Accounting at growth-stage companies might not sound like an art form, but Desene Sterling makes it feel that way in this episode of Controllers Classified. As the Controller at Sourcegraph, she shares how building processes—like procurement workflows and streamlined month-end closes—can be as satisfying as painting a masterpiece. Desene reveals the chaos and creativity of scaling startups, from taming “free-for-all” credit card policies to navigating the complexities of revenue recognition. Packed with humor and insights, this episode highlights how accountants can balance structure with innovation while forging strong relationships to drive impactful change.
When you think about accounting at growth stage companies, the word "artistry" might not immediately come to mind, but Desene Sterling makes a compelling case for it in this episode of Controllers Classified. As the Controller at Sourcegraph, Desene describes how crafting processes, like implementing procurement workflows or streamlining month-end close, feels like painting a masterpiece—except her medium is reconciliations and financial statements.
This episode takes a deep dive into what it takes to build an accounting function from scratch in a growth stage startup. Desene recounts the feeling of being the first in-house accounting hire, navigating "free-for-all" credit card policies and training teams to embrace structure in a way that doesn’t stifle innovation. Her philosophy? Build processes that flex and grow alongside the company, even if that means starting with something imperfect.
But it’s not all about debits and credits—relationships take center stage too. Desene explains how building credibility with colleagues and positioning finance as a partner (and not just an enforcer) are critical steps in successful change management. She also spends time on what she looks for in talent when building out her team, noting that nothing is more important than hiring people who can manage the details while keeping sight of the big picture.
From detailing the nuances of SaaS and on-prem revenue recognition to recounting an unforgettable typo on a 10-Q filing, this episode showcases how accountants at growth-stage companies tackle big challenges with grit, ingenuity, and the occasional dose of humor.
Key Quotes
Time Stamps
Links
0:00:02.2 Announcer: Welcome to Controllers Classified, the podcast where we take a deep dive into the dynamic world of controllers, accountants, and finance leaders, and hear how their ever evolving roles are redefining accounting and the future of business. And now here's your host, Erik Zhou.
0:00:23.6 Erik Zhou: Welcome to Controllers Classified. My name is Erik Zhou, the Chief Accounting Officer at Brex. And today we're covering best practices for accounting and growth stage companies with our guest, Desene Sterling. Desene is the controller at Sourcegraph and has a host of experience working at a number of growth stage companies. Welcome Desene.
0:00:42.2 Desene Sterling: Thanks. Happy to be here.
0:00:43.7 Erik Zhou: So Desene, can you tell us what type of company environment you do your best work in and how maybe that's shaped your career decisions?
0:00:51.1 Desene Sterling: Sure. I think the company environment that I do my best work in is definitely somewhere where I can build something that is growing, that I get to put in a process, a procedure, and really lay the foundation for the future people that are gonna be in accounting. That company.
0:01:07.5 Erik Zhou: You have a bit of a different background than we are accustomed to seeing for a controller maybe tell us how that's helped you in your career.
0:01:15.8 Desene Sterling: So I have no public accounting experience. I've been purely operational my entire career. How that helps me, I think that I'm looking at it from a perspective of like, how do we do this in the business? And not necessarily from the perspective like what is the accounting treatment for this? Obviously I am looking at like what is the accounting treatment for this? But I think that like my first thought when I see any sort of decision made in the business is how do we operationalize this on the accounting side that and how do we work with the business to do this?
0:01:41.3 Erik Zhou: Yeah, I mean I can see that when I was in audit often I just looked at the result. Right. 'cause at the end of the day, I'm looking at the debits and credits for a journal entry. I'm tying it out to the support and I just carry that, the result ties to the support, but I'm not thinking that deeply about how that file was put together. Right. And what it took to do that. Whereas I can totally see now that I'm in this seat, I've been here for, I was in audit for 11 years and now I'm... I've been in this seat for almost six. I can totally... I have a diff... I have a mindset shift. I care so much more about the operations of the process to come up with the numbers. The result is a byproduct. Frankly, if I have a good process, then the results and the numbers will be accurate, if that makes any sense.
0:02:19.0 Desene Sterling: Yeah, totally. And I think about this from a RevRec perspective is like the business can tell me what product they're selling. They can tell me if it's cloud, they can tell me if it's on-prem and I can see like what the, like how... What the accounting treatment for that should be. But I think somebody who's coming from public accounting into a controller role wouldn't understand what inputs they need from the business to make that happen for their team to be able to make those entries that ultimately show up on the financials. So when I hear we're selling this product, I'm like, okay, great. Like am I gonna pull this detail from this system and are you gonna give me like these milestones or whatever it is that I need and who's gonna give them to me? I'm thinking about all of those operational pieces.
