Financing a Startup

Recently came across an article in the London Times about how to approach financing a startup or new business. Overall it’s a pretty good summary of the basic dos and don’ts. Do know what you can do without today. Negotiate with your suppliers so that you can get better terms on your payables, such as a longer payment period and/or discounts. Don’t take on an equity investor unless they bring something to the table which is absolutely crucial (other than money).

Financing a Startup

One item mentioned, which has been problematic for even my established clients has been the timely billing of customers and collection of accounts receivable. How much working capital are you financing due to large A/R balances? For most startups, poor billing and collections can be a killer combination. For all businesses, it can be quite expensive to continue to finance customers for months after a purchase. Know your accounts receivable turnover. Track it. If it is low or declines over time, find out why. Seek to improve the timing of your collections. Provide your staff with incentives for reducing your company’s days sales outstanding.
Many entrepreneurs focus on profitability (which is important) but neglect monitoring and managing their cash flow. It is important as the financial manager of a startup or smaller company to watch your cash flow like a hawk.
For more tips on how to improve cash flow, click here to access our 25 Ways to Improve Cash Flow whitepaper.

Financing a Startup

Financing a Startup

Related Blogs
Does your Accounting Department Produce Net Income?

Coaching the Entrepreneur: Learn how to know what you don’t know. How much should I spend on accounting for my company?     I have been in the accounting profession for 32 years, and for the last 6 years, I’ve owned my own consulting firm to assist companies with accounting challenges. There is one common theme that I

Read More »
Near Sourcing vs. Outsourcing: The Key to Cost-Effective Accounting Solutions

In this insightful interview, Dan sheds light on the critical role of accounting in business growth and success. Uncover the common pitfalls business owners face when overlooking accounting and how it can hinder access to loans and financial opportunities. Learn why good financial statements are vital for decision-making and attracting investors. With the NearSourcing model,

Read More »
Is Mexico the New China?

In the wake of the COVID-19 pandemic and escalating tensions with China, American companies are actively seeking alternatives to mitigate their supply chain risks and reduce dependence on Chinese manufacturing. Nearshoring, the process of relocating operations closer to home, has emerged as an explosive opportunity for American and Mexican companies to collaborate like never before.

Read More »
WIKI CFO® - Browse hundreds of articles
Skip to content