4 Essential Risk Management Checks for Every Finance Manager

How DelightRoom leveled up its internal accounting management

Nov 12, 2022

4 Essential Risk Management Checks for Every Finance Manager

Contents

How DelightRoom leveled up its internal accounting management Self-Diagnosis Checklist How to minimize financial statement errors The Issue The Solution How is DelightRoom doing it?Eliminating unnecessary expenses through recurring payment lists The Issue The Solution How is DelightRoom doing it?How to efficiently manage and find contracts The Issue The Solution How is DelightRoom doing it?Creating accounting policies for consistent financial statement quality The Issue The Solution How is DelightRoom doing it?

How DelightRoom leveled up its internal accounting management

In a startup, accounting management often gets pushed down the priority list and easily becomes a massive headache. It's one of the most challenging areas for startups to handle. If you're wondering whether your company is managing things well, you might want to try a self-diagnosis using the four-point checklist below.

Self-Diagnosis Checklist

1. Reducing financial statement errors
We close our balance sheets and income statements monthly and review each account.
2. Tracking recurring card payments
Looking at last month's corporate card approvals, there are no mysterious overseas recurring charges.
3. Contract management
We can find the contract for a wire transfer made six months ago in under a minute.
4. Accounting guidelines
We have documented accounting policies or guidelines internally.

In DelightRoom's early days, we couldn't confidently answer "yes" to these four checklist items either. However, we spent a lot of time figuring out how to improve where we fell short, and after a long period of trial and error, we finally developed our own know-how.

How to minimize financial statement errors

The Issue

Typically, startups outsource their bookkeeping and financial statement preparation to an accounting firm. As a result, internal interest in financial statements naturally drops, errors aren't corrected in a timely manner, and the overall reliability of the statements plummets.

The Solution

Establish a system to close financial statements monthly or quarterly, and implement a process where a manager verifies the appropriateness of the amounts in each account. If just one hour of review per month can boost the reliability of your financial statements, you will dramatically reduce the resources needed to address errors during future financial audits or due diligence for fundraising.

How is DelightRoom doing it?

We set up a process for each department to generate monthly financial statements, and the CEO reviews the monthly closed statements on the 15th of the following month.
Any revisions from the review are immediately applied by the person in charge, ensuring that the same errors don't pop up in the following month's statements.
We maintain a monthly financial statement review note, which also comes in incredibly handy during future financial audits.

We review our financial statements every month and archive the detailed breakdowns.

Eliminating unnecessary expenses through recurring payment lists

The Issue

As headcount grows, mysterious expenses can start appearing on corporate card statements, and sometimes unknown charges are billed on a recurring basis for months. In fact, we once had a case where a designer left the company, but the subscription fees for their design tools kept being charged long after their departure. 😭

The Solution

Create a recurring payment management page, assign an "owner" to each recurring charge, and add a step to verify the usage of each recurring payment every month. During offboarding, it's also crucial to check whether the departing teammate is the owner of any recurring payments.

How is DelightRoom doing it?

We created a dedicated recurring payment page to manage them as shown below, logging the owner and payment method to check every month. By introducing this workflow, we were able to spot and resolve unnecessary payments right on time.

Our Notion page for managing recurring payments

How to efficiently manage and find contracts

The Issue

If contracts aren't managed regularly, it takes forever to find them when you actually need them, or they might even disappear entirely if the person in charge leaves the company. This can become a fatal issue during financial audits or tax investigations.

The Solution

You need to build a workflow to archive contracts in a single workspace. Most importantly, you must be able to quickly and easily search through a massive pile of contracts to find what you need.

How is DelightRoom doing it?

We implemented our expense reports in Notion, making it mandatory to attach the contract to every wire transfer request. By doing this, we can archive all expense-related contracts on a single page, and we can easily search for contracts sorted by their execution date.

By attaching contracts to the wire transfer request table, we can organize them in one place with zero extra effort.

