Harmonizing Automation and Human Proficiency in Financial Planning and Accounting

Harmonizing Automation and Human Proficiency in Financial Planning and Accounting

Technology for Financial Planning and Accounting

Automation and technology have become increasingly important in the world of financial planning and accounting. The rise of technology has introduced numerous innovative tools and software solutions designed to streamline tasks and improve precision in financial planning and accounting. While automation excels in repetitive tasks and data entry, it is imperative to recognize that human proficiency is still required for interpreting data, offering insights, and making strategic decisions. Financial professionals must acknowledge that technology should complement, rather than replace, their skills and knowledge.

One of the key benefits of technology in financial planning and accounting is its ability to automate repetitive tasks and streamline processes. For example, software programs can automate data entry, reconciliation, and reporting. This not only saves time and reduces errors, but it also frees up CPAs to focus on higher-level tasks such as analysis and strategic decision-making.

Technology also provides tools for data visualization and analysis. With the ability to collect and analyze large amounts of data, financial professionals can gain insights that were once impossible to obtain. This allows CPAs to provide better advice to clients, make more informed decisions, and identify opportunities for growth and improvement.

However, it is important to remember that technology is not infallible. While software programs can perform tasks with incredible accuracy, they are only as good as the data they are fed. It is up to people to ensure that the data being input is accurate and complete. It is up to CPAs to interpret the data and provide insights based on their experience.

The Importance of a Personal Touch

When it comes to financial planning and accounting, there is often a personal element involved. Clients want to feel like they are working with someone who understands their unique needs and goals. While automation has proven valuable in handling data entry and generating reports, it falls short in delivering a personalized approach to financial planning and accounting. This is an area where human experience truly shines, as it encompasses several critical aspects:

  • Building Relationships with Clients: Developing trust and rapport with clients is essential in the financial planning and accounting sphere. It is the human touch that fosters lasting professional relationships, ensuring clients feel valued and understood.
  • Understanding Client Goals and Concerns: A personalized approach requires a deep comprehension of each client’s financial objectives, risk tolerance, and concerns. Human professionals can empathize and adapt their advice to match the client’s unique financial situation, which is beyond the scope of automation.
  • Providing Tailored Advice and Solutions: Financial planning and accounting professionals can create customized strategies and solutions that align with their clients’ specific needs, preferences, and circumstances. Automation, on the other hand, may lack the flexibility and adaptability necessary to address the nuanced complexities of individual financial situations.

The Value of Human Proficiency

While automation can handle many tasks, there are some things that only humans can do. For example, financial planning and accounting often require skillfull analysis and interpretation of data. This involves not only understanding the numbers, but also understanding the broader economic and market trends that can impact a client’s financial situation. Additionally, human proficiency is important when it comes to identifying opportunities for cost savings and improving financial performance.

Balancing Accounting Efficiency With Quality

While automation can improve efficiency and save time, it is important not to sacrifice quality in the process. Financial planning and accounting services require accuracy and attention to detail, and it is important to ensure that these standards are met even when using automated tools. This requires a careful balance between using technology to streamline processes and maintaining a high level of quality and accuracy.

The Future of Financial Planning and Accounting

As technology continues to evolve, it is likely that automation will play an increasingly important role in financial planning and accounting services. However, it is important to remember that people will always be necessary to interpret the data, provide insights, and make strategic decisions. The key is to find a balance between people and automation that allows for efficient, accurate, and personalized financial planning and accounting services. Outsource your financial planning and accounting to Lavoie CPA to see how combining the right technology with human experience can benefit your business.

What Is a 10x Valuation System? (+ Advantages and  Strategies to Implement Effectively)

What Is a 10x Valuation System? (+ Advantages and  Strategies to Implement Effectively)


A 10x valuation system refers to a method where a company’s investors are willing to pay up to 10 times the company’s current worth due to its potential for rapid growth and profitability.

It has gained popularity in recent years, particularly amongst startups because it attracts investments and positions businesses for long-term success.

In this blog post, you’ll learn what the 10x valuation system is, and understand how it works. We will also explore the advantages and disadvantages, and also look at some examples of companies that have successfully implemented it.

