From XU Magazine, 
Issue 28

Embracing financial processes to power a new future

In a company led by inventors, how do you introduce processes that will feed growth and innovation, not stifle them? That was the challenge faced by the finance team at Fulcrum3D.

Fulcrum3D is a classic startup story. Like many great businesses, the Australian tech company was founded by people who are passionate about providing a solution to a problem. Back in 2011, the problem was how to measure and provide reliable data for renewable resources, such as wind and solar. To solve it, a team of renewable energy specialists based in Sydney came together to invent technologies that could provide precise data to predict electrical output from wind and solar farms.  

Fast forward to 2021 and Fulcrum3D’s products and solutions are being used by the renewable energy sector worldwide. In fact, its flagship Sodar wind monitoring system is one of only five remote sensing instruments globally considered to provide bankable wind data by leading independent consultants.

As the business has grown, so too has the breadth of products and services they provide. That’s the thing about inventors - they never stop innovating. 

Finance manager, Stephanie Schreiber, explained that Fulcrum3D designs and manufactures their own products, deploys and commissions on-site systems, and operates its own data monitoring and analytics service. “This business is more complicated than any business I’ve worked at before, in terms of accounting.” 

However, amongst all this complexity, there was a lack of formal processes - something that threatened to hold the company back from its growth potential. 

“In a short time, we’d moved from a small company with minimal formalised systems to a medium-sized company with processes,” she explains. 

“The amount of componentry and instruments we were building with was growing, and we needed tighter systems to keep tabs on it all.

“At the same time, the amount of people in the business was increasing and we needed to ensure everyone had access to accurate information.”

For the finance team especially, there was a third important factor: time.  

“The time lags we were experiencing in the finance department were really holding us back,” she recalls. 

“In particular, we needed to reduce the time lag between processing spend and income in the system and running reports.”

This was especially problematic when it came to revenue recognition. 

“In a simple business, you build something and get paid 100 percent of the money in seven days, and that revenue is recognised in the accounts. 

“In our business, it’s much more complex. Clients typically pay over a series of milestones so our revenue recognition isn’t necessarily instantaneous.”

Sorting through the project spend and invoicing, Stephanie would spend one day a week on manual revenue recognition. 

“And I was always months behind,” she says.

The game-changer was TidyEnterprise, a project, inventory and workflow management software that integrates seamlessly with Xero.

“Tidy has a feature called WIP, which calculates the revenue recognition for projects in progress. At the end of every month, all I need to do is run a payment summaries report and all the data is there and up to date.”

For Stephanie, the time savings are substantial. “Now I only spend one day a month reconciling projects and making sure they’re finished and entered in Tidy, and it calculates how much we’re allowed to recognise as revenue, instantly.”

“That was massive for us. Our books are now up to date at the end of every month. We can see all our costs, our spending, our componentry for projects, our profitability, and more, in one place.

“It’s so good going into Xero and knowing the balance sheet is accurate and what our assets and liabilities are. It’s reduced the stress.”

The power of accurate data 

The Fulcrum3D team, more than anyone, knows how essential reliable data is for effective project design and management – from both a technical and financial point of view. They’ve built a business on that very truth. 

By formalising their project and inventory management processes using Tidy, they are realising the power of reliable data for their own business advantage. 

“When we run the reports, we have the decision making power right there and then, instead of not knowing where we stand,” said Stephanie. 

“This means we know how to better manage cash-flow for upcoming projects, and whether we can take on larger projects because we have money in the kitty.”

Just as wind and solar companies use Fulcrum3D solutions to work out how each part of the plant is performing and reveal opportunities for optimising that performance, Fulcrum3D is using the precise project and workflow data to the same end: optimal business performance. 

“We can see how much stock we’re holding at any point in time, how much we’re turning over, or not, and how frequently we’re going through components we’re buying,” explains Stephanie. 

“We didn’t have eyes on that before; we just kept our shelves stocked with componentry. So, it has made us ask the question - do we need to hold as much stock as we’re holding? How frequently are we going through things?”

The business also now has visibility over its different markets and their profitability. 

“For each of our four key markets, we now understand our gross margin for a particular product or service. This is information we didn’t have at our fingertips before, and it’s revolutionary for us. 

“We could always guess what was doing well, but Tidy gives us an objective look at those markets and whether we’re offering accurate pricing.”

Shifting the mindset 

Ask anyone in the business and there’s no doubting that Tidy has made a positive impact. But making the move to the software a year ago wasn’t plain sailing - it required a huge shift in mindset. 

“We’re a really dynamic, entrepreneurial and inventive company,” Stephanie explains.

“The whole beauty of Fulcrum3D is that we can react and invent new products to solve problems all the time. Some people were worried that the way we freeflow and the way we invent might be stifled by software like this - that using Tidy would turn us into Telstra.”

They explored the option of using in-house expertise to develop their own fit-for-purpose software.

“The thinking was that building it ourselves would allow us to have the software exactly as we want it, rather than be stifled by what someone else offers.”

However, Stephanie said working with Tidy surprised them all. 

“The fact that Tidy is a young, innovative company is a great personality match for us. When we raise a problem, there are people on the ground thinking about what we can do and help create a solution.” 

This level of customer support stood out to Fulcrum3D when selecting the software, though it was not the only factor that determined their decision. 

“We were looking for something that was budget friendly with great customer service. It needed to work with Xero, while being something fluid that could move with us,” Stephanie says. 

TidyEnterprise ticked all the boxes, providing an affordable way to manage the projects, stock and workflows on the operational side before sending the financial information seamlessly across to Xero for the accounting.

To get the most out of their investment, Fulcrum3D engaged Edward Fyvie of 5E Management Services, one of Tidy’s implementation partners based in Australia. 

“Fulcrum3D is a very complex business, so Edward was on the ground helping us work out how to get the business through Tidy in the most efficient way.”

“The nature of our business means we are often stretching its capabilities and using it in ways that have never been done before. That’s where Edward and Tidy’s software engineers work with us and problem solve.”

You’ve got to have process 

“There are those who prefer processes, and those who are non-process people,” Stephanie says. 

“The beauty of our company is that we are creating harmony between those types of people, because we recognise the value of both types of thinking. That’s how we’re able to create and react to markets. 

“Now, there’s just enough process to keep the process lovers happy and not overwhelm or stifle the non-process people. It’s a happy medium.”

What it takes to succeed as a small company is different than as a large company - there’s no doubt about that. However, Fulcrum3D is succeeding where many fail; it is finding a way to keep its startup agility and inventiveness while putting in the processes required to scale.

Why leave it there?

To find out more about how you can make your business Tidy

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