"Cash flow is king, especially for a young business," notes Tim Lovoy, a partner in Big Five accounting firm Deloitte & Touche LLP. While you don't have to be a numbers cruncher to run a business, Lovoy recommends you "maintain a laser-beam focus on collecting receivables" and regularly track key figures.
Numbers to look at daily include cash on hand, bank balance, summary of sales and cash receipts, corrections made in recording collections on accounts, and all cash and check payments.
Lovoy would add accounts receivable to the list, but since most start-ups lack the time and the staff to deal with collections every day, he suggests doing it weekly. "Have an aging [report] that tells you which receivables are 30, 60 and 90 or more days past due," he says. "Once receivables extend beyond terms, immediately follow up with collection efforts. If a customer is net 30, allow five days, then make a phone call. The squeaky wheel gets the grease."
Other items to check weekly include accounts payable (take advantage of discounts for prompt payment), payroll and related taxes (if you have employees), and reports to government agencies.
On a monthly basis, make sure all journal entries are classified according to the appropriate account numbers and posted to the general ledger. It's also wise to prepare a monthly profit and loss statement and a balance sheet. "Make sure they reconcile with the general ledger," Lovoy adds.
Look ahead each month. "[Estimate] revenues for the next month, six months, 12 months," he adds. "That helps you determine what you should do now to either add capacity--so you can satisfy demand--or reduce expenses so you don't lose money."
Also monthly, be certain all appropriate tax payments are made, and review inventory so you can remove dead stock and order new stock.