By Jewell Cochran
At some point in any start-up company or nonprofit organization’s lifespan, properly structured accounting practices are needed. Maybe you have no practices at all, or you have inherited a complete mess. Where do you start?
The first place to start is with cash! If cash isn’t flowing in a positive direction, creating practices around all other systems will be pointless. Begin with a simple cash forecast. Gather the basics: an accounts receivable report, a listing of your monthly invoices, the terms of your loan. If the forecast looks okay, then do another one in a couple of months. If it doesn’t look positive, it is time to move onto step #2.
Create a checklist of activities, upgrading at least one of the items from the forecast that needs attention. Keep upgrading this checklist with additional items and within 3-4 months, you will have an acceptable cash forecast.
Remember, you’re setting up systems to correct existing cash problems only. It is necessary to refine and document working systems but it is not critical at first.