Finance Operations for

High Growth Companies

How to Build a Future-Focused Finance Function

Abstract
Finance teams must shift beyond manual processes to meet
the needs of real-time stakeholder communication. This need
highlights the importance of Finance Operations, a dedicated
team you can build to solve for data complexity and cross-team
collaboration.

Finance leaders will play a big part in rebuilding our economic

future. Set up your FinOps team now to support important
company decisions for years to come.
 There’s a timeless saying: the only way to move forward is through.

That’s one of the key themes that will define the Another McKinsey report published in October 2020
next decade. Business leaders need to be ready found that companies are three times likelier than
for anything — and it’s up to our judgment calls to they were prior to the crisis to conduct at least 80%
define what comes next following a time of of their customer interactions digitally.3
escalating instability and crisis.
All of these shifts are culminating into a new
McKinsey predicts that the Fourth Industrial economic normal. Meanwhile, a new generation of
Revolution is on the verge of accelerating.1 digitally empowered consumers, gen Z, are putting
pressure on businesses to connect profits to value
creation.
“Many executives reported that they moved 20 to 25
times faster than they thought possible on things
like building supply-chain redundancies, improving Companies need to think long term, react to short-
data security, and increasing the use of advanced term demands, and uncover throughlines through
technologies in operations,” writes McKinsey’s chaos, all at once. The bottom line is that
research and insights team.2 transactions are speeding up and becoming
more complex — all in real time.

So how can businesses build a more robust finance function that adapts to this transactional reality?

DATA MANUAL,
COMPLEXITY TIME-CONSUMING,
ERROR PRONE
PROCESSES

HIGH
TRANSACTION
VOLUME

HYPER
GROWTH

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 Exploring the challenge
and opportunity
Finance is the engine of a new economic future

Uncertainty means that we are defining the future With a risk landscape that is changing faster than
in real-time. There’s no blueprint for navigating the human minds can keep up, organizations need to
unique combination of political risks, economic respond with agility rather than reactivity. Consider
instability, climate change, and public health the case of Airbnb as an example, which survived a
challenges that impact every human on earth. sudden shock to its core operations.5
We need to, for lack of better words, figure it out.
In April 2020, Airbnb’s gross bookings took a 72%
“For us, the biggest thing that changed on this front year-over-year nosedive with more cancellations
was how we looked at operational risk,” says Phyllis than bookings in the months of March and April.
Campbell, Pacific Northwest Chairman at JP Morgan The company’s financial landscape shifted
Chase, on a panel with Diligent Corporation.4 suddenly and unexpectedly with a decline in
bookings, a higher number of cancellations, an
increase of refunds, and a need to issue credits.
“It was important to take a fresh look at every risk
These changes resulted in a more complex
dimension to see how it has changed. What does
financial landscape, almost overnight, both in
the new systemic risk look like? How do we know?
terms of transaction volume and overall business
How are we monitoring it? These are the questions
performance.
we need to be asking.”

Airbnb’s business
model and the
complexities its
finance team
faces
Host Service Guest
13-20%
Commission Guest Fees
Host Fees Taxes
en
Rev ue St
Insurance Claims le r Travel Credit
p

Rent Payout Refunds

ea
lti

Liability Claims
ms
Mu

Fraud
Host Airbnb Photographers
Room Marketplace Bad Debt
Host Fees *
Guest Fees*
Renting Fee............... Cleaning Fee........
Fee Refunds.............. Taxes Experiences Hotel Processing Renting Fee............
(online Booking Fees
-3% Service Fee +-6-12%
+ VAT Charges & offline) Chargebacks Service Fee.............
(Room Bookings...
20% Service Fee
(Experiences)..........

Sources:
• What Are Airbnb Service Fees
• Extenuating Circumstances
Policy
• Jonathan Golden article
Government ~20 PSP Global Vendors

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 Despite these challenges, the management team
responded with well-calculated next steps that included
implementing new safety protocols, working closely with
Finances define how hosts to recoup their losses, creating a new line of
business for online experiences, and promoting local
quickly we move, staycations.
where we turn, and how
In addition, the leadership team knew exactly what steps
exactly we can take our would be needed to protect the health of the company.
best steps forward. Smart decisions included:

• Reducing the workforce by 25%

• Reducing all discretionary and capital expenditures,
in addition to executive salaries
• Suspending the buildout of new facilities
• Creating new “extenuating circumstances” policies
• Corporate restructuring that involved mapping out
reductions to future business strategy
• Focusing on aligning the revenue picture to the
core business
• Doubling down on a value system that prioritizes
human wellbeing, trust, and safety

By June, Airbnb experienced a 1% increase in gross

bookings. By January 2021, Airbnb had a leadership role
in protecting the United States Capitol from insurrection
and violence at the presidential inauguration.

