List of Accounting items for Startups to take note of – Accounting is something that most people do not really pay attention to when they are in school. This is one course that will mean a lot to a business as time goes by because having a business owner knowing accounting is definitely an advantage for businesses. But not all startup founders are able to deliver that level of work or have that level of knowledge. Some founders are engineering trained, while some are medically trained.
This is one of those list that will be useful for you if you are about to embark on the journey of starting a business and you will need this to find out what is best for you when it comes to the accounting needs for a startup business.
Let us now start on the List of Accounting items for Startups to take note of:
1. Cash position
Accounting is not just to account for the expenses and the income. But at the same time the cash position of the business. The issue with businesses folding is not because they are not profitable but purely because they do not have a strong enough cash amount.
Cash is king and in this climate of bad business, we are seeing the cash of businesses get burnt up fast.
When you are doing your Start Up Accounting, you need to take note of this figure the most.
You might be seeing big revenue figures but if your cash position is bad, you might not be able to pay up your landlord or handle your staff cost which will end up being in a bad position.
Make sure that you have enough cash to keep the company going for a couple of months in the case of lock downs like recently and you will be safe.
Having an accountant to watch your accounts can be a good thing. Some times you have no idea how much expenses you are working on and will end up spending too much.
When you have a sharp increase in expenses and not paying attention, your accountant might be a good person to sit down with you to explain that you are seeing higher fees in certain sectors or your vendor might be over charging you in comparison to other customers in the same sector.
Expenses are usually what drains the resources of the company so this is definitely the second item that we will hope our start up founders and SME owners will look closely into and monitor when they are running their business.
3. Cost of Funds
The cost of funds can be from loans that you are taking.
This is one thing that drains the your cash positions.
When you want to take on loans to grow your business, you need to ensure that you are getting the lowest loan interest rate amounts available.
Interest rates that are too high will drain your financials more than they may be useful for you to start off a business and grow from there.
Cost of funds can be managed espeically with fees and interest rates taking up a big bulk of that.
4. Receivable Cycle
This is one thing that most people do not really pay attention to but if your receivable cycle is too long, you run the risk of having too little cash flow.
This goes back to the first point of your cash position.
When your receivable cycle is too long, you may not be able to pay for things as they come.
Reducing this figure is one of the top priority for businesses that are having issues.
Other options to getting by this is to take up Singapore Invoice Factoring, this will allow you to receive cash up front first for financing the project needs and paying some interest for such facilities.
5. Fixed Cost
This are the items in your books that you cannot really reduce fast or get rid of.
Things like your salary and rental are fixed for an extended period of time and this is also one thing that you need to monitor.
Variable cost such as commission or commission based workers can be adjusted to find out where is your cost is increasing and adjusting it can mean more profits.
This figure is also something you should monitor as time goes by.
K Cloud Accounting is one of the top Singapore Xero Accounting Services company.
We provide full suite accounting services for our customers from many industries and we are able to assist you for all your corporate secretarial, bookkeeping, accounting and taxation services needs.
We work with many Start ups to provide them with accounting services that they will require.