Start-up success stories are like romantic comedies. They deceive us into believing that however bumpy the ride is, everything is going to fall into place before the curtains go down. On the other hand, no one bats an eye on the businesses that fail. When in fact, it is the latter case that gives us a lot of insight into the issues that can cripple innovations overnight.
Accounting challenges fall into the domain of such problems faced by start-ups today. Whether the money comes in via bootstrapping or through investors; managing it efficiently and in tandem with the projected growth rate of the company are a huge task in itself.
At CapActix, we assess andidentify the challenges start-up businesses face, its impact on overall functioning of the business and how important it is to acquire customers quickly. Hence, we shallnot only help you with your bookkeeping and accounting needs, but we shallalso advise you on strategies to grow your business. We can assist with everything right from setting up your accounting software and accounting system to cost analyses and cost accounting.
What are the major challenges that start-up businesses face and how we can help you to overcome out of that:
Accounting is supposed to be an ongoing process instead of a monthly or quarterly exercise. It should not be under shadowed to company’s otheractivities. Maintaining accounts is a priority task and if you are not allocating enough time on a daily basis then a sluggish work culture is being propagated here.
Moreover, since books, ledgers, and excel sheets are prone to easy manipulation, a better way to record transactions is via the electronic way.
We, at CapActix, help you to choose appropriate accounting software which suits to your business and also set the systems from start to end in such a way that is less prone to error.
Cash flows are the heartbeat of small businesses and start-ups. Running out of cash and being unable to cover costs to keep the business alive, is one of the major reasons why start-ups fail to keep in the market.
CapActix provides solution to cash flow management through our accounts receivable and accounts payable management systems. Here are some practices which we have adopted at CapActix that may help you avert risky clients.
1. Notify about Your Payment Terms Beforehand in invoice.
2. Credit Check before Lending Big through proper documentations.
3. Remind Them about Payments with Automated Systems at regular intervals.
4. Know Your Priority Status
5. Suggest Using Financing Systems From Lending Institutions
6. Keep A Track Of The Leverage Your Customers Have On You
7. Demand Part Payments From Clients before start of the project work
8. Guarantees From Third Parties in big project
9. Use Online Payment Systems
10. Hire A Debt Collection Agency
This is not just about direct expenses such as raw material costs, employee payrolls or office rents that keep the business on the roll, but also the minute transactions like office heads or suppercosts which may go on to become significant when the business cycle completes. Keeping track of every receipt and lodgingthem into proper accounts should be a regular practice so as to avoid any confusion about the outflow of money from the company.
CapActix provides service of cost accounting and cost analyses which helps you to identify profit making and loss making segment of your business through appropriate allocation of variable and fixed overheads.
This step will start from understanding the size of your business and the accounting needs that your books demand. An inexperienced bookkeeper may end up making reckless mistakes which may entangle you in a web of legal issues.
Hiring a professional accountant should be a priority for a start-up during its inception. But at the same time, it is important to regularly review his/her performance and knowledge since start-ups tend to grow at compounding paces. Huge start-ups may even have multiple accountants handling different departments.
CapAtix provides one stop solutions for all the above needs of start-up by providing different services.
There are two basic types of accounting methods; Cash accounting and Accrual accounting. While the former method tracks transactions only when money exchanges hands, the latter uses the concept of credit and debit to update accounts. Although small start-ups and businesses may at times prefer Cash Accounting to keep things simple, Accrual method is the most widely accepted method and should be used however small your business is.
We, at CapActix, help to facilitate separate accounts for various departments and clients through cost center method. Furthermore, we help to keep track of the money owed to the business via accounts receivableswhich the cash system lacks. This can often help to sidestep an un-tracked sunk cost.
Well-kept company books when converted to pie charts and bar graphs can provide amazing insights into the future of the business. But a lot of start-ups fail to make use of this opportunity from the first year itself. Growth forecasting will help you to see the whole picture at once. Without proper numbers, it is difficult to take rational decisions about the future and this may jeopardize the expected market position of the company. Crucial details regarding the performance of different departments and required focus areas of investment will go down the drain without forecasting efforts. Although the task may require a lot of workfor the bookkeepers, it is worth the struggle.
CapActix provides book-keeping and accounting service with proper forecasting and budgeting on the basis of actual results achieved by business. This can help start-up to project their market position and future of the company.
You and your company are two different individuals in the eyes of the law. Therefore it makes sense to have a separate account for yourself in the company books.
Many entrepreneurs make the mistake of considering the profit of the company as their own income and fail to realize the impact of such practices on the growth of their business. Directly using the company profits for your own expenditures will put you in legal troubles on grounds of tax evasion. Founders usually use either the Director’s Loan method (taking out the money you started the business with including interests) or the Salary method to pay themselves legally. Pensions can also be used to pay off aged founders.
We take proper care while recording each and every transaction whereby no mistake can be made to mix-up accounts records of personal and company.