What Is a 10x Valuation System?

A 10x valuation system is one where investors are willing to pay 10 times a company’s worth. However, its success and implementation depend on factors like industry and competition. Other common valuation methods include:

  • Asset valuation: This is calculated based on assets belonging to a business
  • Relative valuation: This is calculated by comparing the assets of a similar business
  • Historical earnings valuation: This is calculated based on a business’s cash flow, gross income, and ability to repay debt

Advantages of Using a 10x Valuation System

1. High ROI for Investors

The system provides high returns for investors as companies who have adopted it focus more on long-term growth rather than quick wins (which have proven to be detrimental). An example is the fall of Elizabeth Holmes’ Theranos.

It allows companies to set high goals and develop strategies for achieving them, increasing the chances of generating substantial returns for investors.

2. Encourages a Focus on Building the Right Business Model

It also encourages the development of a business model that’s sustainable and scalable with the potential to generate high ROIs.

The 10x valuation system gives companies a deep understanding of their finances, revenue structure, and cash flow. This allows them to mitigate risks and set their business for potential long-term success.

Examples of successful business models include:

  • Subscription-based models
  • Freemium models
  • On-demand models

3. Attracts Top-Tier Investors

The system attracts top-tier investors due to its ability to project promising financial growth. It shows that a company can take a significant share of the market comfortably.

A 10x valuation system allows brands to attract investors willing to pay a premium for the next big thing in their industries as they are always on the lookout for companies with the potential to become dominant players in their field.

4. It Rewards Creativity and Innovation

The system also rewards creativity and innovation by forcing companies to pursue different problem-solving approaches. It encourages companies to explore new markets while thinking creatively about how to address the needs of those markets to reach 10x their worth.

It also encourages companies to take risks and experiment with new models that focus on sustainable long-term growth. Additionally, it creates a culture of innovation within a company where employees think creatively to come up with new ideas to help the company grow, and stay ahead of its competitors.

Challenges and Limitations of using a 10x Valuation System

1. Requires a High Level of Growth and Scalability

While the 10x valuation system has numerous advantages, it might be difficult for some companies to implement. The level of growth required makes it difficult for companies operating in markets with limited growth opportunities to adopt it successfully.

Additionally, achieving high levels of growth and scalability requires significant investments in research and marketing. This poses a problem for businesses unable to access the funds for these investments. The pressure forces companies to acquire additional debt, or dilute their equity to raise capital – which creates financial risks over the long term.

2. Not Effective For all Types of Businesses

Implementing the system is also not successful for all types of businesses because of the market size and differences in risk tolerance.

Businesses that are unwilling to take risks will not be a great fit for the 10x valuation system as it requires taking calculated risks and investing significantly in research and marketing.

3. Can Lead to Overvaluation and Unrealistic Expectations

Sometimes predictions about growth rates and a business’ market capitalization are wrong. Market dynamics might change, and new competitors with better UVPs can spring up.

The system also expects companies to attain high growth rates very quickly, typically within months or a couple of years. However, building a sustainable business takes time, and such expectations might not be met.

Companies valued under this system may face significant pressure from investors. This might lead to aggressive growth strategies that can pose potential financial risks for everyone involved.

Strategies for Implementing a 10x Valuation System

1. Identify a Large and Growing Market

Since the 10x valuation system rates businesses based on their potential to achieve significant growth, companies need to identify large and growing markets where they can capture significant shares of the market. This lays the foundation for development and attracts investors on the lookout for high-growth opportunities.

To recognize large and growing markets, companies should conduct extensive research to understand the dynamics of each market and its unique trends.

2. Build a Strong Team of Individuals with a Proven Track Record

Another strategy necessary to implement this system is building a team of individuals with track records of success. A strong team possesses the necessary skills and experience needed to execute strategies successfully. Proven track records indicate that team members can deliver results.

Investors prefer to work with companies possessing strong teams because they have proven abilities to execute growth strategies successfully.

3. Focus on Innovation and Disruption

Focusing on innovation and disruption is an effective strategy for implementing this system as companies that bring groundbreaking products and services to the market experience exponential growth. They carve out a niche for themselves in the market, and competitors find it difficult to replicate their successes.