It’s the finance function that puts companies like Airbnb

on the front lines of economic progress. Think about
the tiny decisions that go into informing such bold,
methodological, calculated, and precise judgment calls.
To understand what’s possible, organizations need
real-time, in-depth, and multidimensional financial
pictures. Finances define how quickly we move, where we
turn, and how exactly we can take our best steps forward.

For many companies, especially fast-growing organiza-

tions, finance is facing major operational challenges.

Finance needs a boost to reach its full

strategic potential
Digitization has created an explosion of data, both in
volume and type. Businesses now operate in a digital
wild west where data requires wrangling from every
department. Sales and marketing functions have spun off
their own specialized “operations” groups supported by
technology like Salesforce and Marketo to make sense
of this high volume, high velocity information.

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 MARKETING FINANCE SALES
DEPARTMENT DEPARTMENT DEPARTMENT

Marketing Finance Sales

Ops Ops Ops

???

Finance lacks analogous counterparts. Yes, Without proper tooling or specialization, the
enterprise resource planning (ERP) systems are smartest minds in finance are drowning in spread-
available. But these systems are manual and aren’t sheets and spending too much time transacting.
equipped to distill avalanches of insight that people
and technical systems need to translate into
A team of business school professors from the
business-ready narratives.
United States and Canada recently collaborated on
an HBR article, “U.S. Financial Reporting Is Stuck in the
20th Century.”6

In the article, the team of four authors explores why

large value funds — consisting of trillions of dollars in
As companies get more complex and assets that include pensions, retirement funds, and
lifetime saves — are seeing their worst performance
add more systems, introduce new in 200 years and shutting down doors as a result.
products, and acquire companies, The issue is that financial models are failing to tie
earnings to value.
finance must manage the downstream
impact — all while navigating the “In sum, we believe that the developments this year,
balancing act of risk management, particularly, the demise of value funds, show the
urgency for a thorough overhaul in financial
security, and compliance. When reporting,” write the article’s authors. “The current
financial processes rely on manual system is causing confusion among investors and
may even lead to misallocation of investment
work, one small change to an capital. It’s time to make concrete revisions to what
organization’s revenue picture can must be reported in financial reports.”

amount to months or years of clean-up

Businesses need to be ready to adapt to evolving
and process redevelopment. reporting needs.

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 Enter Finance Operations
(FinOps)
Forward progress begins with everyday stability

How Finance Operations

Empowers the
Finance Function
Most value Strategic Finance
(e.g. product planning and pricing, resource allocation,
capital structure, M&A)

• Enable real-time visibility &

Financial Planning data-driven decision making.
(e.g. budgeting, forecasts)
• Spend more time being proactive
than reactive.
• Facilitate cost savings and revenue
Reporting and Compliance driving insights.
(e.g. monthly close, audits)

Record Keeping
(e.g. reconciliation, recording transactions)
• Implement scalable systems to
handle high transaction volume
and complexity.
Transacting • Build repeatable workflows.
Most time and (e.g. sending payments, checks)
resources spent • Spend less time with manual, time
consuming, and error-prone tasks.
Source: Andreesen Horowitz;
The CFO in Crisis Mode:
Modern Times Call for New Tools

It’s this orchestration of people, processes, and

technologies that Leapfin calls Finance Operations
Finance is a business’s hidden, or “FinOps.”
untapped growth function —
FinOps is about gaining capabilities that keeps the
the key to becoming a finance function moving at the same speed as sales
proactive force rather than and marketing. The goal is to equip the entire busi-
ness with real-time visibility, to expedite the pace of
a reactionary safety net or insights-gathering and decision-making.
organizational clean-up crew.
With this foundation in place, individual actors in
a business can more easily adapt to a shared
organizational strategy. Those who report to the
The path to growth begins with a steady foundation, CFO can devote more time to looking ahead and
well-defined people processes, and a streamlined moving company objectives into new directions — a
technology stack — similar to what leaders on sales capability that has become lost for a large swath of
teams use to make decisions in their roles, on the fly. the most talented minds in the finance function.

