Bookkeeping for lean startups (Part 1)

The accounting industry thrives on entrepreneurs who are not diligent in filing and bookkeeping. As such, they waste too much money and time keeping their accounts in order rather than working on their product.

In light of this, I’ve written this two-part series to help entrepreneurs adopting the lean start-up methodology to take the right approach to accounting.

Here are four easy things you can do to cut your year-end bookkeeping bill by 30 percent in your first year of business.

1. Open a corporate bank account

Do yourself and your company a favour. If you have not set up a corporate bank account, do so tomorrow. Open the account, and deposit 10 grand. Say goodbye to it — it now belongs to the company.

Draw down only from this account so you can visually track expenditure every month from a single statement. By having a single account means you only need to reconcile a single statement.

To open the bank account you will need the directors of the business to be present with proof of identity. You will also need the company Memorandum and Articles of Association (MAA) and bizfile.

In Singapore, we favor Standard Chartered Bank and HSBC because of their friendly internet banking interface.

2. Open physical mail weekly

Collect mail daily but only open it weekly. With a cup of coffee in one hand, sit and open every piece and either throw it out immediately if it’s not relevant, or file it in a plastic concertina folder.

A plastic concertina folder costs $10 and has tabs so you can file according to transaction type. Print out any important receipts from the drop box or email-file them as well. Attach sticky notes instructions.

This exercise takes 15 minutes per week.

3. Pay stakeholders monthly

Set a billing cycle and let your stakeholders (suppliers and staff) know what date they can rely on you to get paid. You will earn the status as a reputable pay master, which will earn you loyalty and favors when you need them.

Be a consistent pay master. If you are consistent, stakeholders will trust you and will stop bothering you with emails and phone calls to get payment. Poor paymasters are deprioritised, while consistent pay masters are prioritised. Simple as that.

Practice this disciple and negotiate better payment terms because you have street cred. When you do get an inquiry, ask them to send questions to your finance email address.

4. Pay yourself monthly

Set aside a day somewhere quiet where you cannot be interrupted. Take the month’s worth of transactions out from your concertina folder, and place them in piles.