAP)
  • Futurpreneur Canada

21. Use technology to streamline financial processes

Adopting accounting and financial management software can help you:

  • track expenses,
  • manage invoices, and
  • streamline financial reporting.

This can save time and reduce the risk of errors.

Conclusion

Although the market is going through a slowdown, you can still secure funding for your startup if you work on strengthening the fundamentals. As a Canadian Tech startup, you can follow the 21 Finance and Funding Tips mentioned above to prepare for your next funding round.

If you want to work with a strategic finance partner that can help you prepare your startup pre and post-funding, let’s chat. We can take care of your finances while you docs on growth.

Book an appointment to find the right Outsourcing CFO services for your business with Novaa.

outsourced CFO for fast-growth businesses

The ultimate guide to outsourced CFO services for fast-growth businesses

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Trying to scale your business to 8 figures and beyond?

You’ll no doubt know the importance of carefully managed finances and cash flow to do this.

But how do you keep your finances on track through periods of fast growth?

Outsourced CFO services can help.

By using the expertise and strategic guidance of an Outsourced CFO you can keep your business finances moving in the right direction (without the $150K+ per year price tag of hiring an in-house CFO to do this for you).

In this article, we’ll explore why outsourced CFO services can be a great option for businesses looking for sustainable and profitable growth.

Let’s start with the basics…

What is an Outsourced CFO?

An outsourced CFO is an external finance leader that helps to manage the financial operations of the business.

The finance leader helps to –

  1. Strategically align the finances in line with the goals of the business.
  2. Plan the cash flow, liquidity, and financial assets.
  3. Define indicators which tell about financial performance and deviation from the plan
  4. Bring efficiency so that the company has the right systems in place as they grow
  5. Provide financial insights which can be used for business decision making
  6. An Outsourced CFO can be an interim, full-time, on-contract, or part-time role, depending upon the budget and requirements of the business.

But first, why do you need to Outsource CFO services?

As a business leader, it’s likely that your key focus will be on growth and product/service development. Building a dedicated in-house finance team requires time and costs. These costs might be better spent hiring staff in other departments or making investments in product growth etc.

Key Benefits of Having an Outsourced CFO

Outsourced CFO services can have several advantages for your business. It benefits fast-growing businesses which require both financial management and insights for growth:

  • Cost-effective solution. Outsourced CFOs are more cost-efficient than hiring an in-house CFO and a dedicated finance team. You can hire an outsourced CFO on contract, interim, part-time etc. It means that you are only paying for the fractional services provided. This helps you save on multiple costs and employee benefits that you will have to offer to the in-house team.

  • Get Expert advice with the right industry experience. An outsourced CFO has meaningful industry experience (often working with similar businesses to yours). They can use their expertise for better financial fine-tuning for your business. As independent consultants, they can offer an unbiased and out-of-the-box viewpoint. It helps in better decision-making. Most importantly, they come with a fresh perspective. This might be an unconventional approach compared to the company’s normal way of dealing with situations. But it could help in better optimization of processes.

  • Focus on product growth. As a leader of a growing business, it is crucial that you focus more on building the product and features around it to gain market share. Having an outsourced CFO will help you save time in managing and leading the finance function. This time can be used to focus on product growth.

  • Tax Management & Advice. For a growing company, tax management is important to ensure compliance. Outsourced CFOs will help you to create tax-efficient structures. This will have a long-term impact on organizational set-up and profitability. Having an expert team like Novaa to manage taxes can help your team to focus on growth while we manage compliance and your firm’s profitability.

  • Streamlining existing operations. One of the most important roles of an expert CFO is to modernize and streamline your financial operations. This helps you to track better and optimize costs. It helps to streamline the cash flow for expansion. It improves liquidity and ensures the good financial health of the business.

  • Leverage the power of modern accounting. Outsourced CFO services will help you evolve from a traditional accounting system. It will help set up modern accounting tools. A modern accounting system is integrated with the right expense management and AP/AR management tools. It can make your firm function easily. It takes care of right from getting paid by your clients to paying vendors, payroll etc. Modern accounting systems can streamline your business operations.

  • Preparing for future IPO. Financial structuring is the cornerstone of being IPO ready. Having the right experts like Novaa will help you get ready for the future. It will prepare your financials such that when it’s time to go public, your firm will have all the necessary financial trials and documents in place.

  • Steering through Mergers and Acquisitions. A fast-growing business with differentiated offerings and a high growth trajectory can always be a great candidate for a merger or an acquisition. A diligent outsourced CFO can help you to successfully navigate mergers and acquisitions. By weighing the financial aspects of the deals, you can choose the one which is the best for your business.

  • Mitigate risks and prepare for unforeseen situations. It is always good to be prepared for any unforeseen conditions like market crashes, inflation, etc. Hiring outsourced CFOs can help you prepare beforehand. It helps build a robust financial plan that can factor in various market conditions and scenarios so that you are prepared for the future.

How to find the right Outsourced CFO services?

