10 Best Tools to Manage Your Startup's Expenses
This guest post is brought to you by Luke Frye. Luke is a Washington State CPA, Wyoming native, and was the first accountant at Bench. He's now co-founder of TimberTax, web-based tax services with a focus on entrepreneurs. He enjoys motorcycles, wine, and folk music.
With the evolution of technology that enables us to share what we’re up to with thousands of “friends” in real-time, those advances have also automated much of what needs to be done for your bookkeeping for any burgeoning business. If you're starting your own business and need apps or tech to keep your finances organized, no need to look further. We have suggestions for you below.
Collecting money is a top priority when you start a business. Without revenue, you won’t be around for long, even if you’ve landed significant VC funding. Here are the most common systems you can use to collect payments.
Stripe is great because it’s super simple and quick to set up. They have combined two antiquated processes that used to require setting up a separate payment gateway and merchant account — something that used to take weeks — that can now be done in an hour. Then use this Stripe account to connect to various invoicing or subscription billing services. More great news; Stripe now allows you to collect payments via ACH, saving you considerable cash if your transaction volume is high.
If you want to set up quick and easy subscription plans, Moonclerk is a great place to start. They connect with your Stripe account and allow you to create custom plans in minutes. You can then embed onto your website or share their default landing page and template.
While PayPal is an excellent and easy way to receive and send money, you may want to think twice. Accounting for this is constantly a changing and difficult process. If you’re doing your own bookkeeping, then this will require you to learn a lot about their reporting and statuses. If you hire someone, it may cause your fee to be higher. Try sticking with Stripe, and if you need to, accept PayPal in special cases.
Bookkeeping & Records — backward or historic looking data
Setting up a bookkeeping system is one of the most important and least exciting tasks of getting your startup off the ground. Sooner or later, an investor, banker, or tax preparer will ask you for an income statement and a balance sheet. You need to know what these are and how to read them. Better yet, you should be reviewing these and comparing to your budget at least monthly. An income statement shows the financial results over a period of time; money in and money out. A balance sheet shows what you owe and what you own at a point in time; cash on hand, debt, and equity.
There are many options for setting up and managing your bookkeeping whether you do it yourself or hire someone. Even if you do your own books, I recommend you work with someone to set them up properly to begin with. Like many things, it’s infinitely easier if you set it up correctly in the beginning than to go back and fix a mess (and cheaper). Xero, Quickbooks, and Wave are excellent web-based tools. If you’re considering using QB desktop or some other non-cloud-based bookkeeping software, you can save a copy of this article on a floppy drive and quit reading now. If you’re looking to outsource, you can hire any number of accountants or bookkeepers, or consider a service like Bench.co.
Xero is a New Zealand based company and was built for the cloud. They offer excellent support and a clean interface for posting and reconciling bank and credit card transactions, invoicing, budgeting, and just about everything you’d need aside from expenses and reimbursements.
Quickbooks online, QBO, is a standard in the US. While Intuit, the parent company of QBO, is has been around a long time, their QBO product continues to evolve. Many people favor this software because it’s been around a long time. The functionality is almost equal to Xero, so it comes down to your personal preference on how the systems work. Each has its own nuances.
Wave is a free web-based bookkeeping software that has excellent reviews. They make money off of credit card processing fees, payroll, and lending to enable the software to continue to be free. If you’re looking for a loan for your small business, setting up a Wave account will give you access to their partnership with OnDeck for short-term loans up to 36 months with daily or weekly repayment plans.
Bench.co does a great job of reconciling accounts and tracking expenses, but if you need invoicing, you’ll have to set up another system in tandem to do that. Pro—they do most of the heavy lifting, automate statement collection, and can manage your receipts. Con—not much flexibility. Xero, QBO, and Wave all have payroll modules [see payroll below]. Bench does not.
Cashflow — forward looking metrics
While income statements and balance sheets are critical, they’re based on historic past information. They’re “backward” looking, and you’re going forward. Staying on top of your cash will be critical to staying in business. There are countless options out there, including an excel spreadsheet, but here are a few that you might want to consider.
DryRun is simple and easy to use. Their design is straightforward and flexible if you get behind. You can update the cash on hand at any point to roll forward your recurring and one-time expenses and income. You can then view daily, weekly, or monthly cash flows. Bonus, you can integrate Pipedrive if you use it as your CRM and Xero.
Float offers award-winning cash flow forecasting app, budgeting that produces produces visual and accurate reports for your business. It integrates your accounting software, like Xero, QBO, and FreeAgent, so it cuts out the need for manual data entry, meaning increased accuracy, an always up-to-date forecast, and an average of 8 hours per month in saved time for its customers.
Futrli is a more fully featured software headquartered in the UK and Australia. They offer KPI tracking, budgeting, consolidation, as well as cashflow management. Futurli also integrates with Xero, QBO, MYOB and more.
This is Part 2 of our finance miniseries. Check out Part 1, How to Manage Your Startup's Account.