I’ll skip the cute blog anecdotes for this post. Lots to get to, so let’s dive in. Your “finance stack” is the set of tools and services that you use to run the finance organization for your company. I’ve been working with startups for over a decade, and in that time, I’ve used a few very good tools, a few very bad tools and a lot of tools in between that get the job done. But…
When discussing a topic like the finance stack, it’s good to keep in mind that the landscape for corporate tools is ever-changing, with new products launching frequently. It’s part of my job to ensure that clients have the best stack available, and my experience isn’t worth very much if I’m not staying up to date on new entrants eager to put the market leader on their heels. That said, you won’t see a lot of sexy under-the-radar recommendations in my stack. I can’t claim to know every single product coming onto the market, but I am paying attention. In most cases, the market leader is at the top for a reason. But if you’re reading this and have experience with a tool that blows any of my recommendations out of the water, please let me know!
I have a working relationship with almost all of the providers that I mention below. But outside of networking & goodwill, I have no affiliation or direct financial relationship with any of the recommended services.
As of August 2023*, here are the tools and services that I most often recommend to my clients (and read on for more in depth discussion):
Tools
Banking
Mercury - Mercury offers the best banking solution that I have seen for startups. Set up is easy, the platform integrates with everything you’d expect it to integrate with, and the staff are knowledgeable and supportive. They offer $5M in FDIC insurance, and setting up an interest earning Treasury account (via Vanguard or Morgan Stanley) is a breeze. I am aware of some other offerings that provide higher FDIC coverage. But if you think about $100M of FDIC coverage, at $250K per bank, that’s 400 banks! If anything ever were to happen to your provider in that scenario, unraveling it and getting the cash back could be a logistical nightmare. Better in my mind to stash excess funds in treasuries with Morgan Stanley and cross your fingers that the US Government doesn’t collapse…
SVB - Sooooo, we had a little bit of a scary moment there with SVB didn’t we? I have a lot of thoughts and feelings about the March 2023 SVB bank run. In my opinion, it didn’t need to happen. For years, I have recommended SVB to clients as a great option for early stage startups. They were flexible enough to keep up with the pace of a young company, but also grown-up enough to feel secure about dealing with a “real bank”. As far as I can tell, now operating as a subsidiary of First Citizens Bank, they are still doing just that. Unlike Mercury (which is technically not a bank, but a fintech company), SVB is a lending bank. I’ve worked with them on multiple occasions to provide liquidity to my clients as a bridge to the next round or to cover bases on working capital during high growth periods. My general recommendation these days is to use Mercury as the primary operational bank, and maintain 6-9 months of runway with SVB as both a backup bank and a valuable relationship.
Accounting
Quickbooks Online - Talk about not having a sexy under-the-radar pick. If you decide to go with QBO as your accounting software, there’s going to be a few headaches. But in my experience, QBO offers fewer headaches than its competitors. It’s a little bit trickier to set up than Xero and some of the other more lightweight offerings, but once you’re up and running, the accounting and tool integration features are more than a step ahead of the pack. I’m certainly open to the possibility that a better alternative already exists, so if you're reading this and have an accounting tool that you love, please let me know!
Netsuite - For companies with a bit of additional complexity, such as inventory intensive operations or providing bespoke enterprise contracts, you may consider adopting Netsuite earlier than some of your cohorts. It can be expensive and requires a pretty intense implementation effort, but if you set it up correctly, it’s an incredibly powerful tool. If you do decide to go this route, tap your network, see what others have paid, and try to find somebody who has a lot of experience with implementations. Netsuite’s pricing model is not what you would call transparent. (Sage Intacct has also been suggested to me as an intermediate alternative between QBO and Netsuite, though I need to do a bit more looking into it before I recommend it myself).
Strategic Finance/FP&A
Causal - Here’s an under-the-radar pick for you! One of my client contacts suggested I look into Causal, and I’m so glad I did. This tool has really streamlined and turbocharged my financial models. It’s a spreadsheet based tool that utilizes simple formula language, powerful “helper variables” and links between models to make complex models much more straightforward. From there, building basic dashboards and charts is as easy as a few clicks. It integrates with QBO, gsheets and other apps to make updating actuals a breeze. After scaling the not-too-steep learning curve, I’ve spent much more time strategizing & analyzing for my clients instead of maintaining models. The one drawback that I might mention is that the Casual team is rapidly iterating, so occasionally you may find a bug under a rock somewhere, but I have seen this less and less over time.
Google Sheets - As with most finance folks, I used to spend all my time in Excel. But in adding feature after feature over the years (and the fact that I’m doing most of my complicated modeling in Causal these days), the gap between Excel and Google Sheets is now pretty de minimis. Add to that the fact that a GSheet is easier to share and has more integration capabilities than an Excel doc. So while I use Causal for my flagship three statement financial model, I often use GSheets for budgeting and ad-hoc analysis.
Accounts Receivable/Payments in
Once you launch your product, you want to make sure it’s as frictionless as possible for your customers to pay you. The best way to do that is to pick the right tool for your particular situation.