Here’s a checklist for finding the right Outsourced CFO for your business:

  • Credentials and background of the CFO: It is important to have a CFO that has strong credentials in your industry. Look at someone who understands the industry you operate in and has a track record of helping businesses similar to yours

  • Team: You need to hire a finance team, along with an outsourced CFO to run the entire function. The team is pivotal in implementing the strategies directed by the finance leadership. This is also something that can be managed externally as part of an outsourced finance function where you benefit from bookkeepers, controllers, and CFOs all working together

  • Cost: Cost is a major reason for outsourcing financial services. Having a cost-effective service provider who can offer high-quality services is a great combination.

  • Industry experience: You should look for an outsourced CFO with a significant experience in your industry. Similar to how our client Makeshift found the right Financial Partner that can understand the Tech SaaS Industry. This is crucial in executing financial strategies and building an efficient finance function.

Case Study: MakeShift Finds Strategic Financial Partner with Saas Expertise

  • Collaboration: Communication and coordination are pivotal for the Outsourcing CFO to work closely with the company leadership. It delivers the best results. Regular calls and meetings are a great way to better collaboration within the teams.

  • Use of modern tech: AI and data analysis tools have levelled up the game. It gives insights that can help businesses in better financial management. AI-backed reports can aid in better accuracy and faster decision-making. A CFO who is proficient in using modern tech keeps the business ahead of the competition with the right advice based on financial insights.

  • Expertise in Tax Management & Advisory: Having expertise in Tax Management keeps the financial compliances on time. This can save you from a lot of potential issues that any growing business would not want to deal with. Novaa offers a team of experts in tax management who will help you stay compliant. They will help you get the right tax benefits for profitability and efficiency.

Why is Novaa the right Outsourced CFO service for your fast-growing business?

Novaa has a team of qualified experts extending our CFO services to fast-growing businesses.

It helps you to achieve your growth goals without worrying about your financial operations. We offer dedicated and curated services for different stages of business growth i.e. Launch, Grow, Scale, and Mature.

Our fully outsourced finance team helps you find cost-effective financial solutions. We have expertise in setting up basic accounting processes and systems to tax management.

Our outsourced CFO team offers value-added services like:

  • KPI analysis,
  • Financial Forecast Models,
  • Budgeting, etc.

for a tailor-fit solution based on the business requirements.

Book an appointment to find the right Outsourcing CFO services for your business with Novaa.

A FINANCIAL GROWTH STRATEGY

WHAT’S INVOLVED IN A FINANCIAL GROWTH STRATEGY?

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Do you have a sound financial growth strategy in place? If not, it’s never too soon to consider your next business move.

You likely understand the importance of having a financial growth strategy, but that doesn’t mean you’ll always know the best ways to implement one. 

As bookkeepers, accountants, and financial advisors, NOVAA understands that the numbers don’t lie. Accurate reporting and in-depth analysis of your revenue cycles will arm you with the intel to achieve your business goals. 

Adopting a financial growth strategy isn’t just about making detailed plans; it’s figuring out the smartest way to follow through on them.

SUPPORT YOUR DECISION-MAKING WITH THE RIGHT HELP

It takes a fresh pair of eyes to see your business in a new way!

NOVAA can help fill in the details to help you realize a financial growth strategy. A company without a growth strategy is simply treading water in a sea of opportunity.  

Your company has numerous moving parts that need to be integrated cohesively into any new plans. Every department, from your logistics staff to the marketing team, will need to channel their efforts accordingly. 

Bringing in an outside party is beneficial in providing an unbiased assessment of your operation and exploring the financial gains that await.

STAY ONE STEP AHEAD OF THE COMPETITION

Choosing the next direction for your business can be difficult without proper advice.

Goal setting is easier when you have a team that can read between the numbers and formulate a vision. 

The idea is to sustain sales growth on an ongoing basis. Having a good month here and there just isn’t sustainable. Strategizing means brainstorming ways to boost sales, provide better value for customers, and acquire the necessary assets today for a more secure future. 

SETTING UP A GROWTH STRATEGY

It’s time to develop a budget, a timeline, and a detailed list of the actions demanded to reach a new goal. 

Although every business is unique, certain conversations need to be had. 

The following list describes the areas of discussion where NOVAA’s experience can benefit your company. 

REVENUE REALIZATION

A sale made today may not bring in money until much later. Our team can monitor your transactions and make recommendations for wiser spending. 

TAX PLANNING

Behind every successful business is a good accountant. Year-end financial reporting isn’t just about getting things done on time; your return should provide you with a clearer picture of how your business is doing. With NOVAA, you get an entire team to manage your corporate taxes, remit your HST/GST and PST, and review your financial statements on a monthly basis. 

UNDERSTANDING YOUR INDUSTRY

How are you faring against your closest competitors? Knowing the key performance indicators to watch is helpful in channeling your team’s efforts. 

THE COST OF CUSTOMERS

We all know it takes money to make money, but how much are you paying to attract new customers? NOVAA will analyze your expenditures in terms of marketing and sales so you can re-focus on customer acquisition with greater profitability. 

MERGERS/ACQUISITIONS

If your company is financially positioned to make some big moves, you’ll want experienced financial advice to ensure the timing is right. 

ESTABLISHING NEW RELATIONSHIPS

Business mentors like NOVAA can help you generate ideas for working with other companies. There’s nothing wrong with gaining allies in business. Expanding your brand’s exposure and partnering with like-minded ventures can reduce your marketing costs and open up new opportunities.

