Simple Steps for Better Cash Management
Cash is really important for your business. Managing your money well is a key part of keeping your business healthy, and making sure it lasts a long time by protecting and growing your capital.
1. Set A Startup Budget
To get started with your business, create a budget. Figure out how much money you're spending and where it's going, like for consultants, employees, cloud expenses and subscriptions.
Next, if your budget allows, set some money aside for emergency expenses — any unexpected costs around 5-10% of the total budgeted expenses.
2. Streamlining Your Accounts Payable and Receivable
Your accounts payable (which are your expenses listed in the P&L) and receivable (which are your revenues listed in the P&L) show how much money you will be spending and earning in the future.
To make things easier, you can create a process that makes it faster to get paid by your clients and gives you more time to pay your suppliers and other expenses. You can also use automation to quickly send invoices to your customers and keep track of when your bills are due with automated accounting tools.
3. Make sure your bookkeeping is always done in the same way and regularly
Businesses often make a mistake by not keeping up with their accounting tasks. For example, they might wait until the end of the month to update their records, which makes it difficult to understand the company's financial situation quickly.
To keep proper financial records, startups should follow some basic guidelines, such as:
Keep a daily record of all your transactions to see your cash flow in real time.
- Monitor your employees' expenses.
- Organize your bank statements systematically.
- Work with an accountant to ensure your business is running smoothly.
- Use automated accounting software to simplify and streamline the tasks above.