Financial complexity can be overwhelming when starting an enterprise. Understanding the most important terms in finance for startups will allow you to make educated decisions and manage resources effectively.

Basic Bookkeeping: Keeping accurate records is the foundation of financial planning. It is a necessity for any startup looking to secure funding from investors or lenders. This includes GAAP certified financial statements (income and check my blog expenses), cash flow and a balance sheet.

Revenue & Costs: Monitoring and tracking revenues, operational expenses and other costs is a key aspect of financial startup foundations. This helps startups to manage the acquisition of customers, customer turnover, and revenue growth. It helps them understand the impact of pricing at the customer, product features, and other variables on their bottom line.

Financing: Startups rely on personal loans and credit cards to finance their operations. This approach can be expensive and dangerous for startups, especially when the company fails fulfill its repayment obligations. Alternative methods of financing for startups include business lines of credit, equipment leasing, and crowdsourcing platforms.

Cash Flow: Startups must to be able to forecast their cash flow at any point in time. This can be difficult for companies that bill annually or in arrears based upon usage, but aren’t able to provide an accurate view of their cash situation over time. Startups can prevent cash flow issues by streamlining the process of payment and ensuring vendor payments are processed promptly and accurately recording ownership equity.