IMPROVING THE CUSTOMER EXPERIENCE

Poor service can kill your business reputation and impact your sales. It doesn’t take long for bad news to spread online. Referral programs are a cost-effective way to reward customers and build credibility. 

Focusing on customer retention is another fantastic way to drive revenue. Acknowledging your past successes is an excellent way to stay on the right track. 

PROMOTING NEW OFFERS

Adding more products and add-on services can boost sales, but executing those ambitious plans can be a balancing act. Managing customer expectations is crucial. NOVAA will suggest ways to bulk up your offerings while minimizing costs. 

There’s strength in numbers! Hiring professionals outside your organization to monitor your revenue and expenditures can help keep you competitive, fiscally responsible, and ready to scale. 

If your business is ready to take the next step, NOVAA has the most experienced financial advisors in place; and we’re is prepared to listen. Let’s talk!

Profit growth for your business

How to Drive Profit Growth in Your Business

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How do I drive profit growth for my business? 

Every business owner asks this question and the truth is, there are many ways to increase profits and drive your business forward. 

However, profit growth becomes more efficient with a focus on the right areas, and with the help of a strategic financial partner, like NOVAA, you’ll start to see your business goals come to fruition. 

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This article will cover some of the key areas we suggest focusing on to drive profit growth in your business.

Review Your Prices Often

Pricing your products correctly is one of the most influential aspects of generating profit. 

Underpricing – apart from the obvious of leading to low profits, conveys the message that your product doesn’t hold as much value as your competitors. 

Overpricing pushes customers to your competitors, leads to fewer sales, and stunts growth. 

If your goal is to drive profit growth, your first step should be to reevaluate your prices. 

You can do this by: 

  • Comparing your prices to your competitors
    • Your prices should reflect industry rates and not be too far above or below your competitors. 
  • Reviewing your cost of goods sold
    • It may cost you more to produce your product now than it did before. If this is the case, you’ll need to raise your prices to reflect this change. 
  • Talking to your clients/customers
    • They will give you the best insight into your prices. Determine what they are willing to pay and go from there. 

Remember, adjusting your prices is essential. You won’t be able to drive profits without reviewing your prices and making changes often. 

Invest in Your Staff 

With every new hire comes the expectation for them to add value to your business, and with value comes profit.  

Investing in your staff is often overlooked by business owners but is key to driving profit growth. They assume a competitive salary is enough to attract and retain top talent. 

However, this simply isn’t enough if you expect a new employee’s work to make a sizable impact. 

Invest in your staff by: 

  • Offering regular training for tools they use to do their jobs
  • Ensuring personal and professional growth opportunities 
  • Providing a competitive benefits package 
  • Allowing remote work (when applicable) 
  • Focus on improving work/life balance
  • Explaining how their work matters to the company as a whole

When you invest in your staff you create a healthier work environment, promote mental and physical well-being, and drive profit growth.

Use Data to Make Better Decisions

Your business collects thousands of data on a daily basis. This data can be incredibly useful when used properly, but oftentimes, it’s left to go to waste. 

There are three different types of data you can use to help make better business decisions. 

  1. Descriptive data
    1. This tells you what happened and why. 
  2. Predictive data
    1. This tells you what will happen if a certain outcome happens. 
  3. Prescriptive data
    1. This is a way of determining what actions need to be taken for a certain outcome to happen. 

These three types of data combined will give you the insight you need to make better decisions and drive profit growth in your business. 

Lower Your Expenses 

Lowering your expenses goes hand in hand with raising your profits. As you know, lesser costs lead to greater returns. 

However, the question often becomes, how do I lower my expenses? 

There are a few different things you can do to keep your expenses in check: 

  • Create and stick to a budget
    • Your budgets should be realistic but also challenging. Spending should cover necessary expenses but not be so inclusive that you are spending in places you shouldn’t. Holding yourself accountable to a budget is the best way to manage your expenses. 
  • Rework vendor contracts
    • There may be cheaper vendor options or you may have put in enough time to receive a discount with one of your current vendors. Make sure you check in with them often to see if there are any areas you could be saving. 
  • Smooth out your operations
    • The more time it takes for you to produce and sell your product the more money you are spending. Do what you can to smooth out your operations and increase efficiency. This could mean relying more on automation, improving your production strategy, or selecting better sales channels. 

Where there is any opportunity to lower costs, take advantage, this will help drive profit growth. 

Drive Profit Growth With the Help of a Strategic Accounting Partner 

If your goal is to drive profit growth for your business, working with an experienced accounting partner, like NOVAA, is the best strategy.

We understand the steps it takes to increase profitability and will take the time to learn about your business and help you implement new strategies to achieve its unique goals. 

Contact NOVAA today to learn more about how we can help you grow your business! 

Tech-Savvy Accounting

The Importance of a Tech-Savvy Accounting Firm

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Many businesses are catching on to the upsides of working with a tech-savvy accounting firm. 

In fact, an astonishing 78% of business owners say they would prefer to work with a tech-savvy accountant. Why? 

