What is Finance as a Service, and how does it benefit startups?

Finance as a Service (FaaS) is a term that refers to companies that offer outsourced, fully integrated business financial strategy, financial planning, and accounting service lines. FaaS companies benefit startups by providing a full range of financial services that are consolidated through a single provider – it’s like having multiple integrated teams that cost significantly less than hiring and managing your own financial departments. FaaS services include accounting, controllership, financial planning, business strategy, and tax filing and compliance.

Finance as a Service firms operate differently from traditional accounting, bookkeeping or advisory companies. FaaS companies leverage new technologies and scalable systems to increase their agility and responsiveness, providing customized financial reporting and advisory services in real time. The services offered by FaaS firms include:

• Accounting and general ledger
• Forecasting and planning
• Payroll
• Billing and invoicing
• Spend management

Kruze’s team goes beyond these controller type projects and acts as a true finance advisor to startups:

Finance as a Service has grown as technology has influenced the role of finance and accounting within businesses. Prior to FaaS, the business accounting function was a limited role, typically focused on bookkeeping and tax preparation. Companies like Intuit used software like Intuit’s QuickBooks to refine and streamline the general ledger – the basic accounting record that contains all of a company’s financial information. 

With the advent of cloud computing, accounting software companies have been able to extend their reach deeper into the startup and small business market. QuickBooks Online allowed startups to take advantage of Intuit’s accounting system without a largel investment, and is still the dominant system used by small- to medium-sized businesses.

This in turn led to a surge in software systems for peripheral accounting functions like forecasting, invoicing and billing, payroll, and expense management, providing startup companies and their accounting teams with a broad array of tools to manage day-to-day activities and provide real-time dashboards and information for decision makers. These strong products integrate with each other and with banking solutions, and can be combined into fintech stacks that give startups the same kind of information, insights, and efficiencies that larger companies have, including:

• Real-time financial data that allows startups to improve cash flow, forecasting, financial planning, and management.
• Cloud-based technologies that provide easy access to financial systems from anywhere.
• Less expense, since FaaS firms provide full services while keeping operating costs low.
• Scalable operating models that rely on subscription-based pricing that can be quickly ramped up or down.

Even small and mid-sized businesses need key financial insights and information, and it’s even more important that those services are accurate, reliable, and timely. But smaller organizations can’t always afford to establish those capabilities internally, and often don’t have the resources to recruit and build financial teams. FaaS providers offer startups the full-scale service of an entire in-house financial team at a much lower cost, and with much less effort. The FaaS model effectively serves:

• Startups and small businesses with less complicated accounting requirements and smaller transaction volumes, that need to scale as their businesses grow.
• Larger companies that have more complex accounting needs and larger transaction volumes that need more financial expertise. FaaS firms provide a wide range of controller- and CFO-level services along with tax planning and compliance.
• Funded startups that require comprehensive financial management to work with private equity and venture capital investors, boards of directors, and management teams. These executive-level and CFO services provide the critical financial reporting and advisory services that funded companies need for deeper analysis and strategy.

Kruze Consulting can help you strategically outsource your financial and accounting needs, providing you with experienced financial experts who can support your startup as it grows. We already have the infrastructure and financial proficiency to quickly onboard your company and help provide your startup with financial reporting, strategy, and critical metrics that you need to focus on your core business. For more information, contact us today.