0:02:57.1 Erik Zhou: What keeps you coming back into accounting?
0:03:00.1 Desene Sterling: I love that everything ties out. I love that I can always... There's always an answer and I know that if I haven't gotten to the answer, it's still there. I just need to keep going. It's not a guess for the most part. Like everything has... There's like guidance or there's an argument to be made or you like, you just know what the answer should be and you have to get to zero in a rock. What keeps me coming back to accounting in this stage of companies is I get so much satisfaction out of building and seeing things come together and it's like a puzzle for me. So getting to put all those pieces together.
0:03:28.6 Erik Zhou: Yeah. And I think certainly for me, I do have a background in public accounting. Coming into Brex and seeing the processes that we've built, I have a sense of pride and ownership. Right. From building from scratch. Like I have my "fingerprints" on all these things. And I know that, and that actually gives me a lot of joy myself.
0:03:48.2 Desene Sterling: I assume this is how artists feel like after they paint a painting [laughter] So when I see like a bunch of reconciliations, a really nice financials, I'm like, oh yes. Like that was my work.
0:03:58.3 Erik Zhou: Don't let our auditors hear that. We equate our accounting to artistry. But [laughter] how did you get into kind of doing all the accounting for these growth stage companies? What attracted you to it?
0:04:09.2 Desene Sterling: I love the building side of this. I think it's so fun to put in a process and really like set the stage for everyone else that's gonna be at this company in the future.
0:04:19.7 Erik Zhou: And what do you think are the right building blocks? Like what are the top priorities when you get into that early stage companies? Maybe only a few people, maybe it's just you in accounting, frankly, and your own QuickBooks still. But what are the top, what are the first things you try to get going?
0:04:34.9 Desene Sterling: I think the first thing for me is I wanna understand what's broken first. I wanna understand where there's gaps. I mean, I think like it, I know what I want to improve eventually and how will they end stage, but it's gonna be different in every company. Like what is missing to get to that end stage. And I think as with most startup companies, visibility is probably the first thing I'm looking at.
0:04:58.9 Erik Zhou: What about at Sourcegraph? What are the first things that you focused on when you started there?
0:05:03.3 Desene Sterling: So yeah, Sourcegraph was really interesting because all of our accounting was done externally. So I was the first in-house accounting hire and I was bringing in everything. So I wanted... I just... I really wanted a full picture of what was going on in the company. It was pretty chaotic and there, everything was done in a disjointed process. So pulling that all together.
0:05:24.8 Erik Zhou: What were the biggest challenges or what were the things that, I guess getting to company do, the change management? Like what are the things that you had to spend the most time on?
0:05:34.4 Desene Sterling: I probably had to spend the most time on relationships. I think for me being the only in-house accounting hire, I was in control of the work piece. So that was, it was time consuming, but it was under my control to put in the process. But training everyone across the company on a new process or how it worked previously and how it needs to work now was definitely the most time consuming.
0:06:00.9 Erik Zhou: What's something that like people took for granted or like did before and then you're like, okay, well we need to change some things here. Like, 'cause I remember when I was at Brex and we were 70 folks at the company. I was the second accounting hire, so not the first. We had already done, been doing our in-house stuff, but then I said, well we have to have a different process for approving all this procurement. Like we can't just have everyone saying like, let's spend this money and then we just wire the money out when the invoice comes in, etcetera. And that was a big change. And relationships was really important in that too. 'cause I had to kind of build the credibility first for people to say, okay, I'm okay with having a little bit of financial control, so to speak on my decisions.
0:06:40.5 Desene Sterling: Yeah, I think the biggest process change that I made right off the bat that everybody felt was around credit cards. So prior to me joining, it was kind of free for all. If you had a corporate credit card, you swiped it, you bought what you needed and you didn't look at it again. So you weren't leaving a description of what you bought, you weren't attaching a receipt you weren't doing the GL coding. So then accounting is having to reach out transaction by transaction, kind of guess what everything is. And as you're aware, it's like really hard to understand what every single person in the business is doing and why they're doing it. So my change was to have everyone be responsible for their own corporate cards.
