Business Accountant Gavin Marsh is a qualified Chartered Accountant, and has recently joined ihorizon with 13 years experience dealing with sole traders, partnerships and SME’s. He tells us about some of the finance issues that are common with startups.
Having a business idea and turning it into a reality can be an exciting time for any budding entrepreneur, and at the heart of any business is finance.
Many business startups will focus their time and energy on the product or service, but may underestimate or neglect the importance of a robust finance operation. Your business may have received an initial investment to get the project off the ground, or used your own personal finances to support it, but either way monitoring your bottom line profit and cash flow should be top priority. It’s vital for new startups to keep up to date with internal finance, to ensure they keep their cash flow remains positive so they can operate efficiently.
Some key factors that you as startups should keep on top of are:
- Know exactly how much money is due to you from customers as trade debtors
- Know how much you owe to key suppliers and other trade creditors
- Managing cash flow and making full use the credit terms with suppliers
- Ensuring that key stage payment deadlines are met with suppliers
- Keep hold of all purchase invoices
- Monitoring cash levels so there is enough to pay staff and suppliers
- Be very clear on the actual costs associated with producing your product
- Make sure you set a sales price that will cover production costs and day to day operations
Many of these points can easily be monitored by implementing a strong finance system.There are many packages available to assist with monitoring your bottom line profit and cash flow, but at ihorizon we can help you by providing a cloud based finance solution that can assist with real time monitoring.
The key success to any start up is being able to understand the reports that are provided to you, and use them to be able to make important financial decisions about the future of your company. If you plan to expand organically, then having really tight controls is important to ensure that your can monitor every penny. Your financial statements become key when seeking external financing in the form of a loan or an investor. They will want to see an up to date, well kept set of accounts, which can help in their decision to invest in your future.
So regardless of whether your accounts are done in-house or by an external bookkeeper, remember to monitor and check your startup finances to keep them clear and up to date.