For many businesses on an accelerated growth journey, receiving private equity funding is a huge milestone that you’ll have been working towards for a significant period of time.
Once you have received equity funding, it is likely that you will need to provide your investors with financial reporting on a regular basis. For many owner managed businesses (“OMBs”), this might not be something you’re used to doing, so this blog explains what you’ll need to consider for the next stage of your business journey.
There are a number of steps you can take to ensure that you have your financial records in order, so you can provide seamless reporting as and when required.
Understand your processes
The main concern of investors is that their investment is secure and they will likely see return on it. Cornerstone investors (such as large institutional investors) will scrutinise your governance and controls, looking for evidence that good governance is embedded within your business.
By mapping out your processes early, you gain a clear view of:
- Where controls are needed
- How responsibilities are segregated
- Whether compliance tasks are tracked and met in a timely fashion
Then, you can confidently demonstrate to investors that reporting is timely, controls are robust, and governance is sound. The quality of data input directly into your systems impacts the flexibility and clarity of your outputs, another reason why foundational processes matter.
Our team at Johnston Carmichael can carry out an assessment of your processes and procedures, providing recommendations on best practice from our hands-on experience with clients in a variety of key sectors in the North East of Scotland.
Understand your reporting output
For many OMBs, the owners understand their business like the back of their hand, but the bookkeeping and management reporting does not provide a clear view of the financial position to outside parties.
Once you have mapped out your processes, then the next step is to ensure that your team is following the processes set in a timely manner. Bookkeeping once a quarter to bring everything up to date does not give you regular information or reporting, and often puts you on the back foot for tight reporting deadlines that PE investors may expect.
Once your bookkeeping is in order, then take a hard look at your financial reporting. In the early days, tools like Xero, Excel, or niche apps can get the job done. But as your startup scales, operational complexity and investor expectations will grow - quickly outpacing what these more basic tools can handle.
That’s when it’s time to level up to mid-tier financial platforms like Sage Intacct or iplicit. At JC, we can work with you to find a platform that fully fits your needs. Mid-tier financial platforms offer a combination of scalability, automation, and integration. They give owners real control over finances without the cost of a larger scale accounting system.
This is also where the right adviser can make a big difference. We work closely with founders and owners to unlock the full potential of their platforms, helping them streamline data capture and automate workflows, and delivering real-time dashboards which allow them to make decisions quickly and confidently.
Beyond internal efficiency, these systems also send a clear signal to investors that your company has strong financial discipline and is built for long-term growth.
A well-implemented system enables faster month-end closes; a target achievable only through streamlined processes and technology-enabled workflows.
Ensure your team can grow with you
When you receive private equity funding and have all these additional requirements, it can feel like hiring a full-time senior finance professional, such as a CFO, is essential. But it’s worth stopping to consider whether that’s truly what is needed.
Before making hiring decisions, take a step back:
- Are your processes clearly defined?
- Are your systems doing the heavy lifting?
- Do you have reliable support to keep the engine running?
Hiring one or two in-house staff can introduce risk. What happens if someone leaves? Will they have the sector-specific and systems knowledge required?
Often, a mix of outsourced and part-time support can deliver what you need, ensuring suppliers are paid, investor reports are timely and insightful, and compliance filings are met without the overhead of an in-house team. Outsourcing all or parts of your finance function also means you have access to a larger team, who can respond more quickly to change while also reducing the risk of dependence on one or two individuals, ensuring continuity.
Next steps
Gaining investment is only the beginning. Building a finance function that supports scalability, governance, and investor trust requires intentional design. At Johnston Carmichael, we help businesses implement best practices in process, technology, and people - so you can focus on value creation, not firefighting. Find out more about our Outsourced Finance Services offering and get in touch here.