0:07:18.8 Erik Zhou: I'd love to dive into that. Like even in those situations you must have applied some judgment because not everything needs to be "100%" accurately coded, if that makes any sense. Like, yeah there's something like meals and entertainment, I really wanna make sure I have that in place. 'cause on my tax return, like that, there's also cascading impacts there. But some other things, like whether it's coded to this GL account on another GL account, sometimes if it's, if I end up reporting it in sales and marketing, no matter what on, at least on Gap, it's not as meaningful, at least at the start. So curious if you took any judge... If you made any judgmental decisions on thresholds or things like that as you're starting out at Sourcegraph?
0:08:02.3 Desene Sterling: Yeah, so a couple ways I would approach this is one, materiality based on the charge. So for us, we did everything over 25. We want it coded correctly and we want a receipt attached to it. Separately from that, I think you need to look at what the business is looking at, like where are your main costs coming from? And for us, that was T&E. And at a lot of companies, T&E is not like their main cost driver, but we're fully remote and we have teammates everywhere. And we're also looking at different types of travel buckets within each of those. So that was where I really focused, that was like, what was the important piece for FP&A as they're looking at building out budgets for the following year, like where are we spending the most on travel? Is it customer travel, team travel, company-wide travel. So it was really key for me that those were accurate.
0:08:51.5 Erik Zhou: And so what was the beginning stage and what is the... What does it look like today?
0:08:55.9 Desene Sterling: Beginning stage total free for all card holders, swipes a card, never looks at it again, doesn't code, it doesn't add a receipt. End stage is every card holder is responsible for every charge that they have over $25. They are coding it, they are writing a business purpose and they're attaching a receipt. And that is done by like end of month plus two generally, so that we can close.
0:09:21.5 Erik Zhou: And do you send... Like how do you enforce this?
0:09:24.4 Desene Sterling: We check in on it every Friday, so we're keeping on top of it so that it's not a huge surprise for everybody. I would say most people are pretty responsive with the Friday check-ins and coding their charges. We have a few that wait until the very end, but thankfully it's not a ton that they're working through at the eight month end.
0:09:40.4 Erik Zhou: So you talk about T&E here, but then I know that there's a lot of other processes that require a lot of uplift as well when you're just joining. Like what are some of the other areas that you would typically focus on, whether that's Sourcegraph or some of your other companies?
0:09:54.8 Desene Sterling: Yeah, the credit card one was pretty easy to tackle. I think the larger project that we as an accounting org tackled that we had to get more buy-in across the org was the procurement process. So people were pretty used to spending, nearly however they wanted. They could go to a vendor, sign a contract and get that product with that service relatively quickly. So our, I would say our beginning state there was, there was zero process around it and accounting just got the invoice at the end of the month or whenever that vendor invoiced us. So we had no insight into accruals or committed spend, any of that.
0:10:31.8 Erik Zhou: What's your starting point? How do you announce... How do you... Where do you begin in like getting the company to just change that behavior?
0:10:39.1 Desene Sterling: Yeah. Oh, that's so hard. [laughter] So the way that we did it here and what I... I really liked it this way and I think that I will do it this way in the future instead of just going like fully in on a whole procurement process is we started first with invoice approvals. So it got people comfortable going into the system, seeing their invoice from their vendor, knowing that they had to approve it. And then if for some reason anything came back on that spend, like, Hey, we never got this computer that you ordered or we never like this software, it got renewed, you didn't cancel it. It gave them like an accountability over their purchase and it taught them one to like be checking for things and they know their name is attached to it. And I think that was like a really good segue into getting people to feel more responsible for their spend in the company as a whole.
0:11:31.5 Desene Sterling: So after like quite a while on that, we started the procurement process and it was a lighter version of what it is today. So instead of going through a ton of approvals, it was usually just you spend, it goes to FP&A to check for budget, FP&A signs off, it goes to your manager, they sign off. We have since built out like a more robust model. If you're buying certain products that let's say IT would buy, like if you wanna buy a computer, you can't purchase that without IT approval. So like they are pulled into that workflow for approvals. If it's over a certain amount now it's going to your exec lead because they're ultimately the owner of the budget. So there's new layers that we've like added in as people have gotten more comfortable and more used to going through a spend request process.
0:12:11.5 Erik Zhou: When you were doing just the invoice approvals, that sounds like it's just, it's like a three-way match for supplies when they arrive at the dock, so to speak or arrive at your warehouse. It's almost like that's just making sure people are comfortable that this got invoiced and that they receive the goods or services in the invoice so that they're in the process of.
