How to Build a Finance Team for SaaS Scale-Ups: Roles, Timing, and Priorities

How to Structure Your Finance Team for SaaS Scale-Ups

For many SaaS founders, the finance function starts with a spreadsheet, a link to Stripe, and an external bookkeeper. This system works perfectly until it doesn’t. The moment you close a funding round, expand into a new market, or see transaction volume spike, the cracks appear. Suddenly, investor requests for cohort analysis take days to fulfill, the board questions your runway forecast, and you have a nagging feeling you might be exposed on sales tax. Knowing how to set up a finance team for SaaS startups is not about building a massive corporate department; it's about methodically adding the right capabilities at the right time. The goal is to evolve from basic record-keeping to a strategic function that drives growth, and it requires understanding what you need, when you need it, and who should do it.

The Three Core Jobs of a Startup Finance Function

Before hiring, it’s essential to understand the three distinct jobs of finance. Mixing them up is a common source of frustration and bad hires. Almost every task in your finance department will fall into one of these buckets.

1. Transactional: This is the 'rear-view mirror' of the business. It’s about recording what has already happened accurately and efficiently. This category includes bookkeeping, accounts payable (AP), accounts receivable (AR), payroll, and expense management. The primary goal here is a timely and correct month-end close, as this data fuels all other financial analysis.
2. Strategic (FP&A): This is the 'windshield and GPS'. It uses the accurate data from the transactional engine to look forward. This function covers financial planning and analysis (FP&A), budgeting, forecasting, building your financial model, and calculating key SaaS metrics like ARR, LTV, and CAC. It helps you answer critical questions like, “Where are we going and how will we get there?”
3. Compliance and Control: This is the 'guardrails and inspection'. It ensures the company adheres to regulations and proactively manages risk. This includes tax compliance (local and national), revenue recognition policies, internal controls, and audit readiness. Its job is to protect the company from preventable errors and external threats without slowing it down.

Part 1: The Transactional Engine (Getting the Basics Right)

At the 10-employee stage, your transactional engine is likely a founder approving payments alongside an outsourced bookkeeper. This is perfectly fine. The system breaks when transaction volume and complexity outpace this lean setup. The trigger isn't headcount; it's activity. A surge in Stripe payments, more complex vendor contracts, or adding multi-currency transactions can quickly overwhelm a part-time resource. This is when financial data becomes unreliable and slow, directly impacting your ability to make sound strategic decisions.

Professionalizing Your Bookkeeping

The first step is moving from ad-hoc bookkeeping to a professional process. An outsourced accounting firm can manage the basics in accounting software like QuickBooks (for US companies) or Xero (for UK companies), ensuring your books are closed on time each month. They provide a reliable foundation and are a cost-effective way to get started.

However, as you scale toward 50 employees or prepare for a Series A, the need for an internal owner becomes clear. The communication lags and lack of deep business context from an external firm start to create friction. This is where you consider your first internal finance hire, which is one of the most important steps in scaling finance department SaaS operations. This is typically a Senior Accountant or, if your needs are more complex, a Controller.

Your First Internal Hire: Accountant vs. Controller

This role brings the day-to-day financial operations in-house. They don't just record transactions; they own the process. They manage the month-end close, ensure payroll runs smoothly, oversee expenses, and begin to build basic internal controls. The decision between a Senior Accountant and a Controller depends on complexity.

• A Senior Accountant is an excellent choice if your primary need is a hands-on operator to manage the core accounting cycle, improve data accuracy, and run the existing processes more efficiently.
• A Controller is generally a better fit if you face greater complexity, such as multiple legal entities, international sales, or the need to design and implement new financial systems and controls from the ground up.

Insourcing this function marks the transition from founder-managed finances to a professionally run operation. It provides the clean, reliable data that the strategic function will depend on.

Part 2: Adding Strategic Insight with FP&A

With a reliable transactional engine in place, you can shift focus from just reporting the past to actively shaping the future. This is the domain of strategic finance, or FP&A. While an accountant tells you what your revenue was last month, a strategic finance professional tells you what it could be in 12 months and which levers you need to pull to get there. Fulfilling these `SaaS finance team responsibilities` is critical for scaling.

Moving Beyond the Founder-Led Model

Early on, the CEO or a founder handles this role, typically building the first financial model in a spreadsheet. This becomes unsustainable as the business model grows in complexity or when investors demand more sophisticated scenario planning. The practical consequence tends to be that founders spend too much time updating spreadsheets and not enough time running the company. This is the trigger to invest in strategic finance talent.

For most startups post-Series A, this doesn't mean hiring a full-time, six-figure CFO. Instead, the role is often split to balance expertise and cost. A Fractional CFO can provide high-level guidance, manage board reporting, and assist with fundraising on a part-time basis. They bring experience and credibility without the full-time cost.

Simultaneously, you might hire a Finance Manager or Director of Finance. This person is the hands-on owner of the financial model, SaaS metrics reporting, and departmental budgeting. They serve as the analytical partner to the leadership team, providing the data needed to make decisions about pricing, hiring, and expansion. This critical distinction between a Controller (historical accuracy) and a Finance Manager (forward-looking strategy) is key to `hiring finance talent for SaaS` and avoiding a mismatch of skills and expectations.