To do this, you’ll need to challenge the status quo of traditional industries by taking a fresh perspective on marketing and product design or introducing new technologies that challenge established players in the market.

4. Implement a Scalable Business Model

A scalable business model is one that can easily be replicated and expanded as the company grows. This involves finding better ways and strategies to market and using the right advertising channels and methods.

A scalable business model has underlying profitability, a strong distribution network, and the ability to automate numerous activities. It allows companies to grow rapidly and efficiently, while still maintaining focus on efficiency.

Real-world Examples of 10x Valuation Success Stories

1. Uber

In 2011, Uber’s private valuation was $60 million, eventually increasing to $76 billion in August of that year. The car service is considered an attractive business by investors because:

  • It’s a category leader revolutionizing and disrupting the status quo by changing laws in some cities and receiving prohibitions in others.
  • Its business model is effective and scalable, offering a great alternative to poorly-funded public transportation.

It increased to 10x what it was worth initially and became the world’s most valuable startup.

2. Airbnb

In 2014, Airbnb was valued at $10 billion, and in 2020 valued at $100 billion. As of March 2023, its market capitalization is ~ 75 billion.

Airbnb was founded in 2008, and quickly gained traction in the market with its innovative business model which allowed homeowners to rent out their spare rooms. The company:

  • Focused on identifying a large and growing market by targeting travelers who were seeking unique and affordable accommodations.
  • Built a strong team of individuals with proven track records of success in the technology and hospitality industries.
  • Focused on innovation and disruption by challenging the traditional hotel industry.

In 2014, Airbnb was valued at $10 billion, and in 2020 valued at $100 billion. As of March 2023, its market capitalization is ~ 75 billion.

3. Slack

Slack, a cloud-based communication platform for teams is another company that successfully adopted a 10x valuation system. This allowed Slack to achieve a $1 billion valuation after eight months of launching its product.

One vital factor that contributed to the success of slack was its focus on solving a major problem businesses face; the need for effective communication between teams and collaboration tools. Another strategy Slack implemented was building a strong team. Slack’s co-founder, Stewart Butterfield had a successful track record as the co-founder of Flickr.

4. Zoom

Zoom is another example of a company that successfully implemented the system through a combination of strong market demand, a focus on innovation and disruption, and the adoption of a scalable business model.

It capitalized on the large and growing market for video conferencing software to capture a significant share of the market, and its freemium model also allowed users to sign up for free.

As of March 2023, Zoom was worth ~$19 billion – more than 10x what it was worth some years ago.


The 10x valuation system is a popular method for startups and businesses to attract top-tier investors and achieve rapid growth. By focusing on innovation and disruption, adopting a scalable business model, and building a strong team, companies can create a strong foundation for success.

It is however important to note that it can lead to unrealistic expectations and overvaluation if applied to the wrong business. It requires a strong understanding of the market, and a willingness to take risks. Contact Lavoie CPA today to help take your business to the next level.
Start implementing these strategies in your business today.

Bookkeeping vs Accounting: Differences & Benefits

Bookkeeping vs Accounting: Differences & Benefits

As a business owner, managing finances and staying on top of financial obligations is crucial for success. To achieve this, businesses need two important financial services: bookkeeping and accounting. In this blog, we will explore the differences between bookkeeping and accounting services and discuss how each service can benefit businesses.

What is Bookkeeping?

Bookkeeping is the process of recording, organizing, and maintaining financial transactions. A bookkeeper is responsible for managing accounts payable and accounts receivable, reconciling bank statements, and preparing financial reports.

There are two types of bookkeeping systems: single-entry and double-entry. Single-entry bookkeeping is a simple system where each financial transaction is recorded once, either as income or expense. Double-entry bookkeeping is a more complex system where each transaction is recorded twice, once as a debit and once as a credit, ensuring that the books are always balanced.

What is Accounting?

Accounting is the process of analyzing, interpreting, and summarizing financial data. An accountant is responsible for preparing financial statements, analyzing financial data, providing tax advice and planning, and performing financial audits. There are different types of accounting services, including financial accounting, managerial accounting, tax accounting, and auditing.

