The new diligence reality

The fundamentals of financial discipline have not changed, and they never will. But the speed of expectation has accelerated dramatically.

Investors in 2025 no longer care only about "clean books." They expect precision, integration, and systems that can support growth across markets and currencies. The basics that mattered five years ago still matter today: accurate financial statements, timely filings, documented agreements, and defensible metrics. What's different is how quickly you need to produce them and how early in your journey they become non-negotiable.

Diligence now starts earlier, moves faster, and demands evidence that a company's finance function is both resilient and transparent. The new investor bar is clear: growth that is measurable, data that is defensible, and compliance that holds up under scrutiny.

This isn't about perfection. It's about demonstrating control and consistency long before diligence begins. The companies that raise fastest treat readiness as a continuous discipline rather than a pre-raise scramble. The basics never go out of style. What's changed is the speed at which you need to execute on them.

When to focus on what: stage-specific priorities

Not every company needs every system on day one. Your finance maturity should scale with your growth stage and complexity:

Seed to Series A

• Basic accounting hygiene
• Documented revenue recognition methodology
• Core compliance registrations
• Simple metric definitions
• Organized contracts and board approvals

Series A to Series B

• Integrated finance stack
• Month-end close within 10 days
• Multi-currency accounting if expanding
• Proactive tax monitoring
• Version-controlled financials

Series B and beyond: 

• Full revenue recognition automation
• Advanced ERP systems with audit trails
• Comprehensive compliance calendar
• Standardized chart of accounts
• "Always-ready" data room

The goal is to build systems just ahead of when you'll need them. Not so early that you over-engineer, but never so late that you're scrambling. With that roadmap in mind, here are the four core areas every team needs to get right: 

1. Build the financial foundation and scale your systems

When growth accelerates, disconnected data becomes the biggest risk. Metrics like ARR, churn, or burn rate lose meaning if the systems behind them don't align.

A modern finance stack connects billing, ERP, payroll, and forecasting data into a single, reconcilable source of truth. Revenue recognition should be automated, and the month-end close should happen within 10 days. These aren't simply efficiency metrics; they demonstrate operational maturity.

The fundamentals here are timeless: accurate books, reconciled accounts, and documented processes. What's changed is the expectation that these exist earlier in your lifecycle and can be produced faster when investors ask.

As you scale, your systems need to evolve with you. Don't wait for a breaking point to upgrade. Know the thresholds: when to move beyond manual reporting, when to integrate revenue recognition tools, and when to adopt more advanced ERP systems. The right infrastructure allows growth to accelerate without sacrificing accuracy or oversight.

What to get right 

Quick start (Seed to Series A):

• Single source of truth for all financial transactions
• Documented revenue recognition policy
• Monthly reconciliation of all accounts
• Cloud-based accounting system (not spreadsheets)
• Clear chart of accounts structure

Full maturity (Series A+):

• Automated revenue recognition instead of manual spreadsheets
• A close process that is fast, repeatable, and auditable (10 days or less)
• Integration between billing systems and general ledger
• Regular integration audits across core financial platforms
• Clear process ownership for closing and reconciliation

Red flags to avoid

• Manual spreadsheet-based revenue recognition once you're past early stage
• Continuing to use disconnected systems as you scale
• No plan for when current systems will need replacement
• Close process that extends beyond 15 days

2. Stay ahead of compliance exposure

One of the most common diligence red flags is tax or regulatory non-compliance. Even small liabilities can delay a deal or force valuation adjustments.

Finance leaders should treat compliance as a living process. Conduct an annual review of sales, use, VAT, or GST exposure to confirm where obligations exist. Register early in new jurisdictions, store remittance proofs and filings in one central system, and maintain a single compliance calendar that tracks every tax, audit, and board deadline.

The companies that raise fastest are those with a clear audit trail ready before anyone asks for it. This is another area where the basics never change: file on time, pay what you owe, and keep proof. The difference now is that investors expect this discipline across every jurisdiction you touch, not just your home market.

The order of magnitude matters. When you're billing $200,000 a year, a tax issue is a $16,000 exposure. When you're billing $100 million, that's an $8 million risk. Don't wait for agencies to knock on your door. At a minimum, understand your exposure and make an informed decision about the risk you're taking.

What to get right

Quick start (Seed to Series A):

• Annual review of where the company has tax or filing obligations
• Registrations completed in primary operating jurisdictions
• Basic filing calendar for key deadlines
• Designated owner for compliance tracking

Full maturity (Series A+):

• Regular reviews of nexus triggers across all jurisdictions
• Centralized, searchable proof of remittances and registrations
• Documented processes for managing recurring filings and audits
• Proactive monitoring of changing regulations in key markets

Red flags to avoid

• Reactive registration only after receiving notices from tax authorities
• Missing or incomplete filing documentation from past periods
• Last-minute discovery of unregistered jurisdictions during diligence

3. Keep governance and documentation tight

Governance is how investors measure discipline. Organized, version-controlled documentation tells the story of a company that takes its obligations seriously.

