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IPO Readiness and your series A funding

Congratulations on raising your Series A funding. You probably have a working product, a great founder’s team, and customers keen to use your product. It's an exciting time for you and your colleagues as you begin to build the company out, improve your product, and grow your revenues – an optimum moment to start thinking about an IPO.


Here are five reasons why having IPO as a goal will increase your business's productivity and reduce its costs.


Less checking, more doing

One of the core requirements for any public company is assessing risks and implementing controls to mitigate them, and this is something your company should be considering even in the earlier stages. Risks are events that could impact your business and cross every aspect of your trade. Such issues could include employees stealing money out of the bank account, salespeople changing contracts without approval to increase their sales numbers, and even massive turnover and changes to the regulatory environment.

These risks are mitigated with controls. Controls avoid the necessity for senior leadership having to check each risk. Here are some examples of arrangements that can reduce the amount of checking:

  • Role-based access to your platform - all changes approved by a different staff member

  • Contract management system – a system which prevents the sales teams from changing pricing or terms and conditions in contracts without approval

  • Regular indication of employee satisfaction and benchmarking of company payment policies and benefits packages

  • Monitoring the regulatory environment and foreseeing future changes

Instead of checking each transaction, employee, or dollar, you can focus on building your business, knowing that your company assets are safe.


Getting a bad deal

Staff members in public companies have different roles to play. There has to be a distinction between those who enter transactions and those that approve them. Here are three ways your company ensures it gets the best deals by implementing roles based controls:

  • Contracts are signed with suppliers after a staff member confirms that it's a good deal. You can be confident that your staff aren't just bringing in their friends or being too lazy to negotiate a good deal -because someone else checks their work.

  • Sales staff aren't changing prices on your platform. The company policy is to sell for 100 dollars, but your salespeople aren't making as many sales at that price, thus reducing their bonuses. They then try lowering the price in an attempt to close more sales. If your staff can't make those kind of changes to suit themselves, you always get the deals you expect.

  • Your platform is sending money to the programmers. This problem may sound like the plot of Office Space, but imagine if your staff could program whatever they wanted? Why wouldn't they take a cut?

Reduce your audit costs

Every investor wants to know how you're doing, and they find out by receiving a set of audited financial statements. Audits are conducted either by testing and relying on the process for the production of accounts or checking a large enough sample of transactions to confirm they are correct.


If your processes are entirely uncontrolled, the auditor will have no choice but to ask to see hundreds if not thousands of samples to check your revenue, expenditure, and balance sheet. That means that someone, or an entire team, will need to prepare multiple samples for every transaction from invoicing to payment to recording.


Implementing a controlled process at the beginning will reduce the cost of being audited.


Overly customized today, unable to integrate tomorrow

Any Series A company probably still has a get-it-done attitude, and you customize everything to meet the immediate needs of your customers. That's how you got here, and that's how you keep yourself moving. One of the challenges with customization is that you sometimes can't integrate it later. So, if you've developed an invoicing engine within your Saas platform that doesn't comply with future markets, you can't integrate and can't grow. A company that does not comply with regulatory requirements takes a severe risk.


Your control is to always use as simple a process as possible and keep yourself open for integration. Of course, that doesn't mean that your product should look and feel simple, but it does mean that if you should take something off the shelf, such as issuing invoices. Invoice preparation can be prepared in almost any financial management system and can be easily integrated into your platform. So, why customize that process? Otherwise, when you grow, your operation won't be able to support the multiple markets and regulations and you'll need to have them manually prepared instead.


Change programs cost money

If you don't do it today, you're going to have to do it later and probably ask for funding to get this project off the ground. Just the internal staffing of an IPO readiness project can run into hundreds of thousands of dollars. You'll need a team of experts to review your business, document your processes, assess your risks, and suggest controls. Once the business is under control, you must implement the changes within a few years of your company going public.


Why pay extra when you could do it for less now? Hiring an IPO Readiness Consultant to do this for you today will keep your business's expenditure down now and in the future. Advancing to IPO provides IPO readiness services to businesses of all sizes, assisting with risk management and carefully controlling business expenses. Contact us today for a free consultation.



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