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Tech start-ups are renowned for their innovation and rapid growth, but these strengths must eventually be matched by financial discipline and transparency.
As a company moves from start-up to scale-up, financial reporting transforms from a back-office necessity into a strategic priority. Accurate and timely reporting becomes essential for building investor trust, meeting legal obligations, and demonstrating control in a high-growth environment. 
Independent assurance, through reviews or audits, adds another layer of credibility. It validates that financial reports are accurate, controls are effective, and the business can sustain its growth trajectory. In an environment where investors are increasingly selective and risk-aware, tech businesses can no longer rely on innovation and hype alone. You must demonstrate strong fundamentals, clear governance, and a credible path to profitability.
The financial journey of technology companies: From start-up to scale-up
Navigating the early stages of a tech start-up
In the start-up phase, resources are limited and focus is squarely on innovation and growth. Financial processes are often informal: spreadsheets, basic record-keeping, and runway planning to monitor cash burn and survival time.
Start-ups usually focus on bookkeeping and compliance at the most essential level. Your priorities are managing cash flow, meeting GST and payroll obligations, and keeping an eye on how long the business can sustain itself before the next funding round.
Most start-ups in Australia are registered as small proprietary companies, meaning they’re not required to prepare or lodge audited financial statements unless they exceed thresholds under the Corporations Act. This allows founders to focus resources on product development and market traction rather than compliance-heavy reporting.
However, that minimal governance can quickly lead to problems. When there’s little segregation of duties, personal and business expenses can blur, and investors may quickly lose confidence.
Cash management is everything. Even without complex systems, founders should maintain basic monthly income statements and cash flow forecasts to monitor your runway; the number of months you can operate before requiring new capital.
Building scalable systems for growth and reliability
Once revenue grows and investors come on board, financial complexity accelerates. Manual spreadsheets are no longer sufficient.
At the scale-up stage, Excel no longer cuts it. With more staff, investors, and complex revenue models, you need robust accounting software, stronger controls, and defined approval hierarchies.
Key priorities at this stage include:
- Upgrading accounting systems
- Strengthening internal controls
- Implementing approval workflows for expenditure, payroll, and procurement.
Tech scale-ups must also manage increasingly sophisticated revenue flows, SaaS subscriptions, licensing models, implementation fees, and recognise revenue correctly under AASB 15 Revenue from Contracts with Customers.
Upgrading accounting systems allows management to rely on accurate data. Not only do you stay compliant, you have the data to make faster, better-informed decisions.
Key governance considerations
Governance evolves alongside growth. Establishing a capable board, formalising financial oversight, and instilling ‘tone at the top’ all contribute to transparency and accountability.
As you scale, you need to prepare for external scrutiny. Boards need reliable management reports to assess performance, monitor spending, and reassure investors that funds are being used responsibly.
Boards and investors increasingly look at metrics like Annual Recurring Revenue (ARR), EBITDA, and gross margin to track performance. Consistent, transparent reporting on these metrics fosters credibility and investor trust.
Understanding financial reporting and its importance
Why is financial reporting important for tech businesses?
Accurate, timely financial reporting does more than meet compliance obligations; it builds confidence. Financial reports show how efficiently a company is using its resources. They help investors assess performance, employees understand stability, and management make strategic decisions about funding and expansion.
For early-stage tech firms, financial reporting also informs valuation discussions, supports capital raises, and demonstrates stewardship of investor funds.
Main users of financial reports
- Different stakeholders rely on financial statements for different reasons:
- Investors: Assess performance and decide whether to inject more capital or exit.
- Lenders: Evaluate debt capacity, liquidity, and solvency.
- Regulators: Ensure compliance with taxation and financial reporting laws.
- Employees: Gauge job security and growth prospects.
- Suppliers and creditors: Assess payment reliability and credit risk.
As companies scale, your audience expands. It is not just about tax anymore, it’s about maintaining confidence among all stakeholders.
Real-life examples
Australia’s technology landscape has shown that disciplined financial management accelerates growth. Canva, Atlassian, Afterpay, and Xero all invested early in professional finance teams, systems, and assurance processes.
They treated assurance as part of growth, not as a cost.
Core components of a financial report
Income statement and cash flow management
The income statement reveals profitability; the cash flow statement shows liquidity. A company can show profits on paper but still struggle to pay its bills. Cash is king, especially in tech, where upfront development costs are high and payments may lag.
Together, operating, investing, and financing cash flows provide insight into sustainability. A healthy scale-up balances investment in growth with disciplined cash management.
