By Nick Wilson 
Keeping Track Of Your Startup Finances
Bookkeeping can be overwhelming for new businesses, so the key is to implement a pre-launch strategy to stay on top of your records.
Small businesses are forming at a rate of knots in the UK with around 70 new companies being registered every hour! Unfortunately, around 60% of these will fold within three years, which is why it’s vital for startups to keep on top of their finances. Understanding exactly how much money is coming in vs how much is owed in bills is integral to identifying the weaknesses and potential of your business. Follow this bookkeeping guide for new SMEs to make sure that you’re part of the 40% of businesses that are still going strong three years from now.
Keep Your Funds Separate
If you have taken out a loan or borrowed funds from elsewhere to raise money for your venture, it’s important to keep this sum separate from any incoming money received from clients. This will make it easier to keep track of how much profit your business is actually making, and you won’t be confused about how to apportion the total in a single bank account.
Stringent Record Keeping
It’s never too late to start developing positive bookkeeping habits. An accountancy services Peterborough team recommends putting aside a set amount of time each week to review your accounts and be sure not to skip this task. You should also make sure that you keep absolutely everything related to your finances, from all receipts, to bank statements and invoices. Not only will these be necessary when filing your tax return, but they can also be passed on to an accountant who may be able to save you money after analysing your records.
Chase Clients For Bills
Unpaid bills for completed work is a tremendous frustration for small business owners. Some startups don’t want to appear pushy by demanding payment too quickly, yet problems with cash flow can be a major cause of why some SMEs fail within their first year. It’s essential that you keep on top of who owes you money and ensure that you chase them regularly until they’ve settled their debts with you. Be clear about your payment terms and don’t let your clients place a new order with you until they’ve paid up for the previous one.
Use Accounting Software
There are a wide variety of accountancy software solutions available for your firm, but any of them are likely a better option for you than manual bookkeeping. Accountancy software can offer real-time data about how your company is performing financially. Many solutions are now cloud-based which allows you to access this information remotely and share it with an offsite accountant who can view the same information as you, again in real-time.
Rather than falling into bookkeeping, ideally, it’s important to come up with a plan of action before you launch your venture. Set up a strategy for keeping track of your records, invest in an accounting package you’re comfortable with and consider outsourcing some of your bookkeeping tasks to a professional firm, who will likely be able to save you money and keep your business growing well into the future.