Tech-savvy accounting firms, like NOVAA, offer a variety of benefits traditional firms cannot provide. They bring efficiency, accuracy, and smoother processes to your financial systems through in-depth knowledge of third-party applications and financial tools. 

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With a tech-savvy accountant, your business will be in the right position to reach its financial goals. 

How’s that? 

Below we will answer a few questions about tech-savvy accounting firms and explain how your business will benefit from one. 

What Does a Tech-Savvy Accounting Firm Look Like?

As the name implies, a tech-savvy accounting firm uses the most up-to-date technology to leverage your financial systems and help your business reach its goals. 

There are plenty of tools and third-party applications that can be used to improve your financial system and a tech-savvy accountant will have a pulse on the best choice for your business. 

They’ll also learn and implement the tools so you don’t have to take the time to do so. 

While many tech-savvy accountants have a set of tools they prefer, they are eager to find and learn the next best thing to help move your business forward. 

Their pulse on technology extends far beyond financial management, as well. They have the ability to compile data across all areas of your business, including: 

  • Customer Relation Management (CRM)
  • Point of Sales Systems (POS)
  • Sales and Marketing Systems 

With a culmination of all of this data and their financial expertise, you’ll have everything you need to make the right decisions. 

Overall, a tech-savvy accounting firm, like NOVAA, can be a propeller for your business to help it reach its financial goals. 

What are the Benefits of Working with a Tech-Savvy Accounting Firm?

As opposed to a traditional firm, you’ll notice tech-savvy firms look more towards the future, prioritize efficiency, and ease your financial management role. 

Let’s dive into the specific benefits of working with a tech-savvy accounting firm.

A Tech Stack Built for Your Business

Automation is the key to building a financial system centered around technology. However, the tools you choose and how those tools work together is the deciding factor between whether or not your automation helps your business achieve its goals. 

One of the first things a tech-savvy accountant will do to improve your financial system is build a tech stack. A tech stack is a combination of all of the automation tools that work together to electronically manage your finances. 

This includes everything, like: 

A well-built tech stack can completely eliminate manual work, produce up-to-date data, and simplify your day-to-day management responsibilities.

Efficiency 

With your new tech stack and tech-savvy accountant, you’ll see noticeable improvements in efficiency. 

As mentioned, there will be little to no manual work required to manage your finances. All of your data will be up-to-date and accessible from anywhere which allows your accountant to work quickly, generate reports, spot trends, and so much more with just a few clicks of a button. 

Fewer Errors

To no one’s fault, manual work is prone to errors. At the very least, these errors are time-consuming and their worst are very costly.  

Fewer (to almost zero) errors are a byproduct of working with a tech-savvy accountant. Again, automation is the key to this benefit. 

Applications can transfer one data entry to multiple platforms seamlessly. There is no looking up information and duplicating records to gain a better grasp of your numbers. Everything is calculated for you. 

This also means your accountant can dig deeper into your numbers without guessing if the data is accurate. 

Accessibility 

Working with automated tools also leads to improved accessibility, not just for your accountant but also for you. 

While your tech-savvy accountant will obviously have access to your tools, so will you. This means you can access your accounts from anywhere to gain insight into your numbers. 

Sharing files, emails, and lost papers become a thing of the past. All of the financial information you and your accountant need to manage your finances and run your business will be available 24/7, from everywhere.

Future-Focused Strategies

With the benefits of efficiency, accuracy, and accessibility your accountant will have everything they need to focus on the future. 

They will be able to compile data to create strategies that will move your business forward. This also includes a detailed budget and forecasts. 

Together, you’ll be able to use these to create future-focused strategies. 

Easier Collaboration

The automated tools your tech-savvy accountant implements will lead to improved collaboration between your internal and external teams. 

All of your data and documents will be centralized and there will be no need for emailing back and forth or checking to see if the information is up-to-date before moving forward. You and your accountant can have confidence in the accuracy of your data and your workflow processes will improve. 

You will both always be on the same page. 

Less Work For You

Less work for you is a benefit of working with any accountant, not just a tech-savvy one. 

However, when your accountant is tech-savvy, your systems will be automated (as we mentioned) and you will not be required to manually update data or send information to your accountant. 

They will have everything they need and will: 

  • Create reports
  • Build a budget
  • Create forecasts
  • Meet deadlines
  • Spot negative trends and suggest improvements
  • Create short and long-term strategies for meeting your goals

All of the financial management tasks that take your time and brain power will go to your tech-savvy accountant. 

Improve Security 

When you or your accountant rely on manual management, security becomes a huge risk. Files can get lost, deleted, accessed by unauthorized viewers, or corrupted. All of these can be costly for your business and lead to plenty of issues down the road.

With technology infused into your financial system, your work will automatically be saved and stored. Only the people you’ve allowed permission will have access and your information will be safe. 

Additionally, these tools are often heavily encrypted so the potential for hacking is near impossible. 

With the help of a tech-savvy accountant, you can rest easy knowing your essential information is safe and secure. 

Searching for a Tech-Savvy Accounting Firm?

Technology has allowed accountants to do their job better, and in doing so, provide better services to their clients. 

Partnering with a tech-savvy accounting firm is one of the best ways to position your business for long-term success.

