Entrepreneurs and accountants differ in many ways, often most notably is their aptitude and affinity for numbers and driving decision making with the support of financial data. While entrepreneurs dream of creating the next Uber or coming up with their next great marketing campaign, they often tend to ignore the accounting side of their business because, quite frankly, it’s easier to ignore it than to address it. The problem with accounting is that ignoring issues in the present will only make things more difficult in the future. To avoid future headache, follow these 8 vital startup accounting tips.

  1. Implementation & Integration of Accounting Software

One of the most common problems of startup businesses is that they fail to integrate accounting into the rest of their normal business activities. Companies cannot afford to wait until the end of the year to perform necessary accounting functions. By making it an everyday function, you will prevent yourself from having to play catch up at year end. While this may seem daunting at first, there are plenty of different cloud-based accounting software platforms such as Quickbooks Online, Xero and Wave that are easy to learn and implement.

  1. Understand Basic Financial Statement Interpretation

Now that you are keeping track of your accounting info and gathering the data, you need to understand what it is you are actually looking at. Do you understand the three basic documents that you will be seeing over and over again (Balance Sheet, Income Statement, and Statement of Cash Flows)? Do you know the difference between cash vs. accrual accounting methods, or how depreciation expense affects your tax payments? Having sound financial statements from which to base decisions off of is irrelevant if you don’t have the basic knowledge on how to interpret such statements.

  1. Separate Business Expenses From Personal Expenditures

While this is very important from an accounting perspective, this also helps ensure sure that you are making logical and compliant decisions. Co-mingling personal and business expenses may lead you to be more likely to spend company dollars on personal items (and subsequently, claim them come tax time), which is a huge no-no and could lead to harsh penalties and fines should the IRS conduct an audit and uncover such activity.

Luckily, there is little need to worry about costs, as business bank accounts are often free (if you maintain a minimum balance), and payment solutions such as PayPal and Square charge fees on a per transaction basis.

  1. Monitor Cash Flow and Outstanding Receivables

Often times entrepreneurs think their business is flourishing, only to realize they have no cash left to pay the necessary bills.  While the bottom line may be showing a profit, companies need to keep a close eye on their cash balance to avoid becoming insolvent. Startups may not be able to offer their customers a 30-day period to pay their bills like established companies can if their business model requires large sums of cash on hand to handle operating expenses. Therefore, it is important that you try and have your customers pay you as early as possible, sometimes even before the goods are delivered or the service is rendered. Companies often offer discounts to customers who pay in advance in order to maximize their cash flows, which is something you may need to consider if you find yourself cash-strapped. On the other hand, it is best to hold off on paying expenses as long as possible unless there is a significant discount to pay early. If you accelerate your receivables collections and elongate your payables as much as possible, you can maximize your cash on hand at any given point in time.

  1. Get the Right Credit

In today’s world, there are many different types of credit available to your business, and you have to make sure to choose the right one. While the best kind of credit is the kind that comes interest-free from your family or angel investors who have no real expectation of getting it back, most people aren’t lucky enough to receive such funds. Banks have long been a great way to receive credit, but now there are plenty of other options available as well. Credit unions and crowdfunding, among many others, offer their own unique advantages and disadvantages. In the end, what’s most important is that you avoid financing your startup with a high interest credit card.

  1. Forecast Accurately, Early and Often

In order to predict both your short and long-term success, it is pertinent that you take the necessary time to review historical sales data, market trends, economic statistics, and other external factors in order to create forecasts. While your future predictions may not be completely accurate every time, there are numerous benefits to actually spending the time to budget, plan, and estimate future growth. It will allow you to understand seasonal peaks and troughs and determine your actual cost of sale, among other things. It will also help you make important decisions such as when to order more inventory, when the right time would be to launch a new product, and whether it’s time to bring in additional help. Without doing these necessary tasks, you’ll be lacking many of the facts necessary in helping you make smart decisions.

  1. Negotiate to Cut Costs

While this is not necessarily an accounting function, negotiating is something that is still worth talking about. Whether you know it or not, almost everything is up for negotiation. There are plenty of ways you can help your business by negotiating things such as credit terms, sales discounts, or interest rates. If you are responsible for a large percentage of a supplier’s revenue, you have much more leverage to negotiate a payment plan that benefits you and him both. You may also find that certain vendors affect your margins and profitability absent these negotiated rates.  By taking the time to negotiate small but simple things, you can help save your business a lot of money over the course of a year.

  1. Seek the Help of a Professional

Last and most important: If you are not an expert in the field of accounting, then allocate the funds necessary to hire a professional. At the beginning of your startup’s life, it is likely that all you need is for your bookkeeper to set up your software and help keep proper records. There are plenty of service providers out there that can help you out without burning a hole in your startup’s bank account. They can even provide you with additional benefits at the end of the year in the form of a hefty tax return if they’re able to help you identify tax savings that you would have otherwise missed out on. Additionally, there are simply too many complicated laws that govern the accounting process for a non-professional to ever keep track of entirely. A CPA can keep you from getting fined for things you didn’t even know you were required to comply with, while also ensuring that all your financial records are accurate and current.

Take the time out of your busy day and start implementing these 8 vital startup accounting tips, and you’ll be thankful down the road.