0:12:30.7 Desene Sterling: Yep. Correct. Prior to the... Or in between the invoice approvals and putting in the full guided procurement, we rolled out a PO process. So that I think was like the first like foray into people realizing before spend you have to request spend. And I think that's like a huge behavior shift when people are not used to asking prior to spending. That's that behavior that you have to reign in to get them to follow a procurement process.
0:12:57.7 Erik Zhou: And did you set up budgets during the invoice process or like kind of in parallel with the PL process implementation?
0:13:04.8 Desene Sterling: We had budgets at the time of just doing the invoice processing, invoice approvals. It was... It's... It was harder to hold people accountable when they didn't see the budget approval straight away. So they're going out, they're committing to a vendor and then after the fact we're saying, oh hey, maybe you're over budget by 20k in this area of your budget. And at that point it was like, well we've already committed. There's nothing we can do. So [laughter]
0:13:28.9 Erik Zhou: Yeah. My AP team is the last to know sometimes. There are still a handful of contracts that make its way through because it's urgent or some emergency. There may be some secret like project that's going on with this, some exec involvement and it's like, Hey, can we just pay this? And I'm like, this is the first time I'm hearing about this. We're like trying to track all the budget stuff and then I get the story later. But yeah, I totally empathize with what you're saying.
0:13:53.6 Desene Sterling: Oh, we are far from perfect. That definitely still happens, but I would say thankfully it's pretty rare and usually I'd say a CEO or CTO involved thing. And for that, like it's, at the end of the day, it's pretty much their company, so they know.
0:14:05.4 Erik Zhou: 100% preferred. And one of the things you also mentioned was like, we talked about a couple of process items. Most important thing is relationships?
0:14:13.3 Desene Sterling: Yes.
0:14:15.4 Erik Zhou: And so what are the kind of first interactions that you're looking for, the first relationships that you were trying to build joining the company?
0:14:24.5 Desene Sterling: I think the first inter... This is a interesting way to answer this question, but I think the first interactions are generally not the ones that I'm looking for. First interactions with counting when you're putting in a new process or just I guess bringing accounting in-house in general is they're typically seen as the enforcer or they're pushing back. And that's not necessarily what I want. Like I want like a healthy mix of enforcer and partner. Like I want finance to be seen as a group that has authority and a group that can say no and that no is respected. But at the same time, I don't wanna just be that no, like I wanna be a partner. I want people to think about finance as somebody that, oh, they wanna work with me. How can I pull them in earlier so that I can get their opinion and that we're really providing value to them as opposed to just setting the rules.
0:15:14.5 Erik Zhou: Yeah. If someone were to ask you the question, like maybe an engineer or someone in marketing and like they say, Hey, Desene, what is exactly the value that you're bringing me here with all this?
0:15:24.7 Desene Sterling: I think the cool thing about a startup is that most people... Like most people join because of the potential and they like having equity in the company and they feel ownership over the company. So something that finance can always do to create value for themselves is tie back what they're doing to how they're making the company more valuable. We're putting in this process or this control because it's going to prevent X, Y, Z, which will drive the value of the company up, which drives your value up as shareholder.
0:15:53.2 Erik Zhou: And in those situations, do you ever get any further pushback or is it all hunky dory?
0:16:02.4 Desene Sterling: Oh, it's never all hunky dory [laughter] There's always pushback that I think that... I think this is my part about saying like, I want finance to be seen as the enforcer as well.
0:16:11.4 Erik Zhou: Yeah.
0:16:13.3 Desene Sterling: Because even if they push back... I'm fine if people disagree there, people are always going to disagree. But I like the idea of like disagree and commit because you know that this person ultimately, at end of the day, they are in charge of the finances of the company. They are in charge of like protecting the company from a financial perspective. And I have to listen to that, if that makes sense.
0:16:33.9 Erik Zhou: Yeah, it makes sense, makes sense. Maybe going a different direction. So we talked about a process, the relationships they have to build with other folks in the company. What about building the team out? What are the things you're looking for when you're building out the skills that you need as the company expands?
0:16:53.3 Desene Sterling: When I'm hiring for my teams, especially in like the early stage companies, you have to have people that are willing to do everything. Like they have to be in the details. They also have to have seen enough to understand the bigger picture of what they're doing. Yet it's a very special kind of person that does well in early stage startup.
0:17:15.4 Erik Zhou: Define bigger picture, like what does bigger picture mean and and why is that important in a startup accounting or finance role?
