Our Conversation With Anand Mundra

Finance is often seen as the backend and the last thing people cheer about. However, it plays a crucial role in any business and startup and can be the difference between success and failure. This blog will have an exclusive interview with Anand Mundra, a Finance Controller with Sage, an FTSE 100 company on the London Stock Exchange.   Anand takes us on a journey through his career, sharing insights on his experience with Deloitte, BrowserStack, Lockstep, and his current role at Sage. He also shares his thoughts on the unique challenges of SaaS finance and how he balances his responsibilities in strategic reporting, financial reporting, compliance, and bookkeeping. Join us for an inspiring and informative conversation on finance and startups with Anand Mundra.

The Journey

Meet Anand Mundra, a finance controller with Sage, a well-known FTSE 100 company with 15,000 employees. Anand’s journey into the finance space started eight years ago, and it has been an exciting ride ever since. Anand began his journey as an auditor with Deloitte, giving him a solid auditing base. His time at Deloitte gave him an excellent foundation; he worked there for five years. Finally, however, he was ready to move on to something new.

Anand's next step was to move to a promoter company of the TATA group. With a move from Consulting to Industry, this opportunity allowed him to gain more knowledge and experience in finance. First, however, he was willing to learn more about companies' operations, so he joined BrowserStack. That was one of the best learning experiences of Anand's career. At BrowserStack, working for the controllership function allowed him to learn more about how SaaS companies operate and work.

In January 2022, Anand moved to Lockstep, a SaaS-based company based in the US and entities in India. Lockstep was in talks for funding, and it eventually got acquired by Sage Group PLC in London. This acquisition process was like a roller coaster ride, with due diligence and agreement finalisation being the significant milestones.

Currently working on the post-merger integration of Lockstep into Sage, he plays a pivotal role in ensuring that the business functions of both companies are integrated seamlessly. The post-merger integration involves much work from the finance point of view because finance is a priority between the business of the company and the management of the other company.

Exploring the World of Finance

According to Anand, finance has come a long way from bookkeeping and audits. Finance plays a crucial role in ensuring a company's financial stability and growth. In today’s world, it encompasses a much more comprehensive range of functions such as strategy, accounting, financial planning & analysis, treasury, and tax. However, the size and nature of a company still play a crucial role in determining how many sub-functions under the finance umbrella are required and how they should be structured.

Finance in SaaS Companies

When it comes to SaaS companies, finance takes on a unique role. As Anand explained, SaaS and financial metrics are two of the most critical areas finance needs to focus on. In India, SaaS companies are relatively new; most are startups, with some even becoming unicorns quickly. Therefore, it becomes crucial for them to maintain proper records of financial and SaaS metrics.

Understanding SaaS Metrics

SaaS metrics refer to the key performance indicators (KPIs) that measure the performance of a SaaS business. These metrics include but are not limited to Monthly Recurring Revenue (MRR), Annual Recurring Revenue (ARR), Customer Acquisition Cost (CAC), Customer Lifetime Value (CLV), Churn Rate, Net Dollar Retention (NDR), Logo Retention and Customer Satisfaction (CSAT).

MRR and ARR represent the revenue generated from the subscriptions. CAC and CLV measure the cost of acquiring a customer and the lifetime value of a customer, respectively. The churn rate is another crucial metric that measures the percentage of customers who cancel their subscriptions. High churn rates can be detrimental to a SaaS business, so keeping track of this metric and taking corrective actions if necessary is vital. Finally, CSAT is a metric that measures customer satisfaction and loyalty, which is crucial for the long-term success of a SaaS business.

Financial Metrics in SaaS

Apart from SaaS metrics, financial metrics play a critical role in the success of a SaaS business. The financial metrics that SaaS companies must keep track of include revenue, gross profit, operating expenses, net income, and cash flow.