Bookkeeping vs. Accounting

While bookkeeping and accounting are both essential financial services for businesses, there are key differences between the two. Bookkeeping is focused on recording and maintaining financial transactions, while accounting involves analyzing and interpreting financial data. Bookkeeping is typically more transactional and repetitive, while accounting is more analytical and focused on providing insights to help businesses make decisions.

Bookkeeping Services

Bookkeeping services include maintaining financial records, managing accounts payable and accounts receivable, and preparing financial reports. For small and medium-sized businesses, bookkeeping services can be especially helpful as they allow business owners to focus on running their business instead of spending time on financial record-keeping. Bookkeeping services can also provide insights into financial trends and identify areas where businesses can improve.

Accounting Services

Accounting services include tax preparation and planning, financial analysis, and audit support. Larger businesses may require accounting services to help with complex tax issues, financial analysis, and audit preparation. Accounting services can also help businesses make informed financial decisions, reduce tax liability, and improve overall financial performance.

Bookkeeping and Accounting for Healthcare

For healthcare businesses, like any other type of business, bookkeeping and accounting services are essential to ensure financial stability, compliance with regulations, and strategic decision-making. However, there are specific considerations for healthcare businesses when it comes to these services.

Bookkeeping services for healthcare businesses typically include the management of accounts payable and accounts receivable, payroll processing, financial statement preparation, and tax preparation. Bookkeepers in the healthcare industry must have knowledge of industry-specific regulations, such as HIPAA, and be able to manage financial data related to patient care, insurance claims, and reimbursements.

Accounting services for healthcare businesses involve more advanced financial analysis and strategic planning. These services include financial statement analysis, budgeting, forecasting, tax planning, and audit support. Accountants in the healthcare industry must have knowledge of healthcare regulations, such as the Affordable Care Act, and be able to analyze complex financial data related to patient care costs, insurance claims, and reimbursements.

One key consideration for healthcare businesses when it comes to bookkeeping and accounting services is the need for accurate and detailed financial records. Healthcare businesses must comply with strict regulations related to patient privacy and data security, so it is important that financial records are managed in a secure and confidential manner. Additionally, healthcare businesses must be able to track and report on patient care costs accurately to comply with regulations and ensure financial stability.

Another consideration for healthcare businesses is the need for specialized knowledge and experience when it comes to financial management. Healthcare regulations and industry-specific financial practices can be complex, so it is important to work with bookkeepers and accountants who have experience in the healthcare industry and understand the unique financial needs of healthcare businesses.

Bookkeeping and Accounting for SaaS

For SaaS businesses, bookkeeping and accounting services are just as important as they are for any other type of business. SaaS companies deal with a unique set of financial challenges that require specialized experience and knowledge.

Bookkeeping services for SaaS businesses include maintaining accurate financial records, managing accounts payable and receivable, and preparing financial reports. Since SaaS businesses often operate on a subscription-based model, bookkeepers need to be able to track recurring revenue and monitor changes in subscription levels. Additionally, bookkeepers may need to manage revenue recognition for SaaS businesses, which can be complex due to the nature of subscription-based revenue.

Accounting services for SaaS businesses can include tax planning and preparation, financial analysis, and audit support. SaaS businesses may have unique tax considerations, such as sales tax compliance across multiple states. Additionally, financial analysis can help SaaS businesses identify trends in customer behavior and usage, which can inform product development and pricing strategies. Audit support can also be important for SaaS businesses seeking to raise capital or undergo a merger or acquisition.

When choosing a bookkeeping or accounting service provider for a SaaS business, it is important to consider their experience and understanding of the unique challenges facing SaaS businesses. Look for a provider who has experience working with SaaS businesses of a similar size and complexity. Additionally, it can be helpful to choose a provider who uses up-to-date technology and software to streamline processes and improve accuracy.

Bookkeeping and Accounting for Private Equity and Venture Capital

Bookkeeping and accounting services play a crucial role in the success of private equity and venture capital businesses. These businesses face unique financial challenges that require the proficiency of experienced professionals to manage their financial operations effectively.

