Startups often pride themselves on being scrappy, quick-thinking, and adaptable. But while these qualities may serve them well — are, in fact, essential — during the early days, they're not conducive to a sustainable long-term strategy.
To ensure their continued success, businesses need solid financial foundations. And that's where Float's client OFCO normally comes in.
Headquartered in South Africa, but with a global presence, including offices on iconic Madison Avenue in New York City, OFCO stands for Outsourced Chief Financial Officer.
'We serve a broad range of businesses across 34 countries — from early-stage startups to listed companies — in a variety of sectors, including fintech, medtech, and telecoms,' explains OFCO's Juan van der Berg, a chartered accountant and financial consultant.
'But our speciality is growth-stage startups and scaleups. Companies that are in need of more sophisticated financial expertise, but can't afford to have somebody on staff full-time just yet.'
Once a business finds its feet, growth is almost always the next item on the agenda.
62% of respondents in Gartner's 2024 CEO survey singled it out as their top priority. And, growth is especially important in the tech startup world, where evidence of potential often determines whether a company secures venture funding.
But chasing growth when you don't have the right systems in place to support it is counter-productive, Juan points out.
'I'd go as far as saying it can be actively detrimental,' he says. 'Without a clear understanding of its financial health, a business could be overstretching itself. Taking on commitments with margins that are too small to make them worthwhile.
'Or, worse, working capital cycles might be inefficient in ways that make it challenging or impossible to honour those commitments without getting into financial difficulties.'
OFCO's role is to help businesses gain visibility into their finances, so they can manage growth strategically, in a way that moves things forward instead of backfiring.
'Cash flow is our big-ticket item. Essentially, we go in, scope out the client's financial situation, and then we advise on next steps,' Juan says.
'So, what are the business' strengths and weaknesses? What are the gaps? And what's the best way to address these gaps and put the business on a firmer footing so they're in a place where they can scale sustainably?'
The nature of OFCO's role means they typically find themselves in a position where advising is only one component of a much wider scope of work. More often than not, they have to lay the groundwork before they can start developing the strategy.
'Most of the growth-stage SME clients we work with, I'd say, have never had an in-house finance function, so they don't have the fundamentals in place,' Juan elaborates.
'Even when they do have an in-house finance function, it's usually not equipped for scale. So it actually becomes a limiting factor. If the business starts chasing growth at all costs, there's a risk the finance function might not be able to keep up.'
Needless to say, time spent doing prep work is time not spent devising and executing a sustainable growth strategy.
The way these foundations are typically put in place — through Excel spreadsheets — also creates challenges of its own.
First, it takes a huge amount of time and manual labour to set things up.
And, second, extracting insights from the data and maintaining these systems is cumbersome and laborious.
'Spreadsheets are static. They only give you a snapshot of the business' cash flow at a specific point in time.' Juan says. 'The actuals will be different, because they're constantly changing, right?'
The upshot is that, even once OFCO have laid the groundwork, their clients might still miss a critical component: real-time visibility.
'With spreadsheets, your ability to spot cash flow trends, pinpoint discrepancies, and do scenario planning is limited,' says Juan. 'This leads to a lot of missed opportunities.
'Plus, you're always on the back foot, because the data is historical and might no longer be complete or relevant.'
Juan believes that only technology is capable of thoroughly addressing the issue of limited visibility, because 'it connects and fast-tracks everything.'
The problem, in OFCO's case, was finding software that wasn't just easy to set up and intuitive to use, but also provided sufficient granularity to enable them to ask the right questions and come up with effective solutions for their clients.
Then, one of OFCO's director's came across Float and suggested that Juan trial it.
'I remember him telling me "Have a look at this. See if it might be useful." So I basically went on a fact-finding mission. Just exploring… trying different things out,' Juan says.
It didn't take him long to see the value in it.
'Purely from a time-saving perspective, Float is huge,' Juan says, 'One of the biggest challenges I have to deal with, in the course of my work, is finding a way to compare data effectively.
'Say I've put together a cash flow forecast. How do I track that against actuals? With Excel, it's an extremely time-intensive admin job, because I have to manually import the actuals from the client's accounting software, clean up the data, and only then can I do the comparison and get the answers the client needs.'
That's not the case with Float. Once connected to the client's bookkeeping software, it pulls the data as it comes in, enabling Juan to skip the admin and get down to brass tacks.
'Our industry is all about trying to solve as many problems as possible as quickly as possible,' he says.
'Time is a massive bottleneck and pain point for us, and even saving just an hour of admin makes a difference. Float speeds things up dramatically, so from that perspective alone, it's a game-changer.'
But the value Float brought to the table, continues Juan, goes beyond just time-savings.
'The quality and accuracy of our analysis and, in turn, of the outcomes we're able to achieve for our clients has also improved,' he says. 'This is because Float allows us to plan long term, and to track consistently against those plans.'
It's hard to overstate the massive impact Float has had on OFCO, says Juan.
'When you work out how much time Float has saved us across multiple clients over many months,' Juan says, 'the impact on service delivery is significant.'
Float's biggest benefit, though, Juan says, is that it creates a single source of truth. A central repository of easily-accessible, accurate, real-time data which both OFCO and their clients can rely on to make confident, proactive decisions more quickly.
'That latter point is especially important,' Juan stresses. 'We can strategise as much as we want. But, ultimately, the client needs to follow through. If they go off and do their own thing, it's unlikely they'll get the results we were hoping to achieve.
'With Float, you can show them the reasoning behind the strategy and also make it easier to collaborate with them, and, so, foster a sense of engagement.'
Asked what he'd tell somebody who isn't sure whether Float would be right for them, Juan doesn't have to think twice about how to answer.
'I'd encourage anyone to trial it,' he says. 'Once you see what it can do for yourself, you'll be much more inclined to try it.'
