Below is the first article in our new You Got Funded series and is written by Paul Perkins, Director Finance and Human Resources at EyeGate Pharmaceuticals. EyeGate Pharmaceuticals has raised $53.5 million to date, most recently adding a tranche of $5.9 million in January 2011 to bring its total series D round to $28.5 million. You Got Funded features articles from experts and those who have “been there”, offering advice and different perspectives regarding funding. If you are interested in being featured in our You Got Funded series, drop us a note here.

From pitching investors to negotiating the terms of the deal, getting funding takes a significant amount of resources and bandwidth. However, once the round closes, the work is not yet complete, as you need to be sure that your organization takes the appropriate steps to use this new capital effectively and efficiently. One of the most important steps after a company receives funding is setting up an accounting and finance system.

An accounting and finance system forms the backbone of an organization’s financial operations. In addition to generating financial reports, an accounting and finance system allows an organization to enforce internal controls and ensure that appropriate financial checks and balances are in place. While accounting and finance systems will need to grow as an organization scales, it is vitally important for an organization to invest the time to correctly set up their accounting and finance systems from the outset.

First, you should select a payroll provider. Your options are to either outsource payroll to a payroll vendor or process payroll internally. I would recommend selecting an outside vendor, if the funds allow. Using an outside vendor will allow you to spend more time on growing your company and less time on administrative and compliance tasks, such as payroll.

After a payroll system has been established, next you should select the accounting software to track your organization’s daily financial activity. There are many different accounting software providers that are geared specifically to small businesses, and Peachtree and QuickBooks are two cost effective and widely used options. I have a personal preference toward using Peachtree, as the budgeting application is stronger and more robust than QuickBooks, but each organization must select a product that is best for its unique business.

After selecting and installing your newly-purchased accounting software, you should then build a general ledger chart of accounts. The chart of accounts should mirror the approved budget format used to raise funds. Structuring the ledger off the budget will make reading the reports easier for board members who are accustomed to a certain presentation. Although it may be time consuming, it is best to invest the time up front to develop a chart of accounts that will provide you with the reporting output you will need in the future.

With the completed chart of accounts, you can now set up custom financial reports within your accounting software. You will want to create a summarized balance sheet, as well as customized profit and loss statements, both detailed and summary. Budget versus actual reports with variances are recommended in both month-to-date and year-to-date formats. All of these reports can be used with investors.

Equally as important as the financial system is the selection of the external audit firm. The CPA firm is a strategic partner used for tax planning and preparation, audit and review of the organizations financial systems and statements, and assessment of the organization’s internal controls. A good accounting firm, one that is responsive and attuned to the needs of your organization, will be able to provide feedback and input about the systems your organization selects and implements.

After the accounting system has been set up and the accounting firm has been selected, the final step is to create internal policies. While the previous steps help to keep track of capital and provide business leaders with pertinent financial information, policies and procedures help govern how an organization manages capital, outlining which individuals are allowed to make certain financial decisions. Internal policies and procedures can help with everything from how to order supplies to how to keep track of capital expenditures.

When creating your purchasing policies, I would suggest creating a purchase order system that is maintained by someone other than the VP of Finance or CFO. This will help your organization stay within budget and identify any unexpected expenses. As with your accounting system, your organization’s policies and procedures will evolve as the organization grows. Policies and procedures are best written with “keep it simple” as the guideline. Basic policies and procedures, which adequately segregate duties and responsibilities, can save your organization time and help manage your new round of capital.

Paul Perkins is the Senior Director Finance and Human Resources at EyeGate Pharmaceuticals. He was formerly Chief Financial Officer at the healthcare services provider Masonic Health System, and managed finances and human resources at various other corporations. Eyegate Pharmaceuticals is a privately held venture-backed pharmaceutical company dedicated to developing ocular therapeutics and is headquartered in Waltham, MA.