Bookkeeping services for private equity and venture capital businesses involve maintaining accurate records of financial transactions, managing cash flow, and preparing financial statements. These services help businesses keep track of their financial performance, identify potential risks, and make informed decisions.

In addition to basic bookkeeping services, private equity and venture capital businesses may require more advanced accounting services, such as tax planning and compliance, financial analysis, and audit support. These services help businesses manage complex financial issues, reduce their tax liability, and make informed investment decisions.

One area where accounting services for private equity and venture capital businesses are particularly important is in managing their investment portfolios. These businesses typically invest in a wide range of companies and assets, which can create complex accounting and reporting requirements. Accounting professionals can help businesses manage these requirements, including tracking investment performance, valuing assets, and preparing financial reports for investors.

Another important area where accounting services are essential for private equity and venture capital businesses is in managing their fundraising activities. These businesses often rely on raising capital from investors to fund their operations, which requires careful financial planning and reporting. Accounting professionals can help businesses develop and implement effective fundraising strategies, prepare financial projections and forecasts, and provide guidance on how to meet investor reporting requirements.

Choosing a Bookkeeper or Accountant

By outsourcing your financial operations to a trusted service provider, you can achieve greater success and focus on growing your business. Once you have decided whether your business needs bookkeeping or accounting services, it is important to choose the right service provider. Factors to consider:

Cost: Bookkeeping and accounting services can vary greatly in cost, depending on the provider, the level of service, and the complexity of your business. It is important to choose a provider that fits within your budget, but also provides the necessary level of service.

Experience: Look for a provider with experience in your industry, as well as with businesses of a similar size and complexity. You want a provider who understands the unique challenges and needs of your business.

Availability: It is important to choose a provider who is available when you need them, whether it be for monthly bookkeeping tasks or year-end tax preparation. Consider their response time and availability during peak periods, such as tax season.

Technology: Technology has become increasingly important in the world of bookkeeping and accounting. Look for a provider who uses up-to-date technology and accounting software to streamline processes and improve accuracy.

Referrals and reviews: Ask for referrals from other business owners or professionals, and read online reviews to get a sense of a provider’s reputation and level of service.

Communication: Choose a provider who communicates clearly and regularly with you, and who is willing to explain financial concepts in a way that you can understand.

Tips for Selecting a Service Provider

You should schedule an initial consultation to discuss your business needs and ask questions about their services.

Ask for references and follow up with those references to gauge their level of satisfaction.  Look for certifications and affiliations with professional organizations, such as the American Institute of Certified Public Accountants or the National Association of Certified Bookkeepers.  Request a detailed proposal or engagement letter outlining the scope of services, fees, and terms of the engagement.

Both bookkeeping and accounting services are essential for businesses of all sizes. By outsourcing your financial operations to a trusted service provider, you can achieve greater success and focus on growing your business. Contact us today to learn more about bookkeeping and accounting services.

Bookkeeping and Accounting FAQs

Q: Are bookkeeping services necessary for all businesses?

A: Yes, bookkeeping services are essential for all businesses, regardless of their size or industry.

Q: Are accounting services necessary for all businesses?

A: Accounting services are typically more necessary for larger businesses with more complex financial needs.

Q: Can outsourcing bookkeeping or accounting services save businesses time and money?

A: Yes, outsourcing bookkeeping or accounting services can save businesses time and money by allowing them to focus on running their business instead of spending time on financial record-keeping, and by providing insights into financial trends and identifying areas where businesses can improve.

Guide for Start-Ups Looking to Partner With an Outsourced Accounting Firm

Guide for Start-Ups Looking to Partner With an Outsourced Accounting Firm

For investor-backed companies, like start-ups, an outsourced accounting firm, also known as a financial operations management and outsourced accounting firm, offers many benefits that allow start-ups to scale, save time, and reduce operational costs and risk. Learn how to leverage a financial partner to help you and your team keep up with the demands of expansion, regulators, and investors.

What is Outsourced Accounting?

