Don’t Make These Accounting Mistakes in Your Startup!

Errors and omissions. They are a natural part of the human condition. However, every startup owner must do everything within his or her power to reduce the number of mistakes made by their accounting teams. The accounting process is such a delicate and important one, and you don't want to allow an error to derail your operations. That's why you need to be on the lookout for some of the most common accounting mistakes that occur within startups.

 

Not Having a Strong Enough Cash Flow

Startups frequently find themselves in a situation where they don't have the cash necessary to keep operations flowing properly. It is one of the biggest hurdles that all startups face. With this understanding, it is important to focus on improving one's cash flow situation to help improve the odds that the business will be able to continue to survive. Accountants can identify the areas where there are problems within the budget and offer suggestions about how to change the dynamics of one's cash flow situation.

 

A Refusal to Get Help

Finally, there is something to be said about the entrepreneur mindset. This is to say that many startup owners have a certain set of beliefs and opinions that they might have trouble getting themselves away from. One common issue for many entrepreneurs is a resistance to the thought of asking for help from outside sources. This is a big mistake.

 

Overpaying for Services

Virtually every startup out there has an incredibly limited budget to grow the business. Wasting money is not a viable option for any startup that actually wants to make a difference. As such, it is vital to keep accounting expenses under control. That means you ought to consider hiring an outsourced provider for your accounting services. This is a type of service that can help you save money and still get the quality of performance that you require.

 

Duplication Errors

Companies that process a significant number of transactions may run into an issue of duplication. This is when certain transactions are entering multiple times when they should only have been entered once. This can result in double-billing customers or causing other frustrations that ought not have been a problem. Duplication errors can be fixed, but this requires additional labor and manpower. It can also lead to a fair amount of frustration from those who are double-billed for something that should only have been billed once.

 

Data Entry Errors

Data entry errors occur when you enter numbers, data, or customer information incorrectly simply because you're doing it manually or by hand. Data entry errors are common when you're working late, falling behind on order processing, or trying to do too much at once.

These types of errors can potentially be made by anyone, and it is important to recognize the severity of even a simple mistake like this. Any data entry error can derail the entire accounting process and make it far more likely that customers may be lost. Needless to say, this is yet another error that must be minimized as much as possible.

 

Not Leveraging Outsourced Accounting

In-house teams of accountants are cost-prohibitive for many startups as it is necessary to pay full salaries plus benefits to each individual accountant and they have to be carefully managed. Instead, consider using an outsourced team at a better price and know that you can scale up your accounting needs as time goes on. In addition, an outsourced team like ours at JColeman Consulting can offer valuable insights that the entrepreneur might not have considered for themselves and can apply many of the accounting learnings from other clients. Taking that advice can shift the trajectory of the business in a positive way, and that is something that every entrepreneur ought to take advantage of.