Revenue is the amount of money generated from selling software subscriptions. Gross profit is the revenue minus the cost of goods sold, which includes the cost of serving the paying customers. Operating expenses are the costs associated with running the business, such as salaries, rent, and utilities. Net income is the profit after deducting all expenses from the revenue. Finally, cash flow is the cash in and out of business.

Working in SaaS finance requires a combination of business acumen, experience, and exposure to the industry. While some people may understand SaaS metrics, it's crucial to deeply understand how these metrics apply to the business. Therefore, it's essential to have a team of finance professionals who are well-versed in SaaS and financial metrics.

The Difference between Established and Startup Companies

Anand also sheds light on how finance works differently in an established company than in a startup. In a conventional well-established company, many things are already streamlined, and the finance function is well-established. However, in a startup, one must figure out many things independently. There is no set structure, and finance functions must be created from scratch. It's a challenging but exciting experience that requires creativity and innovation.

The Importance of Maintaining Records

Maintaining proper records is crucial regardless of the size and nature of a company. It helps make informed decisions, meets regulatory compliance, and monitors the company's financial health. In addition, by keeping a proper track record, companies can optimise their business processes and improve their financial performance.

Significant Challenges Faced in SaaS Finance Startups

Working in a startup can be an exhilarating experience, but it also comes with challenges. You are expected to wear multiple hats and handle various responsibilities when you work in a startup. As a finance leader, Anand suggests prioritising work and ranking activities in strategy, financial planning & analysis, financial reporting, compliance, and bookkeeping. Prioritising your work can help you stay focused and avoid getting bogged down by minor tasks. However, balancing being a one-person show and relying on your team members or consultants to help with the workload is essential.

Managing Work-Life Balance as a Finance Leader

As businesses grow and expand, the role of finance becomes increasingly complex and multifaceted. As a finance leader, Anand holds several vital responsibilities. He not only needs to manage the finances of the organisation but also needs to ensure its smooth functioning. Given his multiple responsibilities, it is natural to wonder how he manages his day and balances his workload. So let's dive into a workday and understand his approach to managing his time effectively.

Saying "No" to Unfruitful Meetings

Another challenge of business compared to pre covid era is managing a growing number of meetings. Meetings can take up a significant portion of one's workday, especially when you are a leader in the organisation. Anand notes that the number of meetings increases as you grow in the organisation. However, not all meetings may be helpful or productive. So he prefers to decline meetings with more than ten people where he is not required to speak. He finds it unnecessary to attend meetings where he is just an attendee, without any contribution. This approach lets him focus on the arrangements requiring his presence and ensures his time is well spent.

Anand emphasises the importance of scheduling focus hours for strategic work to balance multiple responsibilities.

Taking Breaks to Recharge

While it may seem counterintuitive, taking breaks during the workday can enhance productivity. Anand emphasises taking breaks during the workday, even if it means stepping out of the office for half an hour or an hour. These breaks allow him to recharge and return to work with renewed energy. Anand advises scheduling breaks in your workday, whether in the morning, evening, or any other time that works for you.

Managing Email Inbox

The constant influx of emails can make it challenging to manage one's inbox. Managing email is another crucial aspect of time management for finance leaders. As Anand points out, the finance team still needs to get a chatbot, so keeping your mailbox clean and checking it regularly is essential.

Anand notes that he schedules time to check his inbox regularly. As he gets into meetings, he finds little time to focus on work that requires independent focus. He recognises the importance of keeping his mailbox clean and checking it at least once daily to ensure he gets all the important emails. Anand recalls instances where he had missed important emails because of the overwhelming number of unread emails in his inbox.

Finding the Right Balance

Anand notes that there are days when he works 18 hours a day, while on other days, he may have little work to do. Finding the right balance between work and personal life can be challenging, especially when one holds significant responsibilities. Anand believes that taking breaks and scheduling time for oneself is crucial in maintaining a healthy work-life balance. He suggests finding a routine that works for you and sticking to it, regardless of workload.

