Blackbelt bookkeeping techniques for startup companies (Part 1)

In a startup company, you are insanely busy. With so much going on, you can become blind to how you are spending company money. This is the first of a two-part series (see part two here) on bookkeeping techniques that will start you off on becoming a black belt in managing money.

Bookkeeping, very simply, is the recording of a company’s financial transactions, which include sales, purchases, income, and payments. Here are some tips on how to get it right the first time.

1) Handle paper once

Buy yourself an expanding plastic folder, the concertina type, and keep it within arms reach. Label each of the tabs to cover all instances of paperwork. These include supplier quotes, supplier invoices, client quotes, client invoices, expenses, government documents and bank statements.

Open your mail weekly, print any emailed PDFs and file paperwork under the correct tab. Prevent paper accumulating on your desk and crowding your productivity. Handle every piece of paper once and you’ll make life easier when you do you books at the end of the month.

2) Report monthly profit and loss

Don’t be talked into buying software. For a service-based business, MS Excel will suffice. Setup MS Excel using two sheets. One tab for expense items (out), and the other for income (in). From these two sheets you can quickly calculate monthly profit and loss.

At the very least record income so you can chase accounts receivable (people who owe you). Check you have been paid by ticking off income line items on your bank statement. Note any missing sums or discrepancies and chase them up diligently.

The more granular the Excel spreadsheets, the more data you capture when you import later into a professional accounting application.

3) Money makes relationships

Set a recurring day in your calendar to do the books each month. This is a sacred day when you put aside all other duties and ensure you maintain good relations with stakeholders by paying them on time. Brand your company a good pay master and you will receive triple back in reputation.

By being disciplined about the pay day, you condition suppliers to your billing cycle and reduce the number of nuisance inquiries on outstanding payments. If you are drafting contracts include a clause on the billing cycle.

4) Summon a finance advisor

Create a fictitious finance advisor. They are going to be your exchequer when it comes to all matters of money. They are a great asset to the team, especially when the money you are spending is not yours.

Each time you reach for the cheque book or the credit card, your finance advisor will appear and interrogate your decision to purchase. Look after the pennies, and the pounds will take care of themselves.

Give them their own email address and watch them come to life as they chase payments and scrutinise expenses large or small. Pretty soon you will develop a six sense for numbers and won’t need a report to tell you how well the company is performing.

Your new friend will help during negotiation. Ask them to budget for salary, suppliers and cash expenses. When lured into situations where you may be tempted to overspend, explain to the other party that ‘finance’ has set a budget. Refusing to spend beyond a limit gives you leverage when negotiating salaries and supplier quotations.

Training package promotion: Futurebooks is offering SGentrepreneur readers a 15% discount on half-day bookkeeper trainer sessions. Offer available until 22nd September 2011. Limited to the first 20 persons. Inquire here.

Anthony Coundouris is the founder of Futurebooks – a business offering affordable bookkeeping,business planning and business brokering to start-up companies. Anthony has a decade of experience in all walks of marketing. Collectively he has helped dozens of corporate firms build subscription models and develop an online positioning, including Caltex, Jaguar, SAS, ING Direct, FoxTel, salesforce.com, Telstra,Proctor and Gamble, Google, salesforce.com, Kraft, Citibank and American Express.

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