0:17:22.3 Desene Sterling: When I think that bigger picture, I think about two things like larger scale, like how it's going to look as it grows, and also like how your piece of what you're doing fits into the overall scheme of things. So if you have somebody, let's take an AP person for example. They're entering bills, they're making bill payments. Those are their transactional things. Are they thinking about, okay, if I have this volume, what's gonna, like how much time am I spending on each one? Like, could I keep doing this? If this volume doubled? I want them to be able to be thinking about that so that they are finding solutions for more efficiencies, like as they're going through it. And I also want them to understand that their coding for all of those bills drives our financials. So if those aren't correct, FP&A can't budget correctly. We don't know if spending in this category is driving this behavior. Like all of those things have to be accurate for the business to be making good decisions.
0:18:17.3 Erik Zhou: Yeah, 100%. I, when I joined Brex, we were, I was like employee 68 and we were sort of less than 70 folks. We were on QuickBooks and I just remember growing from me and the other accountant. We were just two folks. Now we're a team of 15, almost six years later. The types of folks that have been really successful in the team are those that to your point, they take a look at the existing process and they figure out how to make it better. 'cause they know that in six months time or a year's time, etcetera, if these projections pan out, like, we're gonna have more spend, we're gonna have to do this, I'm gonna have more volume. I have to figure out a way to automate this or bring the cost down to do each invoice, etcetera. And then there's also the folks that when they do the work...
0:19:04.0 Erik Zhou: To your point, they are willing to have that conversation with all the cross-functional partners that we work with and explain to them the why and bring it home for them. So I 100% see what you're saying here. So you've entered the space, you took a look at the books and records, you have all these processes in place, maybe it's time to get your first audit or you're now going through the audit again now that you're here. What are the cues that you look forward to see, to deal with the audit at that point?
0:19:34.7 Desene Sterling: I think what I'm looking for when we're ready for an audit, generally that requirement is coming from a funding ground, not necessarily like what I see in the books. I think most companies probably don't wanna go through an audit unless they have to go through an audit. I personally love the finality of an audit. I'm always happy to get an audit. And I think when I see a lot of assumptions, so whether that's around like cost to obtain a contract or a complicated reference or stock-based comp, those are the accounting sections that make me more nervous. Like I would rather jump into an audit and get those solidified. We're doing them the right way. We have process for those rather than spend unknown amounts of time potentially accounting for those in a way that we shouldn't be.
0:20:18.1 Erik Zhou: Situations with an audit where you kind of had a surprise as a result of maybe you even inheriting the system, so to speak.
0:20:26.4 Desene Sterling: I don't know if I would call it a surprise necessarily, but more complicated than I expected, yes. So at Sourcegraph, we have on-prem and SaaS revenue. And to complicate that anymore, we had some open source, which we switched off of open source. And I knew that it was going to be one of the larger parts of the audit. So something I jumped on pretty quickly. Once we knew we were going to have an audit, I reached out to professional services firm to do a 606 assessment. And that, when I say it was a surprise, it just ended up going much longer and there was a lot more intricacies of our product.
0:21:04.5 Erik Zhou: What are the things that made... Why is on-prem revenue versus cloud or subscription based revenue complex? Like why is that the case?
0:21:15.0 Desene Sterling: Yeah, so to generalize it, on-prem, and unless you meet a variety of different circumstances, is generally recognized upfront. So the whole value of that contract can be recognized upfront. Other things that could make it broken apart, we have that front portion and a pirata portion is like open source, for example, for us. So we have a split, whereas cloud or like true SaaS is all ratable.
0:21:42.8 Erik Zhou: Is the example of on-prem, like back in the day, if you bought like Microsoft Office for your home desktop?
0:21:48.2 Desene Sterling: Well, I think the most common example is like antivirus software.
0:21:53.7 Erik Zhou: Okay. That you install one time and then you pay for the upgrades every year, so to speak.
0:22:00.3 Desene Sterling: Correct. So like, let's say a company buys antivirus software for all their computers and it's like a one year subscription because it's run on their machines. It's an on-prem, it's not hosted by, it's not hosted in the cloud. It is the value of that contract is all upfront. And for a lot of our customers, they like the on-prem version of Sourcegraph because Sourcegraph sits on their code and has access to their code and it makes them feel a lot more comfortable if they're the ones that are hosting that.
0:22:26.4 Erik Zhou: But then you release the SaaS basically version of your tool and therefore that's more complicated because it's just a different accounting pattern or what's the biggest complexity from doing, from that aspect?