Tips for Beginners to Stay Organized

Emails are an integral part of our professional life. From receiving the necessary information to communicating with colleagues and clients, we spend significant work hours managing our inboxes. However, it is common for beginners to feel overwhelmed by the sheer volume of emails they receive daily.

Rules can be set up to manage the mailbox efficiently. For example, he advises creating rules in the mailbox to park emails where you are marked CC, as they often do not require action. This way, you can focus on emails that need your immediate attention and check the CC inbox once a day without feeling overwhelmed.

In the world of emails, the CC conundrum can be tricky to navigate. For example, it is common for people to mark you CC on an email without any real reason, leading to a cluttered inbox and unnecessary stress. In addition, as Anand points out, some individuals may use the CC function to shift the responsibility of a task onto someone else without taking any action themselves.

However, it is essential to understand that only some CCs are necessary. Sometimes, being marked CC on an email can be crucial to keep everyone on the same page and ensure transparency. Therefore, it is essential to use your discretion and decide which emails require your attention and which ones you can ignore.

One way to stay focused is to prioritise your emails based on urgency and importance. For example, you can use the 'flag' or 'mark as unread' functions to highlight emails requiring immediate attention. This way, you can ensure that you address urgent emails promptly without getting sidetracked by less important ones.

When is the Right Time to Hire a Finance Guy in a Startup?

When hiring a finance professional for a startup, there is no one-size-fits-all answer. Instead, the timing of hiring a finance person depends on the founder's finance and business acumen.

The Importance of Finance Acumen for Founders

As Anand suggests, the founder's finance acumen plays a significant role in determining the need for a finance person. For example, if the founder is from an engineering or product background and is not very interested in finance or needs the required knowledge, then the founder needs somebody in finance to rely on. On the other hand, if the founder has a good understanding of finance, they can manage it on their own or with the help of a consultant.

The First Finance Hire - Finding the Right Fit

The first finance person is crucial to a startup's success as they are responsible for financial strategy and reporting. Hence, finding someone with a business understanding is vital rather than just finance, accounting, and bookkeeping. As Anand points out, the questions that people will ask the finance leader are more about marketing budgets, sales team performance, and commission calculations. Therefore, the first finance hire should be able to interpret financial data and communicate it to non-finance stakeholders.

The Second Finance Hire - A Generalist is Good Enough

For the second finance hire, Anand suggests looking for a generalist who can oversee all the work of consultants and handle tasks related to bookkeeping, accounting, treasury, and tax. The second finance hire does not necessarily need to be an expert but must understand where to find relevant information.

How an outsider can add strategic value in accelerating a product

When it comes to accelerating a product, several factors come into play. From the marketing team's efforts to the HR function's hiring strategy, each position within a company has its role. However, what role can an outsider, like an employee or consultant, play in accelerating a product?

One of the first things Anand suggested was to talk to people from other functions within the company. While accounting books can be helpful, there's no substitute for a first-hand understanding of the business's workings. In addition, talking about the company's other functions, like sales, customer success, HR, and product functions, will give you a good grip on the business state.

Another critical piece of advice Anand gave was to be willing to unlearn things and learn new ones. This is particularly important given how quickly things can change in business. For example, Anand explained that there might be a new regulation that comes up, and there might be situations that you need to be made aware of, but you are still fighting with people about the deprecated laws.

Finally, Anand stressed the importance of leveraging others' work to understand the industry and the business better. For example, rather than watching a budget speech that lasts for hours, he recommends reading a 5-pager relevant points publication from a Big 4 company. According to Anand, it's intelligent and essential to leverage others' work.

What is the Ideal Split between what a consultant does and what an in-house finance team Do?

As a business owner, you might find yourself grappling with what tasks you should delegate to a consultant and what tasks should be performed in-house. This can be incredibly challenging for small organisations with limited resources and a small workforce.