Balance sheet and equity considerations
The balance sheet provides a snapshot of liquidity, solvency, and capital structure. Tech companies often have unique balance sheet challenges, large intangible assets, deferred revenue, and share-based payments.
Equity is often used as a currency to retain talent. But it also complicates valuation and reporting. Companies need to disclose ownership structures, share-based arrangements, and how these affect shareholder equity.
Notes and disclosures
Detailed disclosures, covering accounting policies, related party transactions, and data hosting costs, help investors see beyond the numbers. These notes tell the story behind the financials. They show whether the business is acting responsibly and sustainably.
Assurance challenges and the role of audit
How assurance enhances transparency and trust
Independent assurance builds trust. When numbers are vetted by a third party, investors know the data is reliable. It validates that the company is a going concern and that controls are working effectively.
Audits also reveal control weaknesses and operational inefficiencies, offering management valuable insight. It is about helping businesses evolve, not catching them out.
Common assurance challenges during scaling up
When facing their first audit, many scale-ups find themselves unprepared. Common issues include:
- Incomplete financial records or reconciliations.
- Complex revenue and capitalisation accounting.
- Weak internal controls and lack of segregation of duties.
- Manual data stored in spreadsheets.
- Resource and timeline pressures within small finance teams.
- Cost sensitivity and limited audit experience.
Start-ups are lean, and when they scale, they often underestimate how audit-ready their systems need to be.
Practical strategies to overcome obstacles
To ease the transition, we recommend:
- Investing early in scalable accounting systems and skilled finance talent.
- Undertaking an audit readiness review before your first statutory audit.
- Strengthening internal controls gradually instead of implementing everything at once.
- Treating auditors as growth partners and using their findings as learning opportunities.
Treat your auditors as partners in your journey. Our feedback is there to help you grow stronger and more investor-ready.
Regulatory compliance and standards in Australia
As companies expand, compliance obligations increase. Under the Corporations Act 2001, Australian-owned small proprietary companies may not need audited reports, but once you cross the ASIC thresholds (revenue of $50m, assets of $25m, or 100 employees) you must prepare and lodge audited financial statements.
Tech companies in specialised areas such as fintech or crypto face additional requirements. Fintechs dealing with client funds must hold an AFSL, while crypto and blockchain companies must meet AUSTRAC anti-money laundering obligations.
Complying with Australian and international standards
Australia’s AASB standards align closely with IFRS, providing consistency for investors across borders. For scale-ups eyeing international expansion or IPO, compliance with AASB 2 (Share-based Payment), AASB 9 (Financial Instruments), AASB 15 (Revenues), AASB 16 (Leases), and AASB 138 (Intangible assets) ensures financial statements are globally comparable and credible.
Investors expect consistency. Aligning to international financial reporting standards ensures transparency and comparability, which is essential when seeking global investment.
Embedding compliance early creates efficiency later.
- Monitor thresholds for audit and reporting obligations.
- Stay current with AASB and IFRS updates.
- Document accounting policies and maintain evidence.
- Strengthen governance oversight and board reporting.
- Engage external advisors before issues arise.
Audit readiness checklist for tech companies
Be audit-ready before your first engagement.
A few simple steps can save weeks of stress and build investor confidence.
Systems and records
- Migrate from spreadsheets to secure accounting software.
- Reconcile bank, payroll, payables and GST accounts.
- Keep copies of funding, loan and customer contracts.
- Confirm accounting policies align with AASB standards.
Revenue and intangibles
- Review contracts for correct AASB 15 revenue recognition.
- Separate research vs development spend under AASB 138.
- Keep documentation for capitalised software costs.
- Reconcile deferred revenue and customer billings.
Governance and controls
- Define approval limits and dual signatories.
- Document financial policies and segregation of duties.
- Maintain an updated cap table and equity register.
Supporting schedules
- Maintain fixed asset and depreciation schedules.
- Update share-based payment valuations.
- Prepare working papers that clearly tie to the general ledger.
People and planning
- Nominate an internal audit contact and agree timelines early.
- Run a pre-audit readiness review.
- Brief your team on expectations and next steps.
- Treat auditors as partners in growth, not critics.
From SaaS start-ups in co-working spaces to scale-ups preparing for IPOs, financial reporting and assurance form the foundation of credibility and investor trust.
As businesses evolve, so must their systems, controls, and governance. When you treat financial reporting as a strategic tool (not a compliance exercise) you set yourself up for long-term success.
Scaling fast? Stay ahead of your reporting requirements
Speak with Deepak or your closest RSM assurance and advisory team to ensure your systems are ready for growth.
