For new entrepreneurs, now is the perfect time of year to look at your business finances with fresh eyes. While there may be nothing wrong with your current systems, you may find that technical advances can help your startup save both time and money when it comes to your finances.
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Here are four ways to bring your startup finances up-to-date
Upgrade your accounting
Back in the day, you had few accounting options: do all your bookkeeping yourself, hire an in-house bookkeeper, or pay for a local accountant to help with your finances. While those options were fine, but they could be incredibly time consuming or very expensive.
Thanks to innovations in accounting, today’s entrepreneurs have more options. Yes, you can still pay for an in-house bookkeeper or hire a CPA, but you don’t have to. Business accounting software has come a long way. Modern software gives you the ability to easily do everything from invoicing to reporting to inventory management, all at a fraction of the cost of hiring a CPA.
That doesn’t mean you have to ditch the professional help entirely, though. Rather than settle for whatever accounting services are available in your area, take advantage of virtual and outsourced accounting services. These give you access to professional expertise at a much lower price than you’d get if you paid for a dedicated accountant.
Either way, business accounting is made easier today than it’s ever been before. That’s great news for your startup—so make sure you take advantage of it.
Switch up your banking
If your business doesn’t regularly handle cash, you might want to consider switching to a totally online bank. Online banks like Azlo, Small Business Bank and TIAA Bank offer fee-free banking for small businesses. That means no monthly service fees, no transaction fees, no deposit fees, etc. That’s a way better deal than most traditional banks, which might waive a monthly fee if you meet certain conditions.
Even if you decide to continue banking at a traditional bank, you can take most of your business banking online. Almost all banks let you use their websites or mobile apps to do things like deposit checks, schedule ACH transfers and review transactions. If you’re already a bank member, you’ll likely be able to open new accounts online, or designate a view-only profile for your accountant.
The point is, the more time you save on banking, the more time you have to spend on other things—like doing business. So choose a bank that gives you robust online banking options.
Take advantage of accessible financing
Once upon a time, business financing was available to only the select few. Banks were the primary source of small business lending, and their rigorous application requirements left many smaller businesses and startups out in the cold.
In recent years, though, online lenders have completely changed the landscape of small business financing. Alternative lenders, such as Rapid Finance, lend to businesses that traditional banks wouldn’t touch — including young startups, business owners with poor credit history and businesses that haven’t yet made hundreds of thousands in revenue. Yes, you may pay higher rates and have a shorter repayment term, but for many businesses, that’s a fine tradeoff.
As an added bonus, online lenders let you apply for financing, well, online. Some of them even have automated applications, so you can get approved and funded the same day you apply. If you don’t need that quick of a turnaround, lending marketplaces like Lendio and Nav let you compare business loan offers to find the best deal.
So don’t worry about pleading your business case to a bank officer; with online lending, you can get financing from the comfort of your coworking space.
Use your reporting and analytics data
A decade or two ago, no one could have imagined how much data the modern startup would have access to. From demographic information about your website visitors to live inventory numbers to Facebook ROI, you have an incredible amount of data at your fingertips. So use it!
Of course, that amount of data can at times be overwhelming. You’ll probably want to find analytics software and tools that help you sort through the data and find what matters. You’ll definitely need to decide what metrics you care about and how you’ll track them.
But having data isn’t enough. You need to use your wealth of data to influence the financial decisions your business makes on a daily basis. Based on your findings, is it time to start ordering more or less of a certain product? Should you increase your social media ad spend? Can you afford to hire more team members? Will the ROI on that loan be worth it? Find the answers in your data, and proceed accordingly.
That’s not to say that you should forget about trusting your gut; but a gut decision backed by data is even better, especially when it comes to big financial choices.
A bright financial future
It’s a great time to be an entrepreneur, as startups have access to more choices, more tools and more data than ever before. And if you use them right, they can help your business thrive. Don’t cling to the past because “that’s how it’s always been done” or “it’s worked just fine so far.” Embrace financial innovation — for your startup’s sake.