According to Anand, tasks such as compliance, bookkeeping, and tax filing are best handled by a consultant. These tasks require attention to detail and are recurring, so they can be efficiently handled by a consultant with the expertise to manage them. Consultants are also more flexible and can provide part-time or as-needed services, which can benefit small businesses with limited resources.

Why the Consultant Model Works

Anand believes that the consultant model works fantastically well for small businesses. One of the reasons for this is that the recurring or higher frequency tasks can be handled by junior staff, while the seniors or partners can handle the more complex or critical tasks. This gives small businesses the expertise they need while still allowing them to save on costs.

Anand also highlighted the importance of having access to a partner who can provide guidance and support when needed. With a consultant, you benefit from having an expert on your team who can provide guidance and advice on critical matters without hiring a full-time employee.

The Benefits of Outsourcing

Outsourcing tasks to a consultant can provide several benefits for small businesses. First, by outsourcing critical tasks, companies can save on costs, as they do not need to hire full-time staff to manage these tasks. This can be especially beneficial for businesses with limited resources.

Outsourcing can also give businesses access to the expertise they may need to gain in-house. This can be particularly important for compliance and financial management tasks, where mistakes can be costly. By outsourcing these tasks to a consultant, businesses can ensure that someone with the necessary expertise and experience manages them.

What to consider when selecting a Consultant for your company

Anand emphasised the importance of hiring someone who has confidence in their abilities and understands the business. It's about more than just knowing accounting; a consultant needs to understand the company they are working with. They should be able to provide solutions tailored to your business needs. It would be best to have someone who can think critically, ask the right questions, and offer valuable insights.

Building client relationships is critical to consulting work, but more is needed. A consultant should also be able to maintain those relationships. They should be able to communicate well and keep the client informed about the project's progress. They should also be able to provide regular updates and be available to answer any client's questions.

Anand also emphasised the importance of presentation and marketing skills. It's not enough to provide a technically accurate report; it must also be presented well. The use of technology tools like Tableau or Power BI can help to make information more visually appealing and easier to understand. This will increase the chances that the report will be used and acted upon.

It's essential to have regular meetings with the consultant to keep them informed about the business and any changes that may affect the project. Anand suggested having at least one meeting per month. This will help to ensure that the consultant is aware of any changes in the business and can adjust their work accordingly. It will also help to build a stronger relationship between the consultant and the client.

Anand suggests hiring a small-time consultant for maintaining financial records may be better than a large accounting firm. This is because small-time consultants will likely be more focused on your business needs and more available to answer your questions. You can get opinions on matters quickly.

What are the differentiating points?

Anand emphasises the importance of presenting your business well and is impressed with Zuna's website. According to him, Zuna's website communicates that they serve both US and Indian clients. This approach aligns with the current market trend, where companies in the US and India collaborate to operate globally. Anand believes that highlighting this aspect of the business can help set Zuna apart from competitors.

In addition to presenting your business well, Anand suggests offering free knowledge to clients and prospective clients. For instance, he mentions a regulation called Section 174 under federal laws that affects R&D expenses in the US. By publishing a newsletter that includes information on such regulations, Zuna can showcase its expertise and offer value to clients.

Anand also stresses the importance of regular communication with clients. By sending a weekly newsletter, Zuna can stay top of mind for clients, leading to repeat business and referrals. Even if some newsletters end up in spam folders, Anand believes that the benefits of reaching even one out of ten leads are worth the effort.

Conclusion

Anand's journey from a Big Four audit firm to a startup has been full of experiences and challenges. SaaS finance is crucial for startups and requires a specific set of skills to navigate effectively. As startups grow, finance becomes more critical, and it is essential to have a finance leader who can steer the company through the various financial challenges it may face.

Anand's journey can provide valuable insights if you want to enter the startup space. Being open to new opportunities and willing to learn and grow is essential. With hard work and dedication, anyone can succeed in the startup space.

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