At NOVAA, we pride ourselves on being a tech-savvy accounting firm. We take time to learn your business and then get to work finding ways to improve your finances through efficiency, accuracy, and smoother processes.

We start with building a tech stack and then begin suggesting and implementing strategies – based on your historical data and our experience – that focus on helping your business reach its goals. 

If you’re looking for a tech-savvy accounting firm, contact NOVAA today! We’d love to help your business every step of the way!

strategic financial partner

What Does a Strategic Financial Partner Look Like?

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A strategic financial partner plans to put an emphasis on growth and long-term vision within your finance functions. It’s a way of building systems and processes that focus on the future. 

For many entrepreneurs, focusing on strategic financial planning leads to a successful business. However, because it requires a lot of strategizing and a strong understanding of your finances, many turns to a strategic financial partner for help. 

Strategic financial partners, like NOVAA, help build, carry out, and maintain the finance functions that enable strategic financial planning.

Let’s take a closer look at what your business can expect when you work with NOVAA as your strategic financial partner. 

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Data-Driven Decision Making 

Every business collects data with the intention of using it to help them grow. However, many times, these intentions fall flat. They either: 

  • Don’t collect the right data,
  • Collect the right data but don’t have the time to use it properly,
  • Collect the right data but don’t know how to leverage it. 

A strategic financial partner will ensure your company is tracking the right metrics and using them to produce decisions that drive growth. 

At NOVAA, we do this by tracking essential KPIs and analyzing reports. From there we will pinpoint areas of improvement and opportunity. With that information, we will suggest ways to make adjustments and get back on track. 

With the help of data and guidance from a strategic financial partner, you’ll ensure your choices are aligned with your goals and are future-focused. 

Financial Processes Built for Growth

A common roadblock for many businesses is outgrowing their accounting system. As their business gains traction, they either:

  • Need to switch from manual to automated processes

OR

  • Their financial processes and third-party applications can no longer keep up with the growth. 

This is another area where having a strategic financial partner will be beneficial.

At NOVAA we ensure our clients’ financial systems are built for now and later. As you grow, the systems and processes we help you build will adapt to your business. 

We will pinpoint third-party applications that will work best with existing systems and we will guide you through the implementation process for those tools. We will also ensure you’re entire financial system integrates smoothly so you can maximize efficiency and continue to grow.

In-Depth Financial Analysis

Every aspect of your financial system works together to produce vital information. 

A financial analysis compiles that information to give you the full story of your business. When done correctly, it will give you the information you need to form educated choices and review previous successes. 

An in-depth financial analysis will:

  • Include an evaluation of trends, internally and externally
  • Help build a financial system that works for your business 
  • Focus on long-term planning and strategizing
  • Serve as a tool for determining how and where your business should invest

At NOVAA, we know what information is essential and can compile it into easy-to-understand reports that will help you make the right business decisions. 

Detailed Budgeting and Forecasting 

A large portion of your financial success boils down to accurately creating and utilizing your budget and forecasts. 

Your budget is a detailed outline of your revenue and expenses and when you stick to it closely, it will keep your spending on track.

Your forecasts show you where your business is headed financially and present a potential risk. You can build a variety of forecasts based on different financial situations, however, one of the most important forecasts is the one built around your budget. This will show you where your business will end up financially as long as you stick to the budget. 

As your strategic financial partner, we, NOVAA, will work with you to create a realistic and goal-focused budget. From there, we’ll create forecasts for a variety of situations so you can always be prepared for what’s ahead. 

Experts Dedicated to Your Finances 

One of the primary benefits of working with a strategic financial partner is having an expert dedicated to your finances. 

They have the time and resources to truly understand your business without a personal connection. This means they’ll be able to clearly make decisions on facts and data rather than hunches or emotions. 

And while you may have a good understanding of your finances, you likely didn’t start your business to sharpen your financial management skills. This is why many business owners choose to work with a strategic financial partner. They ensure everything is getting done properly and your business is being built for the future. 

Consider working with NOVAA as your strategic financial partner. We will immerse ourselves in your numbers and dedicate ourselves to ensuring financial success for your business. This way, you can spend more time doing what you do best, running your business. 
Contact us today to learn more about how we can service your business! And don’t forget to follow and like us on Facebook, Instagram, and LinkedIn!

5 Cash Flow Metrics to Prioritize and Track in Your Startup

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Managing cash flow can be a challenge for small businesses. Many factors come into play and if you don’t have a strategy or system in place, you’ll start to see your cash flow trend in the wrong direction. 

At NOVAA, we advise all of our clients to prioritize cash flow metrics as a primary step in cash flow management. 

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When you fully understand what metrics affect your cash flow, you can leverage these numbers to strengthen it and your business as a whole.

While this is not an all-inclusive list of the metrics that can be used to improve your cash flow, these are five of the most important cash flow metrics we, NOVAA, suggest prioritizing in your startup:

1. Operating Cash Flow (or Cash Flow From Operations)

Operating cash flow (or cash flow from operations) is a measure of the amount of cash generated by a company from normal, core business activities. A positive operating cash flow is the first step toward a successful business. 

Typically, this is the first metric found on your cash flow statement. The metric indicates whether or not you are generating a strong enough cash flow to grow. 