0:22:42.2 Desene Sterling: The opposite actually, like cloud is ratable. So it's great. You have $120,000 contract over 12 months, it's $10,000 a month recognized in revenue. That's beautiful. I love those. The on-prem is the more complex piece by far, determining upfront when you do your near success ethics assessment, what is your upfront split versus ratable? Can you have anything ratable or is it all upfront? We have a lot of different products that we sell, so we have different portions and how we combine those products differently results in different upfront and different level portions.
0:23:10.8 Erik Zhou: And when you decided to use an outside firm for the support here, what were the considerations for doing that versus kind of trying to do it in-house?
0:23:21.4 Desene Sterling: My background is not technical accounting. I've never worked in public accounting. It's been always operational. So I definitely understand the technical piece, but I don't, it is not my area of expertise by any means. And I definitely wanted to rely on a professional for that. Someone that has seen a lot of different companies with a lot of different products and can point to like what is standard in the industry. And in the 606 assessments, a lot of it is in our memo as well. Like other companies that are selling similar products to us are using this. And that is like an accepted percentage breakout. So being able to have that information from a professional service team that has seen that information is pretty key. And I think the auditors are more likely to rely on professional service opinions from a known accounting firm as opposed to an in-house assessment of it.
0:24:19.3 Erik Zhou: Yeah, I guess for the auditor, and I was an auditor for 11 years, I totally understand what you're saying. Like for us, when there's someone independent or even like, you know, "more independent in coming out with those assessments and coming out with the results, I have just a little bit more credibility in terms of the outcome of the analysis, if that makes any sense.
0:24:37.7 Desene Sterling: For sure, definitely.
0:24:42.9 Erik Zhou: Yeah, as you go into, you know, building out the accounting and finance function for a growth stage company, there must be a bunch of trade-offs that you're also going through when all the controls and innovation that you're doing, like, what is it that you think through in all the different trade-offs?
0:24:58.1 Desene Sterling: I think just by nature, I want like tons of structure, and I think that most accounting and finance people probably feel the same way, whereas like the rest of the company in the stage of company just wants to move fast. So as I'm thinking about a process or a control, I'm thinking about something that can flex if needed, something that I could build out now that I could slowly like add on, like I had mentioned about like the procurement process, something that gets people comfortable with just a bit of change, and we can work our way towards what I would consider like more perfection, like a perfect control environment, a perfect process. I don't want the team to feel hindered because I think at that point is when they really start pushing back and they shut down and they just won't listen to accounting or finance. So easing it in there, showing our value, explaining the why behind what we're doing it, why we're doing it, so you can like slowly start tweaking behavior changes.
0:25:51.1 Erik Zhou: Is there a size of company that you've been at where you've kind of said, okay, now is the time where there's not any more trade-offs that we have to make, we kind of have to do it this way, the way that I want to do it in accounting with the right controls and the right enforcement and the right level of accuracy?
0:26:10.6 Desene Sterling: I think there's two ways to look at size. I think you can look at size from like an accounting, like a number of people, and is it reasonable for a one-person or two-person accounting team to do all of these things, or do you start having to put some of the ownership back onto the team, like for example, the credit card coding? Or I think you can look at size in terms of like series, like what series funding the company is at. Are they at like a C or D? And is, an audit requirement coming up is really what I'm getting at here, because a lot of the lack of structure, meaning people, for example, people not requesting spend, or people just signing contracts in an accounting, getting the invoice whenever the vendor ends up sending it, that won't work when you have an audit coming up. You won't be able to get your financials into a place where you or the auditors have comfort around, do you know what expenses are coming, what have you committed to, and all of that.
0:27:12.0 Erik Zhou: What about with months and close? One thing that I've experienced at Brex over the years is, at first we were doing months and close, and it could take more time to do it, now that we're much bigger. Actually, we want BD1 revenue, so the first business day of the new month, we want revenue already flashed for everyone for the prior month, and so that's been a big change overall for our team, and we have to therefore put a lot more resources in place to be able to do the reporting in a much quicker fashion. Is that something that you deal with also?
0:27:41.1 Desene Sterling: I've been across the board on this. I've literally worked at companies where we spend the whole month closing, just to close right when the next close starts, and other companies where we had a perfect, like what I would consider the perfect five-day close, and I've definitely experienced the, we need flash, cash flash on day one, revenue flash on day one, and how I approach that is, what can we do during the month so that we're not saving everything for close? Is that systems? If it's not systems, can we do most of our tasks so that we're only dealing with one day of data by the end of the month? Those are the kind of things that I'm looking at so that it's not all close-related at that point.
0:28:18.5 Erik Zhou: What would your advice be on areas that you can push to the left there?
