Startup Finance Ops

Operational finance for survival: keep books clean enough to make decisions, protect cash, and avoid “unit economics but no runway” failure.

This is not accounting or tax advice. Use it to build a finance cadence and to work effectively with professionals.

When to Use

• You need a basic finance operating system (solo founder or early team)
• Cash runway, burn, burn multiple, and forecasting for the next 13 weeks
• Billing and collections process (invoices, payment terms, follow-ups)
• Monthly close cadence and a minimal KPI pack
• Translating pricing/packaging into billing mechanics and cash impact
• Compliance awareness: entity setup, tax obligations, VAT/sales tax triggers
• Bookkeeping setup: accrual vs cash, reconciliation, chart of accounts
• Finance readiness for fundraising or audit prep

When NOT to Use

• Detailed tax strategy or jurisdiction-specific filings -> project-qtax (UK only)
• Pricing and unit economics modeling -> startup-business-models
• Full accounting or audit services (hire a professional)

Quick Start (Inputs)

• Business model: subscription, usage-based, services, hybrid
• Billing method: card, invoice, ACH/wire; payment terms
• Current tooling: bank, invoicing, bookkeeping (or none)
• Revenue and expense structure: top 5 categories, major vendors, payroll/contractors
• Current runway and any upcoming commitments

Workflow

1. Set up a minimal finance stack

• Bank account separation (business vs personal).
• Invoicing + payment collection workflow (even if manual).
• Bookkeeping tool/process (or outsourced).

2. Define a simple chart of accounts (CoA)

• Keep categories stable so month-over-month comparisons work.
• Separate COGS vs operating expenses.

3. Install billing and collections SOP

• Use assets/billing-and-collections-sop.md.
• Decide what “past due” means and what happens at 7/14/30 days.

4. Build a 13-week cash forecast (survival view)

• Use assets/13-week-cash-forecast.md.
• Update weekly with actuals and adjust decisions (hiring, spend, commitments).

5. Run a monthly close (lightweight)

• Use assets/month-end-close-checklist.md.
• Goal: numbers are directionally correct and consistent, not perfect.

6. Produce a minimal KPI pack

• Use assets/finance-kpi-pack.md.
• Tie decisions to cash: new spend must have a hypothesis and a stop rule.

Unit Economics vs Cash (Critical)

Unit economics answers “is this a good business if it scales?” Cash answers “do we survive long enough to find out?”

Common mismatch:

• Great gross margin but slow collections (AR) and high upfront costs
• Healthy LTV:CAC assumptions with no proof of payback time
• Usage-based revenue with variable compute costs that spike before pricing catches up

Compliance Awareness (Not Tax Advice)

You are not an accountant. But you need to know enough to avoid expensive surprises and work effectively with professionals.

Entity type -> tax obligations (get jurisdiction-specific advice):

VAT / sales tax triggers (check before first revenue):

• Domestic revenue threshold (e.g., UK: GBP 90k; EU: varies by country; US: economic nexus by state)
• Cross-border digital services (EU: OSS/IOSS; US: state nexus rules)
• B2B reverse charge rules (know when you charge VAT vs buyer self-assesses)

Payroll tax basics (triggered when you hire):

• Contractor vs employee classification (misclassification = penalties)
• Employer tax obligations (NI, FICA, or equivalent)
• Equity/option tax events (exercise, vesting, sale)

When to hire an accountant (triggers, not timeline):

• First revenue or first employee (whichever comes first)
• Cross-border sales or customers in multiple tax jurisdictions
• Fundraising (investors expect clean books and a cap table)
• Annual filings deadline approaching with no process

Red flags — stop and get professional help:

• Mixing personal and business funds with no separation
• Revenue in multiple countries with no tax registration
• Equity grants with no tax advice to recipients
• Payroll without proper withholding setup

For deeper entity comparisons and jurisdiction checklists, see references/compliance-awareness.md.

Bookkeeping Fundamentals

Accrual vs cash basis — choose early, stay consistent:

• Cash basis: record when money moves. Simpler. Fine for early-stage, most small businesses.
• Accrual basis: record when earned/incurred. Required for GAAP/IFRS, needed for fundraising at Series A+.
• Switch trigger: when investors or auditors require accrual, or annual revenue exceeds local threshold.

Reconciliation cadence:

• Weekly: bank account reconciliation (15 min — catch errors early)
• Monthly: credit cards, payroll, subscriptions, AR/AP
• Quarterly: review chart of accounts, clean up miscategorized transactions

Common founder bookkeeping mistakes:

Finance readiness checklist (fundraising / audit / hiring finance): see assets/finance-readiness-checklist.md.

Anti-Patterns (What NOT to Do)

Resources

Templates

Data

What Good Looks Like

• You can answer “how many weeks of runway” from a single sheet that is updated weekly.
• Every invoice has an owner and a follow-up schedule; AR is not a surprise.
• You review burn and burn multiple monthly and make decisions (cut, pause, double down).