You can calculate operating cash flow in two ways: direct and indirect.

The direct method is the difference between revenue (inflows) and operating expenses (outflows). Below is the formula using the direct method:

Total Revenue – Operating Expenses = Operating Cash Flow

The indirect method factors in non-cash accounts. Below is the formula using the indirect method.

Operating Income + Depreciation – Taxes + Change in Working Capital = Operating Cash Flow

No matter which method you use, your operating cash flow is found on the cash flow statement, along with cash flow from investing activities and cash flow from financing activities. Cash flow from financing and investing factor in the other business activities included in measuring your overall cash flow.

2. Accounts Receivable Turnover

Accounts receivable turnover is a metric that measures the rate your company collects debt from your customers. 

Ideally, you want to have a high turnover rate. This would mean you are collecting debt quickly. A low rate would indicate that customers are not paying in a timely manner, whether it be from:

  • Overly flexible payment terms
  • Delivery problems
  • Unhappy customers 

When you prioritize and track this metric, you can see changes over time, which could point to cash flow problems before they become a larger issue. 

3. Working Capital

Working capital is a metric that indicates your business’s:

  • Liquidity
  • Operational efficiency
  • Short-term financial health 

The numbers you need (current assets and current liabilities) to calculate your working capital are found on the balance sheet. Essentially, your working capital is your current assets less your current liabilities. 

If your business has a large working capital, you have the ability to move into additional investment opportunities and grow. If your current liabilities outweigh your current assets, your business is at risk of failure. 

Working capital can be thought of as a more current indicator of your ability to pay liabilities while cash flow is more of a long-term view. They both work together to provide an overall idea of the financial health of your business. 

4. Forecast Variance

Forecast variance is a comparison of your projected numbers to your actuals. When you measure your variance, you can spot areas where you are off track from where you were expecting to be and make adjustments. 

Some areas where tracking forecast variance in relation to cash flow may be helpful include:

  • Sales (actuals vs forecast)
  • Expenses (budget vs actuals)

5. Return on Equity

Return on equity is an ROI metric that measures the shareholder’s return from your business on their investment. 

Over time, your return on equity should increase. This would indicate that you are wisely using your investors’ money (working capital). If you aren’t using your money to invest wisely, it can lead to a low return on equity, which is a turn-off for future investors. 

Your return on equity can be used to appeal to investors (if needed) and measure how well you are managing your cash flow. 

Need Help Tracking the Right Cash Flow Metrics?

Cash flow is the lifeblood of every business. It measures cash inflows and outflows and is a strong indicator of your business’s short-term and long-term financial health. If your cash flow struggles, your business will struggle as well. 

While tracking metrics like the ones covered above will provide you with some of the numbers you need for proper cash flow management, outsourcing your accounting to an expert will bring you the greatest return. 

At NOVAA, we will ensure you are tracking and prioritizing all of the right cash flow metrics so your business can continue to grow. Contact us today to learn more about how we can help! 

Accounting for Entrepreneurs: How to Stay in Control Year-Round

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For entrepreneurs, staying in control of your accounting year-round is more than an additional task to add to your plate, it’s a necessity. 

Your business relies on you understanding where it stands, financially, at all times. To gain that understanding, you have to know how to leverage automation, stick to your budget, mine value from your numbers, and stay on top of your regular tasks. 

The good news is, with the help of an outsourced accountant, this is easy. However, if you plan to stay in control of your accounting year-round on your own, you may need some extra guidance.

Here are some tips to help you out!

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Rely on Automation

If you are still working with manual processes, it’s time to make the transition to automation. Automated systems and processes can be applied to nearly every aspect of your accounting including: 

  • Bookkeeping
  • Managing accounts receivable
  • Keeping track of payroll
  • Inventory management
  • Bill paying

Not only does automation add efficiency to your business, but it also keeps you organized without you having to perform daily upkeep. With organized processes, accessible from anywhere, you can generate reports and analyze data whenever you need them. This is essential for day-to-day and long-term decision-making. 

With automation, you’ll have a strong pulse on accurate, up-to-date information all year round. 

If you are struggling with finding automation tools that work best for your business, consider reaching out to the experts here at NOVAA. We can provide you with guidance for building a tech stack that drives success. 

Stick to Your Budget

Your budget sets the groundwork for your spending throughout the year. It plans out all of your expenses so, naturally, to get the most benefit from it you have to keep your spending in line with your budget.

When you don’t follow your budget closely, you risk overspending, misallocation of funds, and cash flow problems, all of which can cause major issues for your business in the long run.  

Consider comparing your budget to actuals on a monthly basis. This will tell you how close you are sticking to your budget and point out any areas where you may be missing the mark. It’s a great way to stay on top of your spending and ensure you are setting your business up for success throughout the year. 

Realize Accounting is More Than Compliance

Many entrepreneurs miss the mark when it comes to accounting. They assume its primary purpose is to meet tax compliance, and while having accurate numbers is essential when filing taxes, accounting is much more than that. 

Your numbers are full of valuable information and tell the full story of your business. If you are simply keeping up the books to meet tax guidelines, you don’t truly understand the full potential of your accounting. 

