Technology

Tips for tracking and reporting monthly startup expenses and revenue – TechCrunch

Until recently tech Startups have traditionally enjoyed relative freedom from financial oversight by the venture capitalists who funded them.

As long as these companies could report progress in the development of their products and earn some measure of revenue from sales and software subscriptions, they could burn their millions without having to endure scrutiny of their spending.

But this laissez-faire era is coming to an end. With inflation, rising interest rates and lower earnings expectations weighing on tech stocks this year, we could burst in the midst of another tech bubble, much like we did at the start of the century.

In this environment, many of the “pie-in-the-sky” companies that angel investors flocked to are now struggling to survive. Many VC funds are refocusing their investments in more informed tech companies focused on solving real-world problems.

Passing annual audits will no longer suffice. Investors are now expecting these startups to constantly show more financial transparency. CEOs who once got away with marketing themselves as visionaries must also think and act like accountants.

You don’t want to run your business on your bank balance, but if you’re a tech company that’s not yet profitable, you need to keep an eye on your bank balances.

This means they won’t be able to manually fill out spreadsheets on an ad hoc basis every spare minute. You need robust accounting processes and tools to track and report expenses and income more accurately and timely. And they must keep accurate records of income and earnings coming in every month, if not every day.

While most startup CEOs have a basic understanding of accounting principles, many do not have the training required to fill this role, or simply do not have the time or desire to do so. However, as more VC funds want to see where each dollar is spent, it’s important for CEOs to understand how to accurately track and report monthly expenses and income.

Step 1: Simplify all non-card payments with one provider

Use one tool to sync your accounting platform with any wire transfer, check, or ACH payment your business needs to make. Online banking services like Relay Bank or Bill.com are useful.

You don’t need multiple payment options and you don’t want payments to show up on your books right away. I’ll explain why this is critical below.

Step 2: Use services that control the issuance of credit card fees

Many SaaS companies have significant credit card fees. You should start using a Divvy or Brex card, which allows you to segment and issue cards by department and apply spending limits to help enforce monthly or departmental budgets.

Amex cards are enticing because of the rewards and points, but they make it difficult to track employee spending in real time.

Step 3: Enter your labor costs

https://techcrunch.com/2022/08/05/the-partys-over-tips-for-tracking-and-reporting-monthly-startup-expenses-and-revenue/ Tips for tracking and reporting monthly startup expenses and revenue – TechCrunch

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