Never let AI build your financial assumptions

Thank you for having me. Lovely to be here.

So when I started evaluating was I'm an accidental entrepreneur is what I always tell people because we had just moved from Singapore to the UK. This was back in twenty fifteen, twenty sixteen, I think. And I we had a very young child at the time. She's just two at the time. So I was looking for, you know, part time roles, roles that sort of fit parenting, but it was very hard to find back then. so I thought, okay, the best thing for me to do is probably contract. So we started as a I started contracting. So that's where it started. And I it it was just easier having the company as a structure at that point. I come from a sort of company compliance and accounting background. So I know about company formations and what, you know, how the structure of being individual versus company helps. So but evaluate only started becoming a proper business probably twenty eighteen, nineteen. That's still quite a while now. And yeah, there was always this gap in accounting. It's still a problem. Accounting is very if you look at the spectrum of services that we provide in a general accounting service, it's it's like wide, right? You you have your bookkeepers, the transactional side of things on one end and then you have very experienced people on the other spectrum, the finance directors and the CFOs and things like that. But the bit in the middle is not is very hard to piece together if you do not have someone in house. So that's where I was always a management accountant. I've al I've always loved that, even though I I am from a compliance background. So I just gravitated towards that and it could really solve issues for people from a numbers perspective. Yes.

Yeah. So normally when people talk about accounting, they think about the year end process, right? You have deadlines at where you have to submit taxes, where you have to submit probably returns to the regulators or like the company sales equivalent. But what we do is slightly different. So when you come to us, let's say you're a founder of a scaling startup, you have maybe you're starting to sell and you're going very successfully, or you have you know, investors that need certain numbers in certain formats. You'd come to us, we would take the first three months to basically understand your business, what you do, how you do it, how you sell, what are the processes you have currently, what do we need to build for you from a finance perspective. So it always starts with understanding the business, building the processes you need on a finance side, and then getting to a reporting cadence where you would have certain numbers come to you in formats that you understand as a founder. So whether you are a numbers person or a non numbers person, we'd always sort of work around you to get you what you need to take decisions you need to make take quickly, rather than having to fish for numbers. You don't know where they are, you don't know what they are called, you don't need to know any of this to basically work with us. We would educate you on the way as well. So that's where we differ and that's what essentially that's what management accounting should be.

Yeah. So at the very start there will probably a lot of the a lot of the people that come to us, they probably have had bookkeepers who were really good, but they know that something is missing. We just don't know what that thing that something is. So when they come to us, they're like, you know, they generally come to us because they have questions like we want to really hire someone, but we don't really know whether we can afford it. or things like, okay, our tax deadlines are coming up maybe three months from now, four months from now. not really sure of how much taxes we should be paying, is there a better way of managing that? or things like we want to launch a new product or go to a new country, but we don't really know how to approach that from a financial decision point making or point of view. Sometimes they come to us simply because they have investors and they say, send us your management back and they have no idea what that is. So they would come to us and say, you know, these are the questions we are getting. Do you think you can help us do all of these things? From a numbers perspective, and if you're sort of talking about internal numbers, your general cash flows, profit and loss, your balance sheet, your financial statements that you need on a consistent basis, that's something that we would work to prepare for you on a regular basis. That could be monthly, quarterly, at least quarterly though. If it's any less than quarterly, it's not really. It's probably more to do with compliance than regular management accounting. So the problems that people have are around the inefficiency or the inability to understand what you know, what does how is my business working in terms of numbers. That's very simply what it is. Yeah.

The fundamental reason why people outgrow the first accountant or the first bookkeeper they'd have is because they do not get numbers they need quickly. So, you know, numbers can help really help decision making if you have it in formats you understand and you have it within a sort of time frame that you can work around. Sometimes it's quicker than, you know, you can't obviously wait a whole year to be able to make a decision, right? You really need to be able to understand as you are working, you know, as you are building your business, you will come to a stage where, my God, I really need to think about this particular problem in my business. How will my cash flows change? Then if I had to hire someone, for example. That's an easy, common example of something that happens. People often think, I really need to hire a senior salesperson or I really need to hire a marketing guy. Do we actually have the budget for this? And that's when they start to actively think about where do we do I have a budget at all? Like even if I have a budget, what happens when that needs to change, right? Because the world is changing so fast. So then we come to this process called forecasting, which is a little bit more granular. It's a little bit more quicker than having a full fledged budget. That's generally the starting point for a lot of people because they have questions which cannot be easily answered. and people they have probably can't give them their o those answers quick or within a reasonable time frame, let's say.