For example, if you look at your statement of cash flows just to see how much money is in the bank, you’re missing the bigger picture. This report can also indicate accounts receivable problems, failure to make investments with extra funds, or the need for a better bill-paying strategy.

As you aim to stay in control of your business finances year-round, you have to make sure you are leveraging your accounting properly. If you struggle in this area, it may be time to outsource your accounting to an experienced professional. At NOVAA, we will help you see the big picture so you can get the most out of your numbers.

Create Daily, Weekly, Monthly, and Annual Checklists

One of the best ways to stay in control of your accounting throughout the year is to ensure you have a solid strategy for managing your accounting. Setting daily, weekly, monthly, and annual checklists will help you stay on top of your regularly occurring tasks – and remember, automation can help limit some of this work, as well. 

Daily Checklist

When building your daily checklist, consider including tasks like: 

  • Recording transactions,
  • Reconciling accounts,
  • Recording expenses.

Staying on top of these daily will save you time in the long run. 

Weekly Checklist

When building your weekly checklist, consider including tasks like invoicing and managing payroll. 

Weekly invoicing can help you avoid cash flow problems and having a routine for payroll keeps you from being in a crunch when the due date rolls around.

Monthly Checklist

When building your monthly checklist, consider including tasks like: 

  • Paying bills,
  • Reviewing your budget vs. actuals,
  • Reviewing other reports, like your cash flow statement.

The majority of your monthly tasks are meant to keep you in check with your short- and long-term goals. This gives you the opportunity to catch problems before they get out of hand and make timely adjustments. 

Annual Checklist

When building your annual checklist, consider including tasks like: 

  • Building a tax plan,
  • Building a new budget,
  • Collecting year-end financial statements.

This is a great way to regroup and get ready for the year ahead. Remember, one of the keys to being in control of your accounting throughout the year is being prepared. 

Work with an Experienced Accountant 

As you work to gain better control over your accounting year-round be sure to remember:

  • Automation can make it easier.
  • Sticking to your budget will help you stay on track with your spending.
  • Accounting is more than just compliance.
  • Creating checklists helps you stay on task and working towards your goals. 

If you find yourself lacking the control you need to properly manage your business, consider working with an experienced accountant. 
Our team of experts can be an extension of yours to build an accounting system that keeps you in control. Contact us today to learn more!

What Outsourced CFOs Provide for CEOs

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Outsourced CFOs work as an extension of your team to manage the business’s finances, provide strategic direction, and promote growth. 

While they have their own set of important tasks, they also work closely with the CEO to provide the financial insight needed to make decisions, large and small. 

As the business grows, their professional dependence on each other grows as well. Here are some of the areas in which an outsourced CFO will benefit a CEO. 

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Metrics Management

One of the primary tasks of a CFO is collecting relevant data and analyzing the performance of that data. 

While most businesses track standard reporting KPIs (Key Performance Indicators), like gross profit, budget variance, and customer acquisition cost, they also need to track metrics that are specific to their own unique needs. 

Outsourced CFOs create tracking strategies to ensure your business collects and relays the information it needs to make strong decisions moving forward.  

Along with managing the standard and unique KPIs previously mentioned, CFOs are also responsible for managing cash flow. A healthy cash flow is an indication of a healthy business, so proper management and reporting are vital.

Once the data is collected and reports have been made, outsourced CFOs present the information to the CEO in an easy-to-understand format. Together, they will strategize to create a plan to get the numbers to match the goals and needs of the business. 

Financial Planning and Budgeting

For a business to grow, it has to spend time preparing for the future and in most cases, this can be done through financial planning and budgeting. These tools use a combination of previous data and forecasts to develop strategies for how and when money should be allocated to reach business goals. 

Financial planning and budgeting require a combined effort from the CFO and the CEO. While the CEO knows where money needs to be allocated and is much more fluent with the overarching goals of the business, the CFO knows how to manage that money to produce the financial results that help the business reach its goals.  

Once the tools are created, the CEO will spend their time implementing the financial plans and budget, while the outsourced CFO keeps a close eye on the metrics, measure progress, and suggest changes where needed. 

Systems and Processes Management and Upkeep

Building the financial processes your business needs requires plenty of planning and attention to detail. What may start as shifting from manual processes to automation (or simply improving previously automated processes) may lead to the need to build out a perfectly integrated tech stack. 

This can be a tricky process and more times than not, it’s something a CEO doesn’t have time for. However, a CFO, working closely with the CEO to define goals and strategies, can take the time to do the necessary building and implementation of these processes. 

They understand the technology and systems and can select third-party applications that work well with what you currently have in place, smoothing out the integration process and building a high-performing tech stack.

Strategizing Long-Term Growth Plans

CEOs are responsible for creating long-term strategies that further the business. Some examples of these strategies include: 

  • Product development and pricing
  • Adding a new branch
  • Planning a rate to hire employees
  • Etc. 

However, before implementing these strategies there are plenty of financial aspects to take into account. This is why it’s essential the CEO and outsourced CFO work closely together.

While the CEO brings the ideas and methods for implementing long-term strategies, the CFO works on the financial aspects like market analysis, pricing analysis, studying growth rates, economic impacts, and more. Working together helps to create the most sound strategies to forward your business. 

