Finance Accounting

Finance & Accounting Skill

Guide founders through the financial fundamentals of running a startup — from setting up bookkeeping to understanding burn rate to preparing board-ready financial reports.

Reference Files

• references/bookkeeping-setup.md — Software comparison, chart of accounts, daily practices
• references/cash-flow-management.md — Forecasting, AR/AP management, cash timing
• references/burn-rate-runway.md — Formulas, benchmarks, runway extension tactics
• references/financial-reporting.md — Monthly closes, board reports, stage-appropriate metrics
• references/hiring-finance-help.md — When to hire bookkeeper vs accountant vs fractional CFO
• references/startup-finance-metrics.md — Current benchmarks from high-growth startups
• assets/Cash_Flow_Forecast.xlsx — 12-month cash flow forecasting template
• assets/Monthly_Financial_Report.xlsx — Board-ready monthly reporting template

Workflow

Step 1: Diagnose Stage & Financial Maturity

Ask: "Where are you in your financial setup?"

Stage Definitions:

Step 2: Bookkeeping Setup

See references/bookkeeping-setup.md for complete guidance.

Software Selection:

Selection Questions:

1. Where are you incorporated? (US → lean QuickBooks; international → lean Xero)
2. How many team members need access? (>3 users → Xero's unlimited users advantage)
3. Do you have multi-currency transactions? (Yes → Xero excels)
4. What does your accountant prefer? (Often decisive factor)

Essential Setup Checklist:

• Choose and set up accounting software
• Connect bank accounts and credit cards
• Configure chart of accounts (use startup template)
• Set up recurring transactions
• Establish expense categories aligned with financial reporting needs
• Invite accountant/bookkeeper access

Step 3: Cash Flow Management

See references/cash-flow-management.md for complete guidance.

Cash Flow Fundamentals:

Cash Flow = Cash In - Cash Out

Key levers:
- Timing of customer payments (AR)
- Timing of vendor payments (AP)
- Payroll schedule
- Large one-time expenses

13-Week Cash Flow Forecast: The standard for startups — weekly granularity for 3 months.

Use assets/Cash_Flow_Forecast.xlsx template.

Cash Management Tactics:

• Invoice immediately upon delivery
• Offer early payment discounts (2/10 net 30)
• Negotiate extended payment terms with vendors (net 45, net 60)
• Time large purchases strategically
• Maintain cash reserve buffer (3+ months of runway)

Step 4: Burn Rate & Runway Analysis

See references/burn-rate-runway.md for complete guidance.

Core Formulas:

Gross Burn = Total monthly cash outflows
Net Burn = Gross Burn - Monthly Revenue
Runway = Cash Balance ÷ Net Burn

Example:
- Monthly expenses: $150,000
- Monthly revenue: $50,000
- Net burn: $100,000
- Cash balance: $2,000,000
- Runway: 20 months

2025 Benchmarks:

Burn Multiple Formula:

Burn Multiple = Net Burn ÷ Net New ARR

Interpretation:
- <1x: Excellent (efficient growth)
- 1-1.5x: Great
- 1.5-2x: Good
- 2-3x: Acceptable early stage
- >3x: Concerning

Runway Extension Tactics:

1. Right-size tech stack (audit subscriptions)
2. Renegotiate vendor contracts
3. Shift from full-time to contractors where appropriate
4. Accelerate revenue collection
5. Consider venture debt/revenue-based financing
6. Reduce scope/slow hiring

Warning Signs:

• Runway <6 months with no funding plan
• Burn increasing faster than revenue
• Burn multiple trending upward
• Cash balance declining faster than forecast

Step 5: Financial Reporting

See references/financial-reporting.md for complete guidance.

Monthly Close Process:

Core Financial Statements:

1. Income Statement (P&L)

   • Revenue by stream
   • COGS and gross margin
   • Operating expenses by category (S&M, R&D, G&A)
   • Net income/loss

2. Balance Sheet

   • Assets (cash, AR, prepaid)
   • Liabilities (AP, accrued expenses, debt)
   • Equity

3. Cash Flow Statement

   • Operating activities
   • Investing activities
   • Financing activities

Board Reporting Package:

Use assets/Monthly_Financial_Report.xlsx template.

Step 6: Hiring Finance Help

See references/hiring-finance-help.md for complete guidance.

Role Comparison:

Decision Framework:

Fractional CFO Triggers:

• Preparing for fundraise
• Burn rate/runway unclear
• Need financial modeling
• Board wants more sophisticated reporting
• Complex decisions (M&A, international expansion)
• Cash flow concerns

Output Types

1. Accounting Software Recommendation

• Comparison table for founder's situation
• Setup checklist
• Integration recommendations

2. Cash Flow Forecast

• 13-week rolling forecast spreadsheet
• Scenario analysis (base, upside, downside)
• Key assumptions documented

3. Burn/Runway Analysis

• Current metrics calculation
• Benchmark comparison
• Extension recommendations

4. Monthly Financial Report

• P&L with commentary
• Cash position and runway
• Key metrics dashboard
• Variance analysis

5. Finance Hiring Plan

• Current vs. needed capabilities
• Role recommendations with timing
• Budget considerations

Anti-Patterns to Avoid

Bookkeeping Mistakes:

• Mixing personal and business expenses
• Not reconciling accounts monthly
• Using cash basis when accrual is needed
• Inconsistent categorization

Cash Flow Mistakes:

• Confusing profit with cash
• Not forecasting beyond 30 days
• Ignoring timing of large payments
• No cash reserve buffer

Burn Rate Mistakes:

• Only calculating gross burn
• Not tracking burn multiple
• Waiting until runway <6 months to act
• Ignoring seasonal patterns

Reporting Mistakes:

• Late or inconsistent reporting
• Not comparing to forecast
• Hiding bad news from board
• Too much detail, not enough insight

Integration with Other Skills

• Use fundraising skill for investor financial materials
• Use business-model skill for unit economics analysis
• Use operations skill for hiring plan integration
• Use xlsx skill for spreadsheet creation
• Use pptx skill for board presentation decks

Adapted from Linas Beliūnas's The One-Person Unicorn founder skill set.