2\. Get on a monthly accounting cadence. This is important. Monthly bookkeeping ensures that your financials are always up-to-date. It also makes it easier to spot trends and anomalies in your business's performance. Plus, it gives you a clear picture of your cash flow at any given time, which is crucial when you're raising money.
3\. Clean up your chart of accounts. Your chart of accounts is like the DNA of your financial data. If it's messy, so are your books. Take some time to clean up your chart of accounts. Make sure each line item represents a distinct revenue stream or cost center. This makes it easier for you and your accountant to track your money and identify areas where you might be losing cash.
4\. Reconcile your accounts regularly. Reconciling your accounts means checking that your bookkeeping records match up with your bank statements. It's a pain, but it's crucial. If there are discrepancies, they need to be fixed before an investor sees them. Regular reconciliations also help you catch errors before they become bigger problems.
5\. Get professional tax filing coordination. Taxes can be complicated. A professional tax advisor will ensure that your taxes are filed correctly and on time. They'll also help you identify any tax credits or deductions you might be eligible for, which can save you money in the long run.
6\. Hire a fractional CFO. If you're raising a significant amount of capital, consider hiring a fractional CFO. A fractional CFO is like an outsourced CFO who works part-time for your company. They'll help you develop financial reporting, forecasting, and strategic planning processes that will make you more attractive to investors.
7\. Hire operational services. Finally, consider hiring operational services. These are back-office support services like vendor management, payroll processing, and AP/AR management. They'll help you free up time so you can focus on building your business rather than managing your books.
In conclusion, if you want to raise money, your books need to be in order. It's that simple. Take these practical steps to clean up your messy books before your next round of funding. And remember: A potential investor will ask to see your financial reports before they write you a check. If your books aren't clean and up-to-date, they might walk away. So make sure your books are in order before you start raising money. It could mean the difference between success and failure.
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