We wouldn’t be tackling this subject today if business and startup owners didn’t forget about some basic accounting principles and tasks from time to time. And then there’s the challenge of keeping up-to-date with taxation and labour issues, as well as best practices for transparency and thoroughness in accounting.
Thankfully, digital technology can help make sure you don’t have to keep tiresome financial tasks like these top-of-mind every day.
1. Tracking Cashflow In and Out of Your Business
You need a budget. In fact, there’s no way to overstate the importance of expense tracking, whether you’re signing for your first apartment or putting together a startup in your basement.
Technology has delivered simplicity through software. These days, accounting software takes the form of apps and services that assist with tax prep, budgeting and a host of other cashflow-related tasks.
You probably know QuickBooks by name, but many others remain popular among startup owners. Look for cashflow management software that’s flexible enough to help you tackle each of the problem areas in your business, including:
- Expense tracking — For easier budgeting, tax preparation, billing, oversight, etc.
- Invoicing tools — For vendor and client relationship management and more transparent itemization, estimates, etc.
- Automation tools — To relieve your accounting team from some tedious back-office tasks, such as generating invoices and delivering payment reminders.
The list of features goes on. Thankfully, it’s easy to find expense tracking and cash flow software by filtering the choices according to your everyday needs. Many of the available systems can grow as your business does since developers are always adding new features — such as mobile apps that can automatically log employee miles travelled and much more.
Proper cash flow management and world-class bookkeeping could be a way to position yourself for a merger or acquisition, too. Given the potential legal hurdles in proceedings like these, it stands to reason that companies looking for a merger would choose a partner whose bookkeeping holds up to scrutiny and whose financial practices are already designed for transparency.
Economic research indicates as many as 82 percent of businesses fold because of sub-par cashflow management skills. You’ll always need a good head for numbers, but today you can let technology do some of the rest of the heavy lifting.
2. Chasing Down and Securing Funding
In the past, entrepreneurs were basically stuck soliciting the local branches of regional banks for business loans. These days, the internet makes it possible for businesses to seek funding from just about anywhere:
- Crowd-funding — Perennial crowd-funding favorite Kickstart boasts more than 157,000 successful projects and more than $4 billion raised in funding. And this is just one such platform. Others, like IndieGoGo and GoFundMe, are also helping prove just how viable a “direct appeal to the people” can be when it comes to getting a business off the ground.
- Loans from anywhere — As mentioned, the dominance of traditional banks in the small business funding apparatus seems to be waning. Thanks to apps, the internet, and more reliable digital trust mechanisms, startup owners can apply for loans anywhere in the world. It can be a bank in a different state, province, or even another country. As the economy becomes more global, so do our funding mechanisms.
- Bitcoin and ICOs — An initial coin offering (ICO) is one of the most cutting-edge ways to accumulate funding and grow your user or customer base at the same time. Whereas fewer than 1 percent of business owners secure “angel investor” funding, a more impressive 25 percent achieve initial financial solvency through an ICO.
Among these options, the Initial Coin Offering likely takes the most technological know-how to set up. Issuing tokens to investors using blockchain can take many forms, too. Your followers and investors provide seed money, and in turn, they grow their “tokens” — their equity — in your business. When Brave, makers of a security-focused web browser, sought funding this way, their worldwide userbase delivered $36 million in funding. In just 30 seconds.
3. Payroll and POS Management
Managing the point-of-sale experience may not sound like it has much in common with payroll management, but technology points to a future where the same set of tools can facilitate and simplify both of these essential tasks.
When it comes to payroll management, it can be difficult — especially if your business is non-traditional in some sense, or hires a lot of contractors and freelancers — to keep track of different rates for different employees and types of work, different tax rates in different parts of the country and a variety of other factors that can cause your bookkeepers to struggle on payday. Even smaller businesses need a hand sometimes with managing payroll.
Now, think of the common names today in contactless and alternative payment methods: It’s PayPal, Apple Pay, Samsung Pay, Square, Venmo, and more. In other words, some of the same tech companies that rewrote the rules on POS technologies, and who are helping us carry fewer credit cards around with us, are the same tech companies that can help clean up and streamline your bookkeeping practices and make in-store checkouts simpler and faster.
You might not be sending out contractor payments via Apple Pay — yet. But you’re probably using a different mobile-first financial solution, such as PayPal. There’s a future here where the same service that helps your team stay on top of employee payments also functions like a digital wallet for those same employees until they transfer the funds to their primary bank or credit union — or simply leave it there and use it as-is.
All of the tools described here are already available, which means this exciting future is gradually coming into view. Small business owners who wish to begin accepting app-based payments at their retail locations need to buy into a new kind of payment technology “infrastructure.” But making payments to employees isn’t difficult — and in PayPal’s case, it’s easy for both parties to retrieve payment records for taxation purposes.
Remember that we didn’t always have cash registers that counted out change for us. Where else will innovation take the business world in a couple of years?
Nathan Sykes has a passion for writing about business strategies and emerging technologies. To keep up with his latest posts, check out Finding an Outlet or follow Nathan on Twitter @nathansykestech.
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