Managing startup finances in the early days6 years ago Shalini B
Quick tips for startups to manage finances in their early stages
It is a tedious task for entrepreneurs to manage their finances along with managing loads of other things in their initial stages of startup. But, if they neglect to maintain the finances properly, other management might just go waste. That is why it is extremely important for every firm to take necessary steps to maintain and reduce their spendings and increase their incomes in the starting few months. Every person might come up with varied ways and means of managing finances, but startup Hyderabad is here to suggest few common tricks and tips that every entrepreneur must follow –
Tip #1: Create a budget
First things first. Before you start spending out of the company funds, it is important to create a budget. Mere creation of budget is not important, adhering to it is more important. Mention in your budget, where and how will you spend, and when and from whom you shall receive. That way it will be easy for you to keep a track of future incomes and expenses.
Tip #2: Avoid buying on credit, and be away from company credit cards
As soon as you open a bank account on the name of your company, the bank will offer you credit cards with attractive benefits. But be away from such offers, and keep your company away from being exploited through credit card transactions. Also, avoid purchasing on credit and always prefer paying in cash(online or offline) to avoid any kind of delay payments and late payment fees.
Tip #3: Keep the cash box of your company separate
Usually in the initial stages, it is quite a common phenomenon for entrepreneurs to pay out of pocket in case there is no cash box. But strictly avoid this and say a big NO to this habit. It is always beneficial to keep your personal expenses separate from the company expenses.
Tip #4: Keep a strict debt/payment recovery policy in place
When you decide to lend on credit, ensure that you have a strict recovery policy in place as well. You might have to pay the recovery team a little extra, but it will prove just right in case they help to recover your debts on time. Ensure that all your receivables arrive in time.
Tip #5: Keep “just sufficient” cash in hand
Do not keep excess cash in your cash box. It is always better to maintain the rest in the bank. You never know, you might just start earning interest on them. If you are a startup that raised funds recently and can stove away a huge chunk in the bank, check with the bank or an investment advisor, he might suggest you good ways to invest those locked up funds.
Tip #6: Try to delay payments as much as possible, while recover debts as soon as possible
By following this tip, you will be able to maintain adequate amounts of cash in hand, and it will help you to meet any emergencies or grab any unforeseen opportunities. Make sure that you do not delay payments so much that you end up paying interest.
Depending on the nature of business, you might various other tips and tricks of maintaining your finances, but the above mentioned are the easiest and most common ways of ensuring that you have the right amounts of cash available anytime during your business cycle.