Yes, that's a really good question. It's a question that we get asked a lot. So we in evaluate, we are Google based. So we have leaned towards Claude for number of reasons and we do a lot of financial modeling work, which Claude is really good at. what we do what we use Claude is i internally is for we have embedded workflows within Claude. we also use Claude Cowork now quite a bit. So i within evaluate, all of us have individual accounts. We've not graduated to the enterprise accounts as such. We may need to do that soon enough. so we have one segment of the work that we do, which is basically just helping us structure our day, structure our diaries, make sure making sure that responses like emails from clients or like things that clients are asking us are not going unanswered. But we have to be super careful in terms of the information that it's that we give to it, because there is we always have to have consent from clients, especially if we use it for financial planning and analysis sort of work, where clients are comfortable. We use Claude essentially to build around our assumptions because what we do not let it do or do not let AI do is build the assumptions based on which they can create, let's say, formulae or a financial model because that's where it could go wrong. Because assumptions and because a lot of accounting work is actually judgmental, especially the accounting work we do, because it's all the all almost always forward facing. We use the a lot of the histr historical numbers we've got to create a trend for the future. But we then have to add in a lot of variables that we see, which could be like very simply things like interest rates or like how inflation would hit in terms of certain costs, right? And that's a judgment call for an experienced accountant or an individual that's done this work for many, many years. it it's not to say that AI can't do that, but it's just not there yet. And that's where we see I think our jobs will change massively in the sense that when AI will take over a lot of the transactional, people like us can build on top of that faster. hopefully we can start to service more clients at much more reasonable cost potentially. We're not there yet, but yes, we hope that this was this is something that will happen in the near future.

Yeah, so when we don't put processes around finance and do not have a structure around how our numbers should flow, the biggest problem you'll ever you will have is you will make decisions without knowing whether your numbers can actually support that or not. Or you would make decisions on the back of guesswork or assumptions, right? That's the most natural thing you do. A lot of founders are naturally quite intuitive. That's something that I noticed when I work with them. They sometimes do not know whether their number they they would know intuitively, I think we're doing well this quarter. But having the numbers to back up that intuition would massively improve your whole decision making process, right? Like you can be sure that okay, I will go ahead, make this higher and I will not be bankrupt in six months time. That is that is where this whole piece called financial planning and analysis. You you would have heard the acronym FPNA quite a lot. That's basically what essentially that sits between the transactional and the strategic. And that will massively scale up your whole ability to make decisions that will actually be good for your business. Sometimes you also know that okay this this decision is not going to be great for my business. So y you might still do that because you have a founder's intuition or the instinct to do something is very strong. But you at least know that and then you are make taking the decision knowing that okay it could go wrong and I'm happy to take that risk. So that's what having a good finance process would actually solve for you. And that's what that's how I would encourage all young founders or like scaling founders to think about accounting in that way. It just does it doesn't have to be only compliance or just transactions. It can be so much more. So you know, hopefully. It it's an education as well. It's it's that's that's another thing.

Yes, absolutely. We'd love to scale as a company. We're still a you know, a a a small company. We've we're about five of us splits between UK and Indian at at the moment. We'd love to be able to service more clients and be and really bring this whole concept of FB and A to smaller companies because they are the ones I believe bigger c bigger companies definitely need it, but they they'd have that in house. but For smaller companies, even if you're at a level of revenue from like one million all the way to five, ten million, you can easily use someone like us to sort of build that whole structure out. And then when you are ready to take it in house, you can very well take it house and you won't have to build everything from scratch. And that's the whole idea we want to take to businesses to our twenty twenty seven, twenty eight, hopefully. And we h definitely are looking to scale. our own teams or revenues and how we are as a business as well. So yeah, that's the aspiration.

Yeah. Yeah. Who doesn't? Yeah. Yeah. Yeah, I think I would tell myself to have more faith in what we are trying to build. 'Cause I think we all suffer from every founder, whether that's a professional services founder or whatever you belong to, right? You always doubt, mm, is this the right thing. I think there's very rarely a founder that doesn't doubt themselves to think, Can I make a business out of it? I would knowing everything that I know today, I think I would have I would start to believe that this can actually be a business and start to treat it as one from day one. and that thinking would would have changed a lot of what I initially did as a contractor and how I led that into sort of evaluating a business. I think I delayed it a little bit. It it could have been earlier and faster.

It's probably our website. We we have our website is evaluate dot com. there's a contact page there. I'm obviously on LinkedIn. My colleague Swaffnell is on LinkedIn. We have a very you know, very well kept LinkedIn page for Evaluate. You can contact us on any one of those platforms and we're very responsive. We generally pride ourselves in responding to people within twenty four to forty eight hours, at least as a first contact. So unless we're getting thousands of requests all of a sudden I'm sure. you'll hear back us hear back from us really quickly.

thank you. Yeah. Thank you very much. Thank you for having me. Really appreciate it.