How start-ups can stay lean and mean with cloud accounting
Start-ups face a multitude of challenges, from cash flow difficulties and lack of brand awareness to time management issues and manpower crunch. These challenges are further exacerbated with Covid-19, as consumers tighten their purse strings leading to a sharp decline in market demand and opportunities. In this blog post, we explore how cloud accounting can help start-ups leverage digital technology to stay lean and mean to survive this crisis.
Problems faced by start-ups
Money and cash flow difficulties - Investments in technology and talented employees do not come cheap. It is often difficult for start-ups to attract investors when they are young and lack brand awareness in the market. This is compounded by lack of visibility of their actual cash flow position as they do not have access to real-time financial information.
Time management - Founders tend to overstretch themselves by doing everything on their own to save costs, when their time is better spent on impactful and value-adding activities like business development and leads generation.
Finding the right people - With a lack of brand awareness and insufficient funding, start-ups find it difficult to attract and retain the right people.
Neglecting sales and marketing - Often times start-ups do not devote sufficient time and energy in their sales and marketing, hoping that word-of-mouth will generate enough sales for them. They fail to realize that unless they make a concerted effort to proactively seek out leads and new customers, they will lag behind their competitors and be driven out of the market.
How cloud accounting can help start-ups better manage their cashflows and time:
Automate and streamline invoicing workflow
Use cloud accounting software to generate and email invoices to customers
Send invoices from any location using mobile app
Seamless integration of sales data with financial reporting system to eliminate manual data entry and maintain data integrity
Streamline workflow by automating invoicing (monthly, weekly, etc) for recurring sales transactions
Automate and speed up payment collection
Set invoice reminders in the system to automate payment collection
Allow easy online payment to customers by adding online payment gateways (like Stripe, PayPal, etc) to your invoices. According to Xero Blog, small businesses who enable Stripe payments on Xero invoices are already paid on average up to 15 days faster than those without any payment services attached (Read more here)
Drive profitability and gain visibility
Use Xero Projects to capture, track and report the time and money spent on projects and jobs so that you can make better business decisions. Some of the functions include:
Create fixed price, time and materials, or progress payment invoices
Accurately track time on-the-go with stop-start timers and location-based tracking on mobile (both iOS and Android) – no more chasing timesheets (read more here)
Ensure your staff is working on the right things; see how your team’s time is spent on all projects with the Timesheets & Staff Time overview (read more here)
See how staff costs affect bottom lines; set an hourly cost rate for each staff member, so it’s easy to calculate overall profitability on a project
Read more here.
Manage company spending
Xero Expense is an expense management tool within Xero cloud accounting software that can help you:
Submit and track your company spending on-the-go from any mobile device
Streamline and automate the expense management workflow and reduce human error by eliminating manual data entry
Massive cost savings and improvement in employee productivity since manual data entry currently takes up 30% of accountants’ and bookkeepers’ time (see this article by Xero)
Seamless integration with cloud accounting software to maintain data integrity and achieve accurate financial reporting
Read more here.
Speak to your accountant
As a start-up ourselves, we understand your pains of wearing multiple hats and juggling multiple tasks whilst having to stay cost-efficient simultaneously. We are proud to be a Xero partner who can help digitally transform your accounting function. Schedule a free 30-minute consultation with us to discover how you can reclaim your time and grow your business.