Creating accounting policies for consistent financial statement quality

The Issue

Without documented accounting policies, detailed accounting treatments often aren't handed over properly when an existing owner leaves, leaving the new owner unable to maintain consistency. Additionally, it puts you in a tough spot when external auditors or investors ask specific questions about your accounting treatments.

The Solution

Standardize and manualize your accounting tasks so that you get the same output regardless of who handles the work.

How is DelightRoom doing it?

We created accounting policies for major accounts (especially revenue). These policies are written so clearly and specifically that even a first-time assignee can handle the tasks without any trouble.

A snippet of the subscription revenue accounting policy created by DelightRoom

Contents

Business

4 Essential Risk Management Checks for Every Finance Manager

How DelightRoom leveled up its internal accounting management

DelightRoom

Nov 12, 2022

Contents

How DelightRoom leveled up its internal accounting management

Self-Diagnosis Checklist

1. Reducing financial statement errors
We close our balance sheets and income statements monthly and review each account.
2. Tracking recurring card payments
Looking at last month's corporate card approvals, there are no mysterious overseas recurring charges.
3. Contract management
We can find the contract for a wire transfer made six months ago in under a minute.
4. Accounting guidelines
We have documented accounting policies or guidelines internally.

How to minimize financial statement errors

The Issue

Typically, startups outsource their bookkeeping and financial statement preparation to an accounting firm. As a result, internal interest in financial statements naturally drops, errors aren't corrected in a timely manner, and the overall reliability of the statements plummets.

The Solution

Establish a system to close financial statements monthly or quarterly, and implement a process where a manager verifies the appropriateness of the amounts in each account. If just one hour of review per month can boost the reliability of your financial statements, you will dramatically reduce the resources needed to address errors during future financial audits or due diligence for fundraising.

How is DelightRoom doing it?

We set up a process for each department to generate monthly financial statements, and the CEO reviews the monthly closed statements on the 15th of the following month.
Any revisions from the review are immediately applied by the person in charge, ensuring that the same errors don't pop up in the following month's statements.
We maintain a monthly financial statement review note, which also comes in incredibly handy during future financial audits.

Eliminating unnecessary expenses through recurring payment lists

The Issue

As headcount grows, mysterious expenses can start appearing on corporate card statements, and sometimes unknown charges are billed on a recurring basis for months. In fact, we once had a case where a designer left the company, but the subscription fees for their design tools kept being charged long after their departure. 😭

The Solution

Create a recurring payment management page, assign an "owner" to each recurring charge, and add a step to verify the usage of each recurring payment every month. During offboarding, it's also crucial to check whether the departing teammate is the owner of any recurring payments.

How is DelightRoom doing it?

We created a dedicated recurring payment page to manage them as shown below, logging the owner and payment method to check every month. By introducing this workflow, we were able to spot and resolve unnecessary payments right on time.

How to efficiently manage and find contracts

The Issue

If contracts aren't managed regularly, it takes forever to find them when you actually need them, or they might even disappear entirely if the person in charge leaves the company. This can become a fatal issue during financial audits or tax investigations.

The Solution

You need to build a workflow to archive contracts in a single workspace. Most importantly, you must be able to quickly and easily search through a massive pile of contracts to find what you need.

How is DelightRoom doing it?

We implemented our expense reports in Notion, making it mandatory to attach the contract to every wire transfer request. By doing this, we can archive all expense-related contracts on a single page, and we can easily search for contracts sorted by their execution date.

Creating accounting policies for consistent financial statement quality

The Issue

Without documented accounting policies, detailed accounting treatments often aren't handed over properly when an existing owner leaves, leaving the new owner unable to maintain consistency. Additionally, it puts you in a tough spot when external auditors or investors ask specific questions about your accounting treatments.

The Solution

Standardize and manualize your accounting tasks so that you get the same output regardless of who handles the work.

How is DelightRoom doing it?

We created accounting policies for major accounts (especially revenue). These policies are written so clearly and specifically that even a first-time assignee can handle the tasks without any trouble.

Contents