0:28:22.6 Desene Sterling: Systems, Systems for sure. I think if you can put a system in, even maybe a little before it feels like you need to, it's gonna help you out so much. You're gonna be able to set it up in a way that's thoughtful, that's gonna help you as you scale, as opposed to trying to get through the day-to-day work while also trying to implement a system for the future. Like, You're trying to fix something that's broken.
0:28:49.9 Erik Zhou: Processes, which processes do you think get the most lift from having the right system, Or, yeah.
0:28:54.5 Desene Sterling: P2P, probably. It depends on the business. I think for us, it was definitely P2P. We had so, we were flying blind so much on expenses that getting a system, one, helped us, like gave us a ton of visibility that we didn't have before. It has allowed us to run with a single person entering AP as we have flexed in size. I also think that we did an order to cash. We implemented a automated billing system that has been really helpful for us. And I could see how, so we have low volume, high dollar value. But in companies that are the opposite, where they have a high volume, low dollar value, I would almost say that like the order to cash process is probably more important than P2P.
0:29:38.6 Erik Zhou: I was at PricewaterhouseCoopers for 11 years. And so this is actually still my first job in the industry. I've been here for a while, but early on, as I was building up the team in the process, I was asking folks in the industry that I knew, and one of them was a controller, a very large, it's like a $50 billion public company at the time. And they had started closing their books in two days, actually. And I was like, wow, that's so different than what we're doing here. Like, tell me what it is that gets you there. And she said, well, actually people never think about this, but the biggest obstacle to getting your close right is often your expenses, and getting them there.
0:30:16.9 Desene Sterling: Yeah, totally.
0:30:18.9 Erik Zhou: And that is totally something, and she kept saying, that is totally something you can do throughout the month. Like you should be doing it, if not daily, at least weekly. You should be doing bank recs also, probably daily. At least weekly, if not daily. And then because you did all that work, then you flattened the spike.
0:30:36.7 Desene Sterling: Oh, totally.
0:30:37.5 Erik Zhou: At the month end close. And you can actually almost get everything done by BD minus one, so to speak. And then you're done kind of BD one. And that's something I really took the heart and strove to do at Brex. It sounds like you feel the same way.
0:30:50.6 Desene Sterling: Yeah, so we do cash recs pretty often throughout the month. So oftentimes it's just that last day. We use NetSuite, so we have like a bank. You can match transactions in the bank so you know where you stand pretty much at the end of every day, as long as you're bringing your cash transactions over. We check all of our, like all of our billings are done the last day of the month. We're checking all of our revenue arrangements at that point. And revenue is just really a click of the button once that one's closed.
0:31:12.4 Erik Zhou: You know, I have a curious question just because you have been working at a bunch of growth companies in your career. Is there a point in time when you say, okay, my job is done. So I'm going to go and rebuild this. Is that part of like your goals or your career trajectory or how are you thinking about it?
0:31:31.8 Desene Sterling: Yeah, I think to a certain extent, like, I just personally would never be happy just going through the motions of a close where everything is set up and we're not facing any sort of issues. I think the cool thing about most startups or growth stage companies is that you really get to that point. Like there's always something shifting. Like even when I feel like I'm getting into a flow here, we decide to change our pricing or we decide to offer new products and that starts that cycle over for me again. Like I'm going back to a 606 assessment on what are we doing with this product? How are we selling this? How are we recognizing revenue? And it definitely keeps me on my toes.
0:32:10.1 Erik Zhou: If you were talking to someone who was getting into the field, maybe they're just finishing up school, like what would you tell them about the allure of joining a startup or doing that work? Like how would you explain to them?
0:32:24.6 Desene Sterling: I think that people look at a startup as fun. All of the time. And if you haven't done it before, I don't think that you realize all of the ambiguity that comes with it. So my advice, I say this every time I'm interviewing a candidate that may not have starting experience is like, how comfortable are you with not knowing the answer? How comfortable are you making an educated guess and failing? And I think that you have to be so comfortable with those. Otherwise you will go crazy. Like you can't, there's no manual in most startups of how to do something. And so you are guessing and you just have to, if you have.
0:33:01.4 Erik Zhou: That's so different though, than like if you kind of come out of school with an accounting degree, you just took intermediate accounting. There's like these rules for how to do Goodwill. There's these rules for all these different things. That's very different than what people are exposed to when they're in school.
