Introducing effective accounting in your Tech startup..
When is the right time to introduce effective accounting in your tech startup?
As a founder you often start running your tech company by managing your own finance and accounting, probably to save up on costs, and it is not unusual for a founder to do so in the early stages of their startup.
At that stage of your business, generally, the payroll and number of transactions are limited, and it is not a significant drain on a founder’s time.
However, once a tech business begins to grow and plan for scale, continuing to do it that way may indicate the business is built on unstable foundations and a change is needed, otherwise you may suffer huge financial losses.
It may be time for you to introduce an effective accounting environment in your company.
Effective accounting and controls should be set up in advance before scale up happens, and today’s tech solutions make it possible to automate core finance team tasks with relative ease, reducing inaccuracies and delays and freeing your finance team to focus on more exciting and beneficial tasks.
When is the right time to introduce effective accounting?
Great habits need to be put in place right from the beginning to avoid extra costs that are incurred from inefficient work, but if this has not been done before here are some signs that will let you know that you need to change your accounting habits:
Missing important deadlines
Reports,Payroll, tax, and compliance services begin to grow as the company grows. Soon what you could manage before on your own is no longer manageable and you find yourself spending hours to fulfil your obligations and sometimes even missing deadlines.
When this happens it may be time to get some help.
Chasing of payments
When a founder finds themselves constantly spending all their time on chasing payments it is a signal of inefficient accounts receivable management.
When your business grows so does your accounts receivable and it becomes difficult to monitor the accounts receivable .
Incurring financial penalties
Late submissions and missing deadlines lead to accounts payable gaining interest and incurring of penalties.
If this occurs monthly then it maybe time to optimise your accounts payable process
Manual time consuming processes leading to overtime on weekends and evenings
Finance and accounting is meticulous, it is not something you can do ‘by the way’ and because of the nature of it, you may find a founder working overtime in order to ensure that it is done.
Having manual process in place will also lead to additional time to be spent performing work that could otherwise be automated with a good technology.
If you often find yourself thinking going through the following scenarios, it is likely that you need additional help and support and it may be time to bring in professional help. These problems at scale will be costly and will cost much more to fix.
What do you need to have in place for effective accounting?
The more efficiently a business can use its resources, the more likely it will thrive.
To do that you must take advantage of everything today’s high-tech world has to offer in this regard and optimise your accounting process fully.
When the right technology and processes are installed right, you will notice that your financial environment will include the following in place:
A financial reporting system that provides feedback to management on time and this serves as the bedrock for managing cash requirements, forecasting, and future investment in the company.
A specialist statutory accounting, payroll, tax, and compliance services ensuring legal compliance and tax efficiency. Ensuring that none of the important deadlines are missed.
A robust internal control and cost-effective and time-efficient management system to run and meet all accounting and finance requirements and operations in the company.
While some of these require more detailed work to set up, they can go a long way towards improving your business.
How would your perfect Tech stack for a tech startup finance department look like?
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