Fast growth can hide serious financial problems.

We were engaged by an investment adviser to carry out an independent review of the finance function of a rapidly growing consumer brand ahead of a significant investment raise.

The business was celebrity-backed, had built a substantial following through TikTok, Instagram and affiliate marketing, and had grown to more than £10 million in annual revenue.

From the outside, it looked like a success story.

Behind the scenes, the finance function told a very different story.

The challenge

The purpose of our review was simple:

Could an investor rely on the financial information presented by the business?

The answer was no.

Our review identified a number of significant weaknesses that had developed over several years.

These included:

  • No meaningful monthly balance sheet reconciliations.
  • Stock not being reconciled correctly.
  • Financial reporting not prepared on a proper accruals basis.
  • Sales channels and payment gateway payouts not being fully reconciled.
  • Marketplace integrations that failed to produce reliable accounting records.
  • VAT treatment that required review, including the treatment of international customer sales.
  • Management charges and intercompany invoicing that lacked the documentation and structure expected to withstand HMRC scrutiny.
  • Bookkeeping being carried out by an inexperienced individual with limited oversight, while year-end reviews failed to identify the underlying issues.

Individually, each issue was manageable.

Collectively, they meant the business could not present investment-grade financial information.

Our findings

As we continued the review, it became clear these were not isolated errors.

Many of the problems extended back across multiple accounting periods.

The cumulative impact meant that several years of financial reporting would need to be revisited before investors could place meaningful reliance on the accounts.

The review concluded that the business required substantial improvements to its financial controls, accounting processes and reporting before progressing with investment.

The commercial impact

The issues we identified had consequences beyond the finance team.

The investment process could not move forward as originally planned.

Potential investors needed confidence that the reported performance accurately reflected the underlying business. Until the accounting records and financial reporting met that standard, investment discussions were inevitably delayed.

This is a situation we see more often than many founders expect.

High-growth businesses naturally prioritise product development, marketing and customer acquisition. Finance is frequently left behind.

The problem is that investors do not invest in revenue alone.

They invest in reliable financial information.

The lesson

Growth does not compensate for weak financial controls.

In fact, rapid growth magnifies every weakness in the finance function.

By the time a business begins raising external investment, it is often too late to discover that years of reconciliations have been missed, accounting policies are inconsistent, or the reported numbers cannot be fully supported.

The strongest investment processes begin long before the first investor meeting.

They begin with finance systems, reporting and controls that are robust enough to withstand independent scrutiny.