Accounting could be stressful but it is very important that an entrepreneur has a basic understanding of accounting and finance to make an educated decision for their startups.
One of our clients is a tech startup company. The startup was doing very well in terms of sales but at the same time it was not recording proportional profits and was in a constant cash crunch.
After signing up for our CFO services, the 1st advice as a virtual CFO we gave to our client is to prepare a cashflow statement. The client had never prepared one before and we did it for him and the findings answered for all of his success blockers.
Among many findings the key ones were -
- What should the startup do initially with respect to recruiting talents? Employment or contracts?
- How frequently and timely are the invoices being paid?
- Gaps to fill in the business processes result in cash leakages.
- Delayed collection and its impact on cash.
- Impact of not paying statutory liabilities on time and planning ahead in case of cash crunch.
And many more improvements were implemented.
There was a 360-degree change in the outlook of the entrepreneur and now despite being a techie he was now aware of the nuances of business and the importance of cash flow.
Despite not having detailed accounting knowledge, the decision-making process included the financial outlook which was absent before.
The startup now thrives and is cash rich in just 8 months and the sole reason is that the startup showrunners are now financially educated.
If you wish to learn as well then check out the free webinar by Watermill Accounting -
Startup Accountng for Startups on 22th February 2023 at 2PM.
