If you begin to commit such errors financing activities often significantly reduce, but may in the long term-term business success. The key is to understand the causes and significance of the individual, so you can better decisions be taken.
1. No monthly accounts
Whatever the size of your company by creating false records, issues related to cash flow, planning and business decisions. Although everything has its price, its accounting services in very cheap compared to most of the costs of a business. And, once established, will be implemented in the accounting process that reduces the cost of the rule or is cheaper, because there is no wasted effort in the administration of all activities. In itself, it is usually an error, allowing all other one way or another and should be avoided.
2. Expected cash flows
No accounting creates a lack of knowing where they were. No expected cash flows are also a lack of knowledge about where to go. Without the leadership of the guests, companies tend to derive more of their goals and wait for a crisis that a change in spending patterns monthly. Even if you have an expected cash flows must be realistic. A certain degree of conservatism must be present or no meaning in a very short time.
3. Lack of working capital
No amount of documentation will help if you do not have sufficient capital to properly operate the company worked. It is therefore important to establish definite flow cash flow projections, even before the start, acquiring or expanding a business. Too often, the component of working capital is fully satisfied with emphasis on orientation of investment are ignored. If this happens, the cash crisis, usually the sensation of quick management of resources is not sufficient for the normal sales cycle.
4. Mismanagement of payment
If the reasonable working capital, forecasting and accounting in place, may have management problems effectively. The result is the need to move and stretch the payments that are due to arrive. This is the edge of the slope. I mean, if you can not find the cause of the liquidity problem in the first place, increasing payments that help dig a deeper hole. The main objectives of government transfers to accounts payable and payments by credit card.
5. Poor credit management
Can have serious consequences for the movement of loan repayments in the short term and indeterminate. First, defaults on credit cards are probably the most common methods of destruction to both businesses and individuals to their credit. Secondly, the NSF also checks credit reports on business and have a different form of black mark taken. Third, if you put too long a payment, a creditor for damage due to your credit files. Fourth, if you apply for credit future, because the amounts recovered by the state could lead to a turndown many auto lenders.
If you’re in situations where you just get money for a limited time, you should position to negotiate with your creditors and the payment schedule that you live and who will not compromise your credit card.
6. Non-profit registered
For start-ups, the most important thing you profitable financial point of view, as soon as possible. Most lenders have seen consider at least a very profitable year of operations before loan funds based on the strength of the company. Before the show returns in the short term, corporate finance is mainly based on personal credit and equity. For existing businesses, historical results that indicate an advantage to acquire additional capital. Measuring the repayment capacity is included in net income for the year by an auditor approved third is based. In many cases, companies use their accountants to maximize trade, but also destroy or limit their ability to borrow in the process, when the company reported net income is not sufficient to reduce debt further.
7. There is a funding strategy
Appropriate funding strategy that provides:
1) funding required for current and future cash flows of the company,
2) repayment of the debt burden can flow, and
3) the provision is necessary to business model unforeseen or individual needs to be supplemented.
It sounds good in principle but is generally not well trained. Why? Since funding is largely unplanned and carried out after the event. It seems that the other is found, then the companies trying to obtain financing.
There are several reasons for this are: the entrepreneurs are marketing oriented, people believe that financing is easier to ensure, if necessary in the short-term deployment of financial problems are not as straightforward as other things, etc.. Whatever the reason is the lack of a viable financial strategy, in fact an error. There is a reasonable strategy for funding likely that if one or more of the other 6 are the errors so far. This increased attention to the fact that all errors are closely related and if you can get the effects of mounting negative results.