Expert Financial Reporting Services for Growing Startups

As the go-to financial services partner for venture-backed startups, Graphite Financial is a full-service provider with industry-specific expertise in SaaS, eComm, HealthTech and more. Graphite’s roots are in the venture capital ecosystem, giving us comprehensive knowledge of every startup’s needs. What’s more, our services are wide-ranging, allowing us to serve as more than just a long-term partner, but a true extension of your startup through expert accounting, reporting, and CFO services.

Is your startup ready to transition from basic bookkeeping to strategic financial reporting? Graphite’s fractional CFO services can help. While basic bookkeeping essentially manages your finances day to day, financial reporting provides a more comprehensive view of your startup’s financial health. It digs deep into the numbers to uncover insights and further analyze your startup’s financial data, which is key to communicating with investors and other stakeholders. By leveraging outsourced CFO services, startups gain access to expert guidance and strategic financial leadership without the full cost of hiring in-house startup accounting services.

What Are Financial Reporting Services?

Just what are financial reporting services? Financial reporting takes basic bookkeeping a step further and digs deep into your startup’s finances to interpret, classify and analyze financial data. While bookkeeping is intended to keep records up to date and complete, reporting offers a more comprehensive view of your startup’s financial health and can be communicated to investors and other stakeholders. These reports not only provide transparency but also deliver strategic insights that help guide smarter business decisions.

Some of the key elements of financial reporting include:

• Preparing financial statements (i.e., balance sheet, income statement, cash flow statement, etc.)
• Ensuring accuracy and compliance in financial reporting with GAAP accounting standards or other financial reporting standards
• Analyzing and interpreting advanced financial data to identify trends, evaluate performance and gather insight for better decision-making
• Communicating financial information to key stakeholders, building trust and transparency

Core Financial Statements and Revenue Recognition

Growing startups need to consider a variety of financial statements in their reporting. These include:

• Income statements: Income statements should summarize your startup’s revenue, expenses, gains and losses over a specific period.
• Balance sheets: Balance sheets offer a snapshot of your startup’s financial situation at a given point.
• Cash flow statements: These statements track the movement of cash and cash equivalents that enter and exit your startup.

Financial reporting can be made more complicated by how your startup recognizes revenue. For example, SaaS startups should recognize revenue over the subscription period, which differs from most startups that recognize revenue at the point of sale.

Revenue tracking is also key, notably for eComm startups, as it pertains to understanding financial performance and making informed decisions. eComm startups should track revenue by implementing accrual accounting practices and using robust bookkeeping systems. Such startups will also need to know how to calculate gross revenue, net revenue and total sales based on the respective formulas.

All startups must also comply with the ASC 606, which standardizes revenue recognition from customer contracts. It offers a five-step model for revenue recognition to help startups understand when and how to recognize revenue. ASC 606 has a significant impact on SaaS startups, notably when it comes to deferred revenue and contract obligations.

Proper revenue tracking and compliance are essential to fundraising success.

Industry-Specific Financial Reporting Solutions

Graphite’s full-service startup accounting expertise adds even more value to our ability to pair professionals with specific experience in a startup’s industry or at their respective stages in their journey. Graphite’s professionals have a deep and thorough understanding of reporting requirements in all industries, from SaaS to eComm to HealthTech, Fintech and more. Learn more about the reporting requirements for some of the most common types of startups we work with:

SaaS and Tech Startup Reporting

Per accounting guidelines and best practices, SaaS startups must meet specific financial reporting requirements based on their unique business model per the ASC 606. More specifically, they need to demonstrate an ability to generate predictable revenue streams and scale in a sustainable manner. Some of the KPIs SaaS startups should be tracking include:

• MRR and ARR
• CAC
• Churn rate
• LTV
• LTV/CAC ratio
• CAC payback period

By closely monitoring these metrics, Graphite helps SaaS startups align financial performance with overall business strategy and operational efficiency, ensuring that growth initiatives are financially sustainable and data-driven.

Deferred revenue and subscription billing complexities can further complicate reporting. Deferred revenue is essentially unearned revenue for services your SaaS startup has yet to deliver. It should be recorded as a liability on the balance sheet, then recognized as earned revenue as services are provided. Deferred revenue management is important for financial stability and improved forecasting. SaaS and tech startups may also have various billing complexities that must be properly managed. Pricing models may include flat-rate, usage-based, tiered, feature-based and per-seat. Proper management can help ensure financial reporting accuracy.

eComm and Consumer Product Reporting

Just as there are unique reporting requirements for SaaS and tech startups, eComm and CPG startups must also consider these considerations. Some of the unique financial challenges in these industries as they pertain to financial forecasting and reporting include inventory accounting, COGS and multi-channel revenue tracking.

• Inventory accounting involves maintaining accurate records of inventory movement. Most startups administer either First-In, First-Out (FIFO) or weighted average cost methods. Once you select a method, routinely monitor inventory to identify where improvements can be made.
• COGS: COGS are the direct costs associated with producing or acquiring sold products. They help provide a better understanding of gross profit and net income, and can also help with supply chain optimization.
• Multi-channel revenue tracking: Multi-channel revenue tracking can be difficult due to a lack of inventory synchronization across various sales channels, different requirements and regulations across platforms, and problems tracking returns and exchanges across all channels.

It’s crucial to focus on these to build a strong financial foundation and track profitability. Another key metric for gauging the profitability and sustainability of an eComm startup is the LTV:CAC ratio, which measures the lifetime value of the customer versus the cost to acquire that customer. A good LTV:CAC ratio for an eComm startup is 3:1, representing a $3 return for every $1 spent to acquire a customer.