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 With FinOps as the central, unified owner of
financial data within an organization, teams can
access what they need in real-time. With this
capability, companies empower the world’s most
talented quantitative professionals, who work in finance,
to make better decisions.

To use an analogy, FinOps untangles bottlenecks so that

data can flow smoothly through an organization.

How the idea for FinOps came to be

The idea for FinOps and Leapfin came from our founder
Raymond Lau’s experience in business operations at
online gaming company Zynga, which scaled incredibly
quickly from a small startup to close to $1B publicly traded
company. Along the way, Zynga acquired more than a
dozen game developers and amassed a fast-transacting
customer base from all over the world.

After a career at IBM implementing enterprise resource

planning (ERP) systems and a stint at a startup called
PlayHaven, Ray joined Zynga. He stayed with the
company on its eventual path to IPO. Along the way,
Ray reported to Zynga’s COO, to help the company make
better strategic decisions when scaling quickly.

One of the challenges that Ray and his team

encountered was being able to answer business critical
questions in real-time and with precision.

“Our COO would approach me with a very simple ask,”

Ray explains. “A hypothetical example would be ‘What’s
the anticipated ROI of investing $5M in marketing for a
particular game?’”

To answer these questions, Ray would need to assemble

a team of data analysts, pull numerous SQL reports,
and access multiple internal databases. The process
would take multiple weeks. Then, his COO would have a
follow-up question that could potentially take several
more weeks to answer.

With the rise of cloud computing, these questions should

be faster and easier to answer. Leapfin is Ray’s vision
for the solution that he wishes he had at Zynga that
can orchestrate multiple systems into a unified and
streamlined FinOps machine.

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 CEO

CFO

Accounting Finance Operations Finance

Here are some example ways to build this level of

Get Started: camaraderie:
Build Your FinOps Machine
• Designing data flows to ensure communication
Here are his (and our team’s) best practices for
between finance, product, engineering, and other
getting a FinOps program off the ground.
teams
• Ensuring that finance shares input for how data
1. Build a dedicated business function
gets collected, managed, interpreted, and used
The FinOps function needs a clear place within an
• Addressing and resolving problems related to
overall organization, reporting directly to the CFO.
data integrity
This level of structure is essential for ensuring
that team members receive the resources that • Providing education for best practices around
they need to maintain the health of financial data reporting accuracy and that more gets tracked
and systems. rather than less

FinOps is about creating the foundation for teams to

do more – and create more value from the financial
data that companies already have on-hand. The FinOps team may consist of dedicated
hires or may require teams from other
2. Build cohesion between business stakeholders departments (i.e. analytics or business
The future of business leadership is multi- intelligence) to work cross functionally.
dimensional — functional leaders rely on each FinOps responsibilities include the following:
other to make their best judgment calls.
• Data collection, cleansing, and modeling
Behind every successful product, there’s a team • Maintenance of financial data hygiene
of people who brought it to life across product, • Creation of scalable & repeatable processes
marketing, engineering, customer support groups
and more. Every decision culminates into what • Automation of manual financial processes
ultimately becomes customer-facing. United • Oversight of financial analytics reporting
around facts, teams are in their best possible • Ownership of all financial systems
position to chart out new strategic paths for the (e.g. billing system, ERP, revenue recognition,
organization. payment gateways)

The FinOps team is the liaison that ensures smooth • Collaboration between finance and technical
communication and collaboration between finance departments (e.g. engineering, product, sales)
and other functional groups. This level of structure
ensures stronger revenue alignment through the
entire organization.

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 3. Focus on real-time insight with a modern Let’s say that your product team is launching a
finance tech stack new line of business and that you’re already
Far too many companies are making judgment generating higher levels of revenue than expected.
calls on stale data – which ultimately does more That perspective could save jobs that would
harm than good. otherwise become eliminated based on the
previous 30 days of data.

Consider, for instance, that your company is

navigating a potential layoff due to temporary So how can a FinOps function help your company
hardship. Especially now, with the global crisis, prior gain access to real-time insights?
data does not necessarily reflect what will happen
in the future as there are many external variables Designing an ideal finance technology system flow
that may impact financial performance. is critical. Oftentimes companies are using point
solutions or legacy systems beyond what they’re
capable of doing.

Designing the Ideal Finance Tech Stack

Owner & Responsibilities Finance Tech Stack

Finance & Accounting ERP Planning BI

Ensure and maintain accurate
financial reporting, close processes,
and financial plans.