Decision Making

In addition to long-term strategizing, CEOs are also responsible for making day-to-day decisions. While it may seem like the short-term decisions don’t carry as much weight in the moment, they absolutely play a role in the overall success of the business. 

There are almost always financial implications associated with these daily decisions and a CFO is responsible for providing guidance in this area. 

They also play an essential role in determining if the short-term decisions being made align with goals and the long-term plans for the business. 

Outsourced CFOs Partner with CEOs to Enhance Business

As the outsourced CFO works to manage metrics, create growth-focused financial plans and a budget, select and manage the upkeep of systems and processes, strategize long-term plans, and aid in decision making, it’s essential to work closely with the CEO. 

While an outsourced CFO is not in the office, their relationship with the CEO still requires the same levels of trust and communication. Together, their skills will go hand and hand to improve the business as a whole.  

For more information about how outsourced CFOs and CEOs work together to create a thriving business, visit: https://www.novaa.ca/

How Outsourcing CFO Services Leads to Growth

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Growth is the goal, and in this day and age, outsourced CFO services are a one-way ticket for businesses to reach their growth goals.

As the world around changes, updates, and digitally integrates, you’ll find yourself falling behind if you try to keep up on your own. 

This is where an outsourced CFO can help. They are well-versed in financial planning and know what it takes to build a sustainable accounting system, a strong cash flow, and budgets and forecasts that keep your business needs and goals in mind.

Here’s how:

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Outsourced CFO Services Means a Sustainable Accounting System

Your system needs to be able to grow with you. If growth leads to strain, that’s a sure sign your system isn’t able to sustain growth.

To ensure your system can grow with you, you need processes that will suit your needs now and in the future. This includes a tech stack with easy-to-use tools. Your system will be organized and efficient to track progress and make adjustments quickly.

Outsourced CFOs are experienced in building systems meant for business growth. They have time you may not to evaluate your business landscape and develop a financial system that helps you meet your current and growth goals.

Cash Flow Management

Cash flow is your business’s lifeblood. It measures the flow of money in and out of it. There’s no disputing; you should track it and always be looking for ways to increase it.

Excellent cash flow changes everything. When you manage cash flow, you understand the real cost of day-to-day operations and can use that knowledge to streamline and take advantage of growth opportunities.

Cash management includes:

  • Finding out how much cash you have on hand
  • How much money you will need in the future
  • Evaluating the cost-benefit for technology and other investments
  • Pinpointing asset changes as they occur (or anticipating them)
  • Knowing your liabilities
  • Keeping your cash flow under control
  • Timely invoicing
  • Timely payments

Outsourced CFOs know what it takes to improve cash flow, can monitor it closely, and make adjustments to improve when needed. 

Outsourcing financial services gives even smaller businesses access to expertise, analysis, and resources they might not otherwise think they can afford.

And sadly, they may feel this way because of poor cash flow management that an Outsourced CFO can fix. This is a massive financial failure you can avoid.

Budgeting and Forecasting

Overspending is often where businesses fail. 

Take customer acquisition costs as an example. They just expect it to be worth it down the line. But if they’re not also spending to increase customer lifetime value, this spending never pays off.

A budget is essential to keeping spending on track, so you’re spending in the right places and ensuring what you’ve allocated works together across the budget to achieve goals.

Budgets also go hand in hand with cash flow management. You can make easier purchasing decisions with a budget because you already know how much you’ll spend on that line item. 

Sticking to a budget ensures you are not overspending in one area, leaving other areas underfunded.

Your budget should be time-bound, whether that’s quarterly or annually, and it should account for:

  • Every source of revenue
  • Every possible expenditure

Your budget should be realistic while allowing you to operate within your means and manage unexpected revenues and expenses. A reasonable budget can also help you identify opportunities and forecast what you’ll need in the future, like having money for those technology investments you know you need to grow.

Forecasting lets you see where your business is headed and serves as a guide to building a better budget, meaning this all works full circle. With forecasting, you are looking forward rather than backward. 

You can predict where things are going and use this understanding to implement data-driven strategies to confidently move towards your goals.

Outsourced CFO services keep your business moving toward growth and realizing it.

KPI Development and Monitoring

Tracking the right KPIs is essential for a growing business. The data your KPIs generate benefits your financial reporting process and are key to giving you a big picture view of how your business is doing.

With consistent monitoring and analysis, you can quickly make adjustments to get back on track when your numbers are off.

Relying on data is also a long-term strategy in that you can use it as a tool for making better business decisions.

An outsourced CFO can help present opportunities within your data that could add value to your financial strategy.

You can rest easy knowing your outsourced CFO is spending the time you don’t have, getting to know your numbers and monitoring the progress of your financial goals.

Outsourced CFO Services Could Be the Right Move for You

As your business grows, you need your financial system to grow with you. You need someone who can manage and maximize your cash flow, guide you toward the right business decisions, and help you move your business build a strategic financial plan.

Hiring a full-time experienced CFO may not be in the cards, and that’s where NOVAA steps in.

NOVAA’s technology forward, cloud-based outsourced CFO services will help you get a handle on cash flow, create a budget and system that works, and take advantage of the opportunities to grow your businesses. Book an appointment today.