An outsourced accounting firm is a professional firm that provides financial services to client businesses. These firms are hired to provide specific services like cost reduction, financial reporting, payroll processing, and system and process assessments. An outsourced accounting firm can provide more comprehensive and reliable services than an in-house accounting team.

Common functions that investment-backed companies outsource include:

  • Bookkeeping
  • Managerial accounting
  • Tax accounting
  • Financial Audits
  • Controller services
  • Outsourced CFO services
  • Financial analysis
  • Payroll services
  • Compliance
  • Human resources

How Investor-Backed Companies Can Benefit from Outsourced Accounting

In the early stages of development, start-ups don’t usually have an established or consistent revenue stream, making growth and long-term financial stability essential goals.

As start-ups do grow, they need the right financial infrastructure in place to handle the rising cash flow, regulation requirements, and overhead costs.

This is where an outsourced accounting firm can deliver immediate value by offering these benefits:

Build Trust With Investors

Outsourcing accounting services can be a smart move for start-ups looking to impress their investors. By working with a reputable accounting team, start-ups can demonstrate to investors that they are serious about their financial management and have taken steps to ensure accuracy and financial transparency.

Additionally, an experienced accounting team can provide valuable insights and recommendations that can help start-ups make informed financial decisions and optimize their cash flow. All of these factors can contribute to a more positive perception of the start-up by investors, increasing the chances of securing funding and building long-term partnerships.

Access to Specialists Without Overhead

No one in business disputes the value of a quality CFO, but affording one with a start-up budget can put this essential role out of reach. Outsourced accounting firms make industry-leading proficiency financially accessible. Trust our knowledgeable outsourced CFO professionals, who possess industry-specific insights and a wealth of experience, to guide your financial decision-making.

They bring a level of experience to the table that start-ups may not have in-house or cannot afford to bring in-house. By leveraging the knowledge and skills of an external accounting team, start-ups can ensure that their financial management is accurate, compliant, and up-to-date without diverting internal resources away from core business activities.

Improve Internal Controls

Without a CFO in place, investor-backed businesses have no one to spot signs of fraud, like unusual transactional or billing activity. This puts companies at greater risk, which can be eliminated with an outsourced accounting partner.

Enhanced Data Security

Financial operations management firms protect business data with encrypted cybersecurity programs. This can be a real point of confidence for a start-up’s investors and employees, knowing that personal customer or employee information is safe.

Flexibility to Scale

A good outsourced accounting firm will tailor its services to meet its clients’ most immediate needs. This is good news for investment-backed companies who need to stay financially lean. By outsourcing financial duties, a start-up can save money by limiting spending to critical areas only.

Start-ups only pay for the services they need. Plus, start-ups can scale and decrease services with the ebb and flow of businesses. With an in-house team, you have to pay salary and benefits regardless of the workload.

More Time For Growth

Outsourcing can also free up time and resources for start-ups and their leaders, allowing them to focus on growth strategies.

First and foremost, outsourcing allows start-ups to delegate time-consuming and complex accounting tasks to an external team of specialists, freeing up internal resources. This can be especially important for start-ups, which often have limited staff and resources.

Outsourced accounting for start-ups can also provide access to advanced accounting tools and technology that they may not be able to afford or implement in-house. This can help to streamline accounting processes, reduce errors, and increase efficiency, making growth an attainable reality for start-ups.

Advanced Services You Can Expect from an Outsourced Accounting Firm

In addition to the benefits above, a financial operations management and outsourced accounting firm can provide these added perks to your invest-backed business.

Cash Flow Management

Use your outsourced partner to run an analysis of your expenses and profit statements. With this information, your partner can plan effective strategies to deal with potential roadblocks.


Leverage your partner firm’s forecasting experience to map out strategies that address performance needs in the short and long term.
Growth and Exit Strategies

Let your outsourced accounting firm prepare business plans, forecasts, and other essential documents needed to raise more capital for growth.

Business Systems and Process Improvements

Who better than an outside financial specialist to advise on areas where your start-up can improve efficiencies? This includes things like month-end reporting, credit and collections, and even your business strategy to maximize returns.