Every agreement and approval should have a clear home. Keep executed contracts, board materials, and subsidiary records in one secure repository. Maintain an accurate cap table and document all resolutions and equity changes. Performing internal reviews twice a year (essentially a "mini-audit") ensures consistency across what the board sees, what finance reports, and what the data room shows.

This is where old-school discipline matters most: documented decisions, signatures on agreements, maintained records. It's not complicated, but it's non-negotiable. Organized governance reduces friction in diligence and builds confidence in management's ability to scale responsibly.

One of the fastest ways to slow down a fundraise is not being able to quickly locate and explain key contracts, outliers in your financials, or changes in your cap table. Everything from customer contracts to equity agreements should be organized and easy to explain in detail.

What to get right

Quick start (Seed to Series A):

• Centralized storage for all executed contracts
• Accurate cap table maintained in real-time
• Board meeting minutes and resolutions documented
• Key vendor and customer contracts easily accessible

Full maturity (Series A+):

• Centralized, structured storage with clear version control
• Version-controlled financials and forecasts with audit trail
• Periodic internal reviews that identify and close gaps (twice yearly)
• Documented governance policies and approval hierarchies

Red flags to avoid

• Unsigned or partially executed contracts in your files
• Cap table that doesn't match board resolutions
• Missing board minutes or key corporate documents
• Inability to quickly locate and explain specific agreements

4. Align your story with your numbers

Your financial model doesn't exist in isolation. It needs to support the narrative you're telling investors about your business.

When your growth story talks about aggressive expansion but your model shows conservative hiring, investors notice the disconnect. When you emphasize customer retention but can't produce clean cohort data, it raises questions about what you really know about your business.

The basic principle is straightforward: your numbers should tell the same story your pitch does. Investors will discount aggressive models regardless, but they expect internal consistency. Your hiring plan should align with your revenue projections. Your burn rate should reflect the growth investments you're describing. Your unit economics should support your path to profitability.

The financials should be the last thing presented in a pitch deck because the story should make them obvious. When you get to the numbers, everyone should say, "Great, the financials are very consistent with the story I just heard." If they're not, the meeting's going to be over pretty quick.

This alignment also extends to how you track performance internally. Clear KPI definitions shared across the company matter. If you're telling investors that a specific metric drives your business, you should be managing to that metric with consistent definitions in board decks, investor updates, and internal reporting.

What to get right

At all stages:

• Financial model that mirrors your growth narrative
• Consistent metric definitions across all materials
• Ability to explain any outliers or one-time items in detail
• Unit economics that substantiate your path to profitability
• Clear explanation of key assumptions in your model

Red flags to avoid

• Different definitions of the same metric across board materials and investor decks
• Growth projections that don't align with planned headcount or spending
• Inability to explain the drivers behind your model
• Unexplained anomalies in financials that create investor confusion

Building momentum: where to start

Investor-grade systems are not built overnight. Start with a few high-impact changes that reinforce control and confidence:

1. Centralize contracts and filings into a single workspace. If it takes more than 60 seconds to find a key agreement, your governance needs work.
   
   
2. Define how key metrics are calculated and make those definitions visible across the company. Consistency builds credibility.
   
   
3. Shorten your monthly close to a consistent 10-day window. This builds rhythm and reliability and proves you can move fast when diligence demands it.
   
   
4. Conduct a compliance audit today. Identify every jurisdiction where you might have obligations and get registrations completed proactively. At a minimum, understand your exposure.
   
   
5. Review your financial systems roadmap. Know what will need to be upgraded in the next 12-18 months and plan ahead of breaking points.
   
   

Investor-grade financials are not about perfection. They are about demonstrating resilience, consistency, and control long before diligence begins. The basics never go out of style: keep accurate books, file on time, document your decisions, and know your numbers cold. Do these things continuously (not in a pre-raise panic) and you'll move through fundraising with confidence.

When your systems, processes, and governance all work in sync, you set the stage for long-term credibility and repeatable success.

Get the right support in place 

Building investor-grade financials requires the right partners at the right time. Whether you need comprehensive accounting infrastructure, strategic CFO guidance, or automated compliance management, having experts in your corner accelerates your readiness.

Rillet provides modern accounting and financial operations infrastructure built for scaling startups, helping you close faster and maintain clean, audit-ready books.

KongBasile Consulting (KBC) offers fractional CFO services and financial strategy for venture-backed companies, ensuring your finance function matures alongside your growth.

Anrok automates global tax compliance across all your jurisdictions, states, and countries,  eliminating manual tracking and ensuring you're always registered and compliant wherever you do business.

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