0:33:14.8 Desene Sterling: Yeah, it is like the total, I feel like it is the total opposite of how most accountants' brains work. And if I think back to like my very first time in a startup, I definitely struggled and I felt like I checked in all the time, like, should I be doing this? Is this right? And I think it just comes with like, I think it comes with getting comfortable being wrong and like knowing that it's okay to be wrong sometimes. And also like being lucky and getting it right. And then it builds your confidence and you just wanna keep going.
0:33:44.5 Erik Zhou: And do you think that's built a sense of judgment? Like, so to speak, cause everything is a judgment, right? The way you're designing a process is a judgment that you're making that may not fit another company. But I guess what you're saying is you've built up the experience so that you kind of have a sense of the range.
0:34:01.3 Desene Sterling: Oh, totally. I think that like every fact pattern, every company is different. So what worked in your last startup may not work in your current startup. So I think that you need to be able to recognize that. Like you can't just go into it assuming that what you did last time will work this time. But yeah, I think confidence is built by knowing, by making mistakes and also by having success. You know what has worked, you know what hasn't worked. You have like an arsenal of things that you could try or like things that you know went so terribly wrong, you never wanna try them again.
0:34:32.8 Erik Zhou: So when you go through the audit, one of the things that I always deal with is, okay, where's the documentation for this? Or where's the documentation for that? What's your, like, how do you deal with that maybe in the audits that you've experienced?
0:34:45.0 Desene Sterling: I think I've learned this the hard way. I've definitely just been working, booking journal entries, not attaching things, not leaving notes, and a year later the audit comes around and it's like, hey, what's this and I can't remember. So for me, I document absolutely everything. Like even if it doesn't feel important, I will attach the backup to the journal entry. If it seems like unclear, I'll add a note so I know what it is. Something else that has been huge for me in terms of audit is in your system, tagging things by the customer or the vendor, every transaction, not just like the bills and the invoices.
0:35:22.7 Erik Zhou: Every transaction, what are the transactions that you tag to a customer or a vendor that's not a bill or an invoice?
0:35:28.6 Desene Sterling: Accruals, so when you're making accruals, instead of just putting the amount, make sure you have the customer tag on there so that, or the vendor tag on there so that when you go in and you run reports based on vendor, like, hey, was this accrued? The auditors are gonna ask you, was that accrued? And if you can't attach it to a vendor, they might, you're gonna end up with an audit adjustment and try to figure out later what's going on. All of our audit adjustments. So, like, when audit adjustments come through, especially revenue ones, don't just book in bulk. Like, figure out what each of the components of that entry is and attach it to the customer so that when you're running your deferred revenue waterfalls later, like, you see everything that relates to that customer.
0:36:05.8 Erik Zhou: That's like, basically, you're creating your own subledger accounting.
0:36:08.9 Desene Sterling: Oh, yeah, 100%.
0:36:10.6 Erik Zhou: By doing that, makes sense. Yeah, and that gives you the richer detail that you need moving forward to and looking back on history. Okay, cool. So, we always close off our podcast with a fun segment called Finance Leaders Are Fun Too, and we get a variety of stories about accounting debacles or sometimes an accounting joke or a really unusual expense report. Desene just to close out the show, I don't know if you have anything to share in that, in these avenues.
0:36:36.7 Desene Sterling: I can't share any of them, but I think the thing that stands out the most to me, and it's funny because it's, like, not numbers related, is I, in a prior company, we were doing a quarterly filing, our 10Q, and we scrubbed and tied out every single number so many times, and I clicked the button, and as I looked at it, I realized that I spelt the month wrong on the front page. I think there's no going back after that. Like, it's filed, and it's public record. So, that was definitely something that made my heart stop. I look at the words now, not just the numbers.
0:37:12.4 Erik Zhou: So, you do a full read, now you do a proofread, et cetera, yeah. I mean, that's something that usually I would have expected. Sometimes investor relations takes a look through that, I guess, yeah. Or if you had an auditor, they do a 10Q review, they would have called it too, but I guess ultimately it's your file, right?
0:37:28.4 Desene Sterling: Yep.
0:37:31.2 Erik Zhou: Yeah. Well, thank you, Desene, for spending the time with us today on the podcast. Appreciate all your insights, our working on growth stage companies, and thank you.
0:37:37.8 Desene Sterling: Yeah, thank you.
0:37:40.4 Announcer: Thanks for tuning in to Controllers Classified, presented by Brex. Brex is an AI-powered spend platform with global corporate cards, expense management, reimbursements, and travel. Visit brex.com and follow Brex on social to see how they can take your accounting game and your company to new heights.