Potential Cons of Partnering With an Outsourced Accounting Firm

While there can be some potential obstacles when working with a financial partner, most can be avoided with good communication up-front and by finding a firm that feels like a natural fit.

Outsourcing for the First Time

If you’re not familiar with using an outsourced accounting firm, you may not know how to fully leverage the firm’s capabilities. To avoid this, start-ups can ask potential partners to walk them through their typical work process.


While using an outsourced accounting firm can save investment-backed companies money, if not carefully managed, the partnership can cause costs to soar quickly. This can be prevented by asking potential partners for a detailed estimate and factors that would impact the price. Also, be upfront about your budget. A good financial partner will tailor a solution to match it.

Poor Communication

Bad communication can result in many of the issues above. From the start, make sure you and your outsourced accounting firm are in agreement on the process and modes of communication, as well as goals and objectives.

Bad Fit

Just as there are numerous types of investment-backed businesses, there are also numerous investment firms that specialize in niche sectors. Look for a firm that has experience with a company similar to your size, structure, and industry.

Tips to Help You Choose the Right Financial Partner

As we mentioned, many of the potential risks of hiring an outsourced accounting firm can be avoided if you’re able to find a firm that understands your culture, verticals, and goals. Here are questions and considerations that can help you find the best fit.

What Are Your Short and Long-Term Business Needs?

Start by taking into account your specific business needs to determine if they’ll be met in your partner’s tailored package.

What services or support do you need?  What type of data is being shared with external personnel, and which tasks should remain in-house because of their confidential nature? For instance, if your company requires tax accounting or bookkeeping but not payroll processing, these duties are ideal for outsourcing.

What Is Your Budget?

If you are unsure about how much it will cost to outsource your finance and accounting services, don’t fret. You can make an educated guess based on some key factors.

Ask yourself:

  • How much can my organization afford to spend on outsourced services?
  • What specific services does my organization need?
  • What value will the services bring to my organization?
  • Are the costs of an in-house team and technology stack cheaper than the cost of an outsourced team and technology stack?

Keeping these questions in mind can help you make an informed decision about the cost of outsourcing your finance and accounting services. You can also compare and contrast pricing between your top picks.

Check the Firm’s Reputation & Experience

It is important to do your research when looking for potential providers. Check out what previous customers have to say about them, and make sure they have experience in industries or with clients similar to yours.

It is important to find a financial outsourcing partner that has experience in the industry and understands the complexities of your business. Make sure to ask for references from previous or existing clients.

Ask Questions

Here are a few questions to get you started, but you’ll likely have questions specific to your business structure.

  • What experience do you have working with start-ups?
  • What accounting software do you use and what features does it have?
  • What services do you offer, and what is your pricing structure?
  • How do you ensure the accuracy and timeliness of your services?
  • How do you communicate with clients?
  • Are you familiar with any tax regulations specific to start-ups?
  • What is your experience with raising capital?
  • What other services do you offer that may be beneficial to a start-up?
  • Are you willing to provide references from other start-up clients?

Next Steps

If you’re ready to start your search for an outsourced financial partner, here are a few to-do’s to complete before you begin your search:

  1. Are you open to new and updated accounting practices?
  2. Are you willing to share access to your financial data with a partner?
  3. Is your team ready to adopt process improvements your financial partner may recommend?

Contact Lavoie

If you answered yes to the questions above, it’s time to find a partner you can trust. With the right partner, you can gain the knowledge, skills, and experience required to optimize your financials and reach the goals you have for your start-up.

Contact Lavoie today to learn how their experienced team of financial professionals can provide you with the support you need to successfully manage your finances. We have extensive experience supporting investment-backed companies.

Contact us online or by calling 704-644-0235.

Due Diligence Checklist 101: What Venture Capitalists Need to Know

Due Diligence Checklist 101: What Venture Capitalists Need to Know

Before investing in a company, venture capitalists run what is called a due diligence checklist. This is a rigorous process that looks closely at all aspects of a company, including assessing business legal, financial, and human resources status. By performing a thorough review of the company, investors can move forward with their investment with confidence.

Additionally, the due diligence process helps investors gauge the potential risks and rewards of the investment. If the due diligence results are sound, usually the investors will move forward.

