Building Compliant Finance Processes from Day One
The best time to build compliant finance processes is before you need them. These foundations make audits easier, prevent fraud, and scale with your business.
Core Internal Controls
Internal controls are the processes that ensure financial accuracy and prevent fraud. They're required for audits and expected by investors. Building these foundations is key to overall compliance.
Fundamental Controls
Segregation of Duties
Different people should authorize, execute, and reconcile transactions. The person who approves payments shouldn't be the one making them.
Access Controls
Limit access to financial systems based on job function. Use role-based permissions and regularly audit access lists.
Documentation
Maintain audit trails for all transactions. Every change should be traceable to who made it, when, and why.
Reconciliation
Regularly reconcile accounts, verify transactions against source documents, and investigate discrepancies promptly.
Small Team Reality
With small teams, perfect segregation isn't always possible. Compensating controls like detailed reviews, audit logs, and board oversight can fill gaps until you scale.
Approval Workflows
Documented approval thresholds prevent unauthorized spending and create accountability.
Sample Approval Matrix
| Amount | Approver |
|---|---|
| <$1,000 | Department manager |
| $1,000 - $10,000 | VP/Director level |
| $10,000 - $50,000 | CFO or CEO |
| >$50,000 | Board approval required |
Key Approval Workflows
- Vendor payments: Invoice → 3-way match → Approval → Payment
- Employee expenses: Receipt → Manager approval → Finance review → Reimbursement
- New vendors: W-9 collection → Banking verification → Approval → Setup
- Contracts: Legal review → Finance review → Exec approval → Signature
Monthly Close Process
A documented monthly close process ensures consistent, accurate financials and makes audits significantly easier. These practices also support SOC 2 certification.
Monthly Close Checklist
Close Timeline Target
Early Stage
Close within 15-20 business days. Focus on accuracy over speed.
Growth Stage
Close within 10-12 business days. Balance speed with accuracy.
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