Inspired by Victor Drault, Principal at Breega.
As a startup founder, in the first stages of launching your company, you’re likely to be more focused on getting your idea off the ground, and growing your client base, than on the less exciting administrative and financial tasks involved in the day-to-day running of a business.
However, whilst developing your client base is a priority, taking the time to put in place the right tools to help you track and manage your cash flow should also be a priority.
All in all, managing your cash is a priority !
Make your cash management a top priority right from the start !
You can be the best driver in the world, with one of the most powerful cars, but if you don’t have any fuel in your car, you’re not going anywhere! Cash is fuel.
Monitoring your cash flow closely allows you to avoid problems and also gain the trust of current and potential investors. But above all, it allows you to spend more time on business opportunities such as developing your product, your positioning, your relationship with clients…
Build a financial roadmap from the start
Try to figure out very early on, at what point in the future you’ll require extra cash, and how much. You’ll have to continually monitor your income and adjust expenditure accordingly to make sure you have enough in reserve to get through your funding round and afterwards. This is true for all startups (keeping in mind that it usually takes around 6 months to obtain funding from investors).
Use cash flow management tools
Monitoring your working capital, accounts receivable and accounts payable, is key as these obviously have a huge impact on your financial health.
- Using « Upflow » is a great way to make sure you get paid on time.
- Using digital factoring companies (Finsy, FinexKap ) allows you to receive cash for your client invoices straight away
- Using « Libeo » helps you manage and pay your service provider
- « Agicap » is great tool which helps you with cashflow modelling/forecasting
Chose the right bank
When you start a company and open a bank account to make sure your banker understands your activity and the challenges you will inevitably face.
Negotiate account fees and any other bank related expenditure in advance in order to save money.
Bear in mind too that your company should always have two bank accounts. Having two bank accounts allow you to have access to two overdraft facilities, two different loan offers, two payment options. Having two bank accounts also provides you with a safety net.
And more generally… keep an eye on your cash
Continually check, plan and adjust.
Check your bank balance and cash flow at least every week.
Plan all of your spending decisions in terms of their possible return on investment and adjust all future decisions accordingly.
Remember that time is also money so look at externalizing certain tasks if they are particularly time-consuming (if you’re in an incubator or accelerator you may even get free access to certain services). And thirdly, wherever possible, try to save money. We all know, it doesn’t grow on trees.
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