To help you understand exactly what company details are reviewed closely, we discuss each part of the checklist.

What is Due Diligence?

Venture capitalist firms use due diligence to ensure that potential investments are sound and will generate a good return. This process allows venture capitalists to evaluate the potential risks and rewards associated with any given investment, as well as gain a better understanding of the company and its operations.

This process looks at a variety of sources, including the company’s financial documents, legal documents, market research, and other related material. Additionally, venture capitalists may consult with specialists such as lawyers, tax advisors, and industry analysts to gain a better understanding of the company and its prospects.

Ultimately, due diligence can help venture capitalists make informed decisions about which investments to pursue.

Types of Due Diligence

Venture capitalists will look at more than just a company’s financials to get a comprehensive view of the company’s standing.

Financial Due Diligence

Financial due diligence is a process in which an independent third party reviews the financial records and operations of a company to assess its value, financial strength, and potential risks. The goal is to provide an informed opinion on the company’s financial position and future prospects. It is typically conducted prior to a merger, acquisition, or other business transaction.

This step looks at the market, top competitors, required permits or permissions, and who the company can or can’t conduct business with.

Regulatory Due Diligence

Regulatory due diligence evaluates a company’s compliance with applicable laws and regulations. Existing shareholders, certificates of incorporation, existing contracts and/or arrangements, and other rights pertaining to the company capital are all examples of what investors will evaluate. A look into these areas makes sure that any investment made in the company will be in compliance, especially if the company has had any previous legal disputes.

Tax Due Diligence

Tax due diligence is a process of assessing the tax compliance of a company by reviewing tax laws, tax returns, and financial audits. Venture capitalists use it to guarantee that any investments they make follow tax regulations and that the company’s taxes are being paid properly.

Tax due diligence gives investors greater insight into the tax implications of their investments and identifies any potential liabilities.

Legal Due Diligence

Legal due diligence evaluates a company’s compliance with legal requirements, again, to make sure everything is compliant with regulations. Investors will look at shareholder resolutions, a certificate of incorporation, previous capital charges, and any contracts that could be terminated. Legal due diligence helps identify any potential issues that could affect the investment.

Intellectual Property Due Diligence

Intellectual property due diligence is a process of assessing the patents, copyrights, and trademarks held by a company. It ensures that investments don’t violate existing intellectual property rights and helps identify any potential IP issues that could affect the investment.

Information Technology Due Diligence

Information technology due diligence evaluates a company’s IT systems, processes, and procedures, as well as if the company is exposed to cybersecurity risks. Venture capitalists use it to ensure that any investments they make are supported by a strong IT infrastructure.

Human Resources Due Diligence

Human resources due diligence is a process of evaluating a company’s human resources policies and procedures, including its workforce mix, benefits, salaries, and bonuses. It’s not uncommon for investors to request organizational charts, stock options, and benefits packages, the details of past disputes with employees, and contact information with all third-party vendors.

Operational Due Diligence

Operational due diligence is a process of evaluating a company’s operations, including current processes, supply chains, logistics, procurement efficiencies, and risk management. Venture capitalists use it to make certain that the business is running well and can support any future investments.

Risks of Not Performing a Complete Due Diligence Check

If venture capitalists fail to use a due diligence checklist, they may expose themselves to unnecessary risks with costly outcomes. Without a thorough review of the company’s financial records, management team, industry trends, competitive landscape, and other operational matters, the venture capitalist may not have a full understanding of the company and its prospects. This can lead to poor decisions and a potential loss of funds. Additionally, it can increase the risk of legal and financial issues associated with the investment.

In Summary

The due diligence process is one of the most important steps that venture capitalists take, and working with a financial partner like Lavoie, can ensure the due diligence findings are as accurate as possible.

An outsourced accounting firm like Lavoie has the resources and experience to evaluate the potential company’s financial statements and financial health and provide guidance on potential risks and rewards associated with the investment. Additionally, a venture capitalist accounting company can provide advice on tax liabilities and other financial matters associated with the investment.

Consult with Lavoie to prepare for your upcoming investment. Contact us online today.