Summary Details

Finance Operations Financial Data Lake

Create and maintain “source of truth” Revenue Cost Other

for financial data, including Subledger Subledger Subledgers
subledgers and analytics. Data Warehouse

Transactional Details

Product & Engineering OMS Billing Inventory Other Systems

Select the best point solutions
to deliver the most ideal customer PSP Mobile Payroll
experiences.

An ERP, for instance, is not meant to function as This way, finance is set up for success and their
a data warehouse or business intelligence tool. systems are working with them instead of boggling
When used in this incorrect way, ERPs become them down.
slow-running and costly. However, many
companies use ERPs for business intelligence due
Companies need to expand their perspectives
to lack of other options.
beyond assuming the worst and playing it safe.
An accurate financial picture enables leaders to
FinOps needs to come in as the owner of finance make more empowered, forward-looking (and
system design. They need to own the in-between forward-moving) decisions.
systems (i.e. subledgers) that have the ability to
house transaction-level data.

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 Final Thoughts: Assemble a
navigable big picture
The COVID-19 pandemic has sparked a movement That means every organization needs a solid
of decision makers rethinking their commitment financial foundation to advance into the future.
to human health and wellbeing. As Diligent Companies are facing decisions that seriously
Corporation explains, “CEOs and boards around affect people, not just shareholders. Well-defined
the globe are facing the challenge of integrating financial reporting is crucial to ensuring that
stakeholder capitalism, corporate purpose and companies can step into the leadership roles,
ESG into meaningful corporate strategies that don’t in which they are needed, to lead our world into
sacrifice shareholder returns.”7 the future.

A well-defined FinOps strategy is necessary to

navigate this urgency — to better connect
shareholder visions with human health. By setting
up the right foundation for a dedicated role for your
finance systems, managing key stakeholders, and
having the right tech stack, you’re able to develop
something larger and more meaningful than the
sum of its parts.

Financial statements should be living,

breathing documents that adapt to a
business’s strategy – we are well beyond
the days of a stale PDF. That means creating
a single source of truth to enable the
processing of data on a massive scale.

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 About Leapfin

Leapfin turns operations data into finance data in real time

for the world’s leading digital brands.

The Leapfin Finance Data Platform unifies billing, ordering,

payment, CRM, and other operational data with intelligent
accounting automation to create a GAAP-compliant,
immutable Leapfin Financial Record for every transaction.

The Leapfin Data Platform provides reliable and fast financial

reporting to controllers, transaction-level detail for
analysis to finance, and visibility to real-time revenue to
decision makers.

Canva, Reddit, SeatGeek, Medium, Vimeo, and many other

fast-growing, high-volume digital brands trust Leapfin to be
their finance data system of record.

Ready to bring Finance Operations to your organization?

Learn how Medium did so here.

References
1. Sneader, K. and Singhal, S. (2021, January 4). The next normal arrives: Trends that will define 2021—and beyond. McKinsey & Company. https://www.mck-
insey.com/featured-insights/leadership/the-next-normal-arrives-trends-that-will-define-2021-and-beyond#

2. Sneader, K. and Singhal, S.

3. How COVID-19 has pushed companies over the technology tipping point—and transformed business forever. (2020, October 5).
McKinsey & Company. https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-covid-19-has-pushed-
companies-over-the-technology-tipping-point-and-transformed-business-forever.

4. Ciccarelli, K. (2020, December 17). How COVID-19 Changed Risk Management and Strategic Planning. Diligent Insights. https://insights.diligent.com/
the-diligent-institute/how-covid-19-changed-risk-management-and-strategic-planning.

5. Taulli, T. (2020, November 21). How Airbnb Beat The Covid-19 Virus. Forbes. https://www.forbes.com/sites/tomtaulli/2020/11/21/how-airbnb-beat-the-
covid-19-virus/?sh=392b25cb2bcf.

6. Govindarajan, V., Rajgopal, S., Srivastava, A., & Enache, L. (2020, December 16). U.S. Financial Reporting Is Stuck in the 20th Century. Harvard Business
Review. https://hbr.org/2020/12/u-s-financial-reporting-is-stuck-in-the-20th-century.

7. Stafford, B. (2021, January 6). Stakeholder Capitalism: Why is it Sustainable Now and in the Future? [Episode]. In Inside America’s Boardrooms. Diligent
Insights. https://insights.diligent.com/esg/stakeholder-capitalism-why-sustainable-now-and-future.

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