Part 3: Building Guardrails with Compliance and Controls

As you grow, so does your exposure to risk. Compliance is often an afterthought for fast-moving startups, but ignoring it can lead to significant financial and operational headaches. For most pre-Series B startups, you don't need an enterprise-grade compliance function, but you do need to master a few key areas.

Revenue Recognition

For SaaS companies in the US, this means adhering to ASC 606. In the UK, the standard is typically FRS 102. These standards govern how you recognize revenue from customer contracts. For example, consider a US-based SaaS company that signs a $12,000 annual contract with a one-time $2,000 setup fee. Under ASC 606, you cannot recognize the full $14,000 upfront. The $12,000 subscription revenue is recognized monthly ($1,000 per month). The $2,000 setup fee, if it doesn't represent a distinct service, is also typically recognized over the contract term, adding an extra $166.67 per month. Getting this wrong misrepresents your company's performance and can be a major red flag for investors and auditors.

Sales Tax and VAT

This is a major challenge, especially for US companies. Crossing state lines digitally often creates 'nexus,' an obligation to collect and remit sales tax. The Supreme Court's Wayfair decision underpins modern nexus rules. For US Sales Tax: Economic nexus thresholds are often around $100k in sales or 200 transactions in a state. In the UK and EU, the equivalent is VAT, which has its own set of registration thresholds and rules that you must monitor as you grow.

R&D Tax Credits

This is a valuable source of non-dilutive funding you can't afford to ignore. For US R&D Tax, rules under Section 174 require specific tracking of research expenditures. The UK has a well-established HMRC R&D scheme. Both programs require meticulous bookkeeping to substantiate claims. Failing to track eligible expenses properly can mean leaving significant cash on the table.

Internal Controls

As you hire more people, you need simple controls to protect company assets. This isn't about creating bureaucracy; it's about smart risk management. Early `startup finance team best practices` include:

• Segregation of Duties: The person who can add a new vendor to your payment system should not be the same person who can approve and send payments to them.
• Approval Workflows: Implement a simple system for purchase approvals. For example, any expense over $1,000 requires manager approval, and anything over $10,000 requires founder approval.
• Access Controls: Limit access to financial systems like your bank and accounting software to only the employees who absolutely need it for their roles.

Your Controller is the ideal owner for these compliance and control areas, ensuring your accounting policies are sound and your risk is managed.

A Practical Roadmap: Your First Three Finance Hires

Building your finance team is an evolutionary process driven by business events, not a rigid headcount formula. A `finance team org chart for a SaaS` business should reflect its current stage of growth. The key is to match the right skills to the right stage, moving from foundational transaction management to strategic decision support and robust compliance. What founders find actually works is a phased approach that balances in-house expertise with outsourced support. Continue the sequencing and role guidance at our hub on building your finance team.

What to Look for in Your First Finance Hire

Your first full-time finance hire, typically a Senior Accountant or Controller, is a critical decision. Look for a candidate who is more than just a bookkeeper. They should be tech-savvy and comfortable navigating the integrations between your bank, payroll provider, Stripe, and your accounting ledger (QuickBooks or Xero). They need a strong understanding of accounting principles (US GAAP or FRS 102) but also the flexibility to operate in a startup environment where processes are still being defined. Crucially, they must be detail-oriented and view their role as providing the foundation of accurate data upon which all future financial strategy will be built.

Your First Three Finance Hires (In Likely Order)

1. Outsourced Bookkeeper / Accounting Firm (Day 1+): This service manages the core transactional work on a fractional basis. They keep the lights on financially while you focus on product and growth. The trigger to move past this is when the lack of business context and communication delays start to hinder decision-making.
2. Senior Accountant or Controller (First Internal Hire, ~20-50+ Employees or Series A): This role brings transactional ownership in-house. They manage the month-end close, improve processes, and begin to handle compliance fundamentals like sales tax and revenue recognition. This hire professionalizes your financial operations.
3. Finance Manager or Fractional CFO (Post-Series A): This adds the strategic layer. The Finance Manager builds the models and analyzes metrics day-to-day, while the Fractional CFO provides high-level guidance for board management and fundraising. This combination provides robust strategic support without the cost of a full-time CFO too early.

Frequently Asked Questions

Q: When should a SaaS startup hire a full-time CFO?
A: A full-time CFO is typically hired post-Series B or when the company is preparing for a major strategic event like an acquisition or IPO. Before that, a combination of a Controller, a Finance Manager, and a Fractional CFO provides comprehensive coverage at a more appropriate cost for an early-stage company.

Q: What finance software should an early-stage SaaS startup use?
A: Start with a solid foundation: an accounting ledger like QuickBooks (US) or Xero (UK), a payment processor like Stripe, and a payroll provider. As you grow, add dedicated tools for expense management (e.g., Ramp, Expensify) and potentially a subscription management platform to automate billing and revenue recognition.

Q: Can our first accountant also handle strategic finance (FP&A)?
A: This is generally not advisable. Accounting and FP&A are different disciplines requiring different skills. An accountant is focused on historical accuracy and compliance, while an FP&A professional is focused on forward-looking analysis and modeling. Trying to merge these finance roles in growing startups often leads to neither job being done well.

Q: How does the finance team structure change after Series B?
A: After Series B, the finance team begins to specialize further. You might hire dedicated heads for FP&A, Accounting, and Tax. Roles like Treasurer (to manage cash and banking relationships) or a dedicated internal audit function may also emerge as the company scales toward public market readiness or a large exit.