Tony Tiscornia, Chief Financial Officer at Coupa
As companies seek stability amid the ongoing pandemic, they are now faced with another wave of uncertainty. This time, it’s economic volatility. These two factors are challenging on their own. Now that they’re combined, burgeoning businesses are being tested like never before.
We’re already well into the second half of 2022 and IPOs, which are often seen as an indicator of business momentum and confidence, are meaningfully down from last year. Specifically, a recent Coupa global survey found that almost 87% of fast-growing UK businesses are delaying IPO due to current market conditions.
It’s unsurprising that many are pushing back planned listings. Managing a business’ finances is no doubt a complex process, and combined with fast growth and pre-IPO preparation, this can be a major stress-test for any company. But holding tight and waiting for a sunnier day simply isn’t enough. Whatever the reason for delay, they now find themselves with extra time to prepare. This will end up proving crucial to their growth ambitions.
Past examples can teach us how to emerge stronger and how finance teams can find inspiration and resilience.
What we know
In the past, similar circumstances to those we face today have resulted in accomplished businesses. For instance, Airbnb, Asana, Slack, and Uber navigated the 2008-2009 recession, launched, and found huge success. Looking further back, Microsoft and Apple were both forged during the recession of the 1970s and launched soon after. Today’s uncertainty will also pass. When it does, businesses must be prepared to capitalise.
Advancing the finance back-office
When it comes to preparing from a financial operations perspective, there’s no better time than the present. Having back-end finance systems ready to support the anticipated increase in operational and reporting demands, as well as expected requirements from investors and regulators, is a fundamental step in preparing your business for an IPO.
Yet, Coupa’s research found that inadequate financial systems are holding businesses back from growing at scale. And while 80% of business leaders said they feel confident their risk management processes and controls can mitigate financial risk that could hinder growth, only 15% said that these processes will not require any more improvements.
Automation as a solution for last-mile IPO readiness
Coupa’s research shows that most businesses admit to many of their financial processes still being handled manually, including: procurement (64%), supplier management (61%), cash management (58%), accounts payable invoicing (52%) and payments (37%). This not only leaves room for mistakes and unnecessarily strains the financial team’s time and effort, but it also prevents each process or system from integrating and “speaking” to each other.
That’s where automation can help. Automated financial technology solutions that are scalable and easily integrated with other systems are a necessity for any company en route to IPO.
Without effective control of financial risk management, businesses could overlook serious issues that may significantly and negatively affect them. Investors not only want to ensure these measures are in place, but that they’re rigorous too.
It’s also vital to ensure the right people are in charge of these systems and processes. Preparing for an IPO can be a lot of work, and a well-trained team with specialised knowledge in identifying actions and potential issues can help ease some of that pressure.
Weathering recessionary storms
Sadly, no amount of prep can completely guarantee smooth sailing when navigating to your IPO – especially in the current climate – but businesses shouldn’t feel paralysed by economic challenges. Businesses before them, and businesses after, will weather recession storms and crises and emerge unscathed, if not stronger.
Finance teams should see themselves as a strategic anchor for their businesses. A recession provides a great opportunity for organisations to apply renewed focus in reevaluating their systems and processes in order to put them in the strongest possible position when they’re ready for IPO.