Investor-Ready Financial Reports

As your startup grows, it’s imperative to stay in constant contact with investors and stakeholders. Financial reporting is a key aspect of this, underscoring the importance of providing them with clean, investor-ready financial reports. Graphite can help with this task.

Clean, auditable financial books are important for several reasons. Not only can they accurately and confidently depict your startup’s financial situation, but they also portray professionalism and credibility, which can help further build relationships and credibility with key stakeholders. Good books can also represent a competitive advantage compared to other startups that investors might be considering investing in.

Some best practices for creating investor-ready financial reports include focusing on a narrative and telling a compelling story, clearly addressing investor interest and priorities, and integrating the right data and metrics to validate your startup.

Technology-Driven Reporting and Automation

When you partner with Graphite, you’re not just getting expert financial support and advisory services at a fraction of the price of bringing a professional in-house; you’re also getting the technology and programs that Graphite uses. Our platforms help us deliver efficient, accurate financial reporting, can integrate with accounting software and reporting tools, and come with automation benefits to streamline month-end close, recurring reports, and other financial processes.

Some other features of Graphite’s technology suite include real-time financial dashboards, KPI tracking and mobile accessibility.

GAAP Compliance and SOX Readiness

From generally accepted accounting principles (GAAP) compliance to SOX readiness to audit preparation, startups often face complex financial requirements that must be met as they grow and evolve. Aside from meeting regulatory requirements, startups must also switch from cash-basis accounting to accrual-basis accounting. Accrual-basis accounting is a requirement for any startup grossing $26 million over a three-year period, per the IRS.

GAAP is a framework of principles developed and published by the Financial Accounting Standards Board, which helps ensure that statements are prepared and presented consistently, thereby making it easier for stakeholders to understand your startup’s financial performance. Key GAAP principles include regularity, consistency, sincerity, permanence and good faith. While it’s not mandatory for privately-held startups to comply, doing so can help secure investments and build trust and credibility with key stakeholders. GAAP compliance is a necessity for publicly traded startups and plays a critical role in shaping long-term financial strategies that drive growth and sustainability.

SOX readiness relates to financial reporting and internal controls according to the SOX Act’s requirements. It is important for legal and regulatory compliance, improving accuracy and transparency, reducing risk and enhancing governance. It’s important that any financial professional your startup is working with is familiar with the various aspects of SOX readiness.

Strategic Partnership Approach

If you’re looking to enhance your startup’s financial reporting, working with Graphite is the clear choice. Graphite has venture capital fund origins and knows and understands the landscape like few others do. Our dedicated team of professionals specializes in working with startups, and we have more than 500 startup case studies to prove it. At Graphite, we strive to be more than just an external partner, but a true extension of your startup’s financial operations. We’re able to serve as your long-term financial partner from the seed stage through IPO.

We know how limited a startup’s resources are in the early days of their founding, further underscoring the benefit of working with a qualified external partner rather than spending the money to hire a financial professional.

Partner With Graphite for Strategic Financial Reporting

Are you ready to take your strategic financial reporting to new heights? Graphite is standing by and ready to serve as your trusted financial partner. With the ability to grow and scale our services as your startup evolves, we’re well-positioned to serve as your long-term provider. We’ll help you stay financially compliant, empower better decision-making, support strategic financial planning, and help your startup prepare for fundraising success. Contact us today to learn more and to schedule a consultation.

FAQs

What makes financial reporting different from basic bookkeeping?

Bookkeeping services focus more on day-to-day financial management, while financial reporting digs deeper into the numbers to interpret, classify and analyze financial data. While both are essential aspects of financial management, bookkeeping is intended to keep records up to date and complete, while reporting offers better financial clarity and more of a comprehensive view of your startup’s financial health and can be communicated to investors and other stakeholders.

When should startups transition to professional financial reporting services?

Many early-stage startups can manage their finances on their own for a certain period of time. However, it’s best to be proactive when making the jump to working with a professional accounting services partner. Consider working with a professional when your startup is growing in its financial complexity, experiencing rapid growth or readying for fundraising rounds, or when your startup’s in-house staff can no longer adequately manage finances.

How do you ensure our financial reports meet investor requirements?

It starts by understanding the investors and what they’re looking for in financial reports. From there, we’ll target our reports to this audience, prioritizing transparency and accuracy in the data to build trust and confidence in your startup and its leadership. We’ll also focus on the most relevant KPIs and present them in an engaging and impactful way. Finally, you can rest assured that Graphite-produced financial reports comply with all regulatory standards and requirements.

What industries do you specialize in for financial reporting?

At Graphite, we specialize in working with startups that span every industry. From SaaS to eComm to HealthTech, we’ll work to pair a financial professional with your startup who has specific experience in your startup’s industry of operation.

How quickly can you produce monthly financial reports?

Most startups take up to a week to complete their month-end financial reporting process. At Graphite, however, we streamline the process and produce reports within a few days.

Do you provide both GAAP and cash-basis reporting?

Yes, Graphite is a full-service financial provider. Our services span everything from basic accounting and bookkeeping to advanced financial reporting.

How do you handle multi-entity and subsidiary reporting?

We’ll consolidate each entity’s financial data into a single set of financial statements. We achieve this by standardizing the chart of accounts, automating intercompany transactions and utilizing our advanced, robust accounting tools to ensure accurate reporting.

What reporting software and tools do you use?

As a tech-focused firm, we utilize the latest tools and offerings to streamline financial reporting. We can also recommend and set up different tools and software for our startup partners and mold various programs to the software your startup prefers.