Starting a Startup’s Financial Team — From Outsourced to In-House

When a startup reaches a certain scale, outsourcing finance operations isn’t an option anymore.

That’s the point when many startups scale by bringing on an experienced chief financial officer (CFO) to take the reins of the finance function and build the office of the CFO from the ground up. It involves insourcing the functions that lean startups typically outsource to external vendors.

Yaron Bartov, new CFO at tech startup Torq, shared with PYMNTS his experience in building the office of the CFO from the ground up at the maker of no-code workflow software for IT security teams.

Bartov joined the company four months ago. His marching orders were to create an internal finance organization from the ground up. He applied the corporate philosophy of simplifying things to the task at hand.

“So, before me joining, everything was external. There were two external bookkeeping agencies. There was no internal finance team here and when I joined,” he said. “So I had to build a team — director of finance, controller and bookkeeper.”

He also had the opportunity to establish policies, guidelines and controls. In addition, he has educated the staff on how to work with an in-house finance office.

State of Payments

At this point, the payments function is partly automated. On the accounts payable side, the company uses commercially available payments software. It employs credit cards as a method of payment. Different solutions are used in the U.S. and Israel. The company plans to finalize accounts payable automation by the end of this year,

On the accounts receivable side, it just started billable operations this year, so billing isn’t automated yet. However, plans are in place to semi-automate the process soon and ultimately achieve full automation.

Macro Challenges

The nature of the company’s business makes it relatively immune to some of the major macro headwinds such as inflation and global geopolitical stresses. Virtually any organization has to have a security team that needs to automate the manual processes that are in place right now.

The tight labor market does impact the company. Torq has coped with the talent crunch by relying on good old-fashioned networking to source new staff, he said.

Corporate Challenges

Having just recently started customer-facing operations, one of the biggest corporate challenges is onboarding new customers. Establishing budgets needs to be done over 12-month and 18-month time frames. Competitive issues are also a priority.

The biggest challenge of all though is cash flow to provide a return to investors. According to Crunchbase, Torq has raised $78 million over four rounds so far.

“At the end of the day, it’s all about cash flow. So, we are a startup. Investors took a bold step and invested in Torq and now we need to fulfill the goals and the plans with that funding,” Bartov said.

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