Stripe - Consumer SaaS. If you have an app or digital product that you are selling en masse to consumers, Stripe should have everything you need to cover your bases on payments. It integrates with everything you need it to integrate with, and the reporting capabilities are great. If your product is a basic monthly subscription, you can use Stripe Subscriptions. Alternatively, if you have a more complicated subscription offering (multiple tiers, terms & prices) you could pair Stripe with a subscription management tool like Chargebee.
Shopify - Direct to Consumer/Retail. For companies shipping a physical product to customers, you will want to make sure that you have an attractive and intuitive online store, and can track shipments and inventory levels. Shopify is the industry standard provider in this space for good reason.
Bill.com - B2B with standard Terms & Conditions. If you have a B2B offering, but what you’re offering is a standard product, with little variation from customer to customer, Bill.com should be a good option. Many, if not most, of your customers will already have a bill.com account, so collecting payments on the platform should be easy. With a QBO integration, accounting should be fully automated.
Zoho/Netsuite - Enterprise Contracts. For B2B companies that offer bespoke contracts & terms to each customer, you’ll want something a bit more robust than Bill.com. To be fair, I don’t have a ton of experience in this arena, but I didn’t want to leave this cohort out. In doing some research, it looks like Zoho offers the best ratio of functionality/implementation/price for bespoke invoicing solutions. If you want it to talk to your Salesforce instance, you’ll have to set up a Zapier link, but that’s pretty easy to do. Alternatively, you could just bite the bullet and set up Netsuite.
Payroll
Similar to Payments In, this one depends on your situation. There are three tools that stand out to me, all of which work pretty well and may be tailored to specific situations.
Gusto - For companies with straight-ahead employees and contractors. Gusto is probably the easiest payroll tool to set up and use. If your company doesn’t have a lot of edge cases, international issues or unique benefits, Gusto is a safe bet.
Justworks - It might be just a bit trickier to set up than Gusto, but I’ve found Justworks to be more flexible when dealing with contractors and international providers. From an accounting perspective, the reporting on Justworks is a bit more intuitive, in my opinion, than Gusto’s reporting features.
Rippling - Congrats! You’ve grown to 150+ employees. Time to roll up your sleeves and implement a more scalable tool. Rippling provides enhanced functionality & support for benefits, 401K and compliance. If you find yourself spending more time than you’d like registering with new states for payroll taxes, you may consider supplementing your payroll provider with Middesk.
Payments ouT
Bill.com - It just works. It’s easy to set up and integrate with your accounting system. I think there are some improvements to be made in terms of automation, and I know many companies are working on combining OCR with AI tech to optimize the recognition and coding of bills as they come in. But until somebody comes along with a tool that is 5-10x better than Bill.com, the fact that most of your vendors already have a Bill.com account is going to make keeping the lights on with Bill.com easier than any other tool.
Routable - I haven’t actually worked with Routable before but I think what they are doing is really cool and I’ve had a couple of really illuminating conversations with the founder. I’ve decided to give them a shoutout here in case this may help any founders swimming in payments hell. Routable has developed a product focused on streamlining disbursements at scale. If your company is in the fintech, insurance, or marketplace space, you might want to check them out.
Credit cards and expenses
Ramp - I’m not as close to the credit card & expense reimbursement side of the house as I used to be, but Ramp has everything you need to manage both.
Inventory
Zoho - Zoho inventory is powerful enough to track all of your skus, lots, bills of materials, and FIFO layers. It integrates with QBO and logistics platforms, and will cost you MUCH less than its competitors.
Netsuite - For companies that expect to scale quickly, it may be worth setting up Netsuite sooner than later.
Sales Taxes
Carta - Carta’s a great product. In terms of ease of use, reporting, and support, Carta is a tool that I have no qualms about recommending. It costs a little bit more than some of its competitors, but from my perspective, it’s pretty easy to see what you’re paying for. You’ll note that in my diagram, I don’t have Carta integrated into the accounting system. That’s because their integration is currently one way, pulling the financials into Carta. If they added the functionality to push stock based comp and option exercises into QBO, then I’d recommend setting up the link. Until then, Carta sits on its own in my finance stack.
Services
The below aren’t necessarily tools, but are basic finance-related services that every startup is going to need at some point.
Strategic Finance
GTX Finance - Did you think I was going to invest all this time in this blog post without a bit of self-promotion?! We have a small team, but we’re really good at what we do, we really care about our clients, and we have a track record of successfully ushering our clients to the next stage in their journey.
Accounting
Kong Basile Consulting - I work with KBC on most of my clients because they hire great accountants. I’ve worked with a number of outsourced accounting firms and outside of specific scenarios, KBC is the one that I always recommend.
Income Taxes
Baker Tilly - I’ve worked with Alan Chinn & his team for many years now. They are incredibly knowledgeable, responsive, and fairly priced.
Insurance Brokers
Hub International - has provided responsive and responsible service for my clients as broker across multiple types of coverages.
409A Valuation
Stout - Carta is a quick and easy option for knocking out your 409A valuation and having it nicely integrated with your cap table tool. But since they churn out thousands of valuations per year, it doesn’t always feel like they are particularly flexible or invested in your company’s story. For a more tailored approach, I’ve really enjoyed working with Stout.
*I’ll make a point to review this list every 6-12 months and update, as needed.