Even while going through a financial audit is terrifying, it is an unavoidable element of operating a company, especially when raising venture capital to support your initiative. Financial audits are often required as part of the due diligence process for firms raising Series A and subsequent rounds of venture capital funding. And for the same reason, startups need to look for a free invoice generator app.
To ensure that their financial records are up to date and following standards, startups should consider having an audit and online billing software for financial management and a free receipt template to generate invoices.
Many companies are operated by entrepreneurs who are not intimately versed with the accounting techniques and methods necessary to create compliant financial statements and reports. It may also provide investors with a sense of security. That is why the importance of using a free receipt maker app is high.
These faults may be discovered and corrected during an audit, preventing future tax or legal complications using online billing software. Third-party vendor audits may be a source of anxiety, but if you want to keep your company safe from claims of fraud and carelessness, you’ll be glad you had them. Avoiding them may hinder your firm from gaining crucial funding as it expands since some investors need them as a condition of their investment.
How to be ready for your audit in 4 easy stages
No matter what type of accounting systems and free invoice templates you use, To ensure that your first audit goes successfully, there are several procedures you may take. Among the many more are:
1. Keep a copy of anything related to your finances
Keep all of your financial documents, especially major expenses and buying, in the business’s name. An itemized invoice should be requested before processing any payment for any service delivered to your firm; this applies to all vendor types and hourly-skilled personnel (developers, marketing professionals, etc.).
You must use a single channel like the free receipt maker app for any financial interactions and utilize it. Documents from both within and outside your company may be easily accessed via this route. A recommended practice is to save receipts and invoices related to a bill in your online billing software.
In terms of archiving, how long should I keep financial records?
Debate rages about how long company owners should keep their financial records. Many small company owners choose to keep their financial records forever by partnering with a free invoice generator app like Moon Invoice, which uses the cloud to retain your financial information.
Startups should meticulously preserve the financial history of their startup by retaining all accounting documents. As a result, an audit will be less stressful and disruptive for your company.
2. Organize and manage your records
Your company’s financial information must be structured clearly and concisely. This is essential. Finding the information you need will be difficult if your company’s financial records are filled with mistakes or omit critical information.
Because of this, your team and you will be forced to spend a significant amount of time during the audit going over previous financial transactions, which is not a productive use of your time or the time of the external party who requested the audit in the first place. This is not a good use of your time.
The following are some useful hints for maintaining your financial records regularly:
- Use online invoicing software like Moon Invoice.
- Your accounting software should allow you to attach receipts and invoices to your startup’s financial transactions, such as income and expenses.
- Create a Google Drive folder for your key business and financial papers, such as receipts, invoices, contracts, and statements.
3. Determine and adhere to a process for approving tasks
By establishing explicit controls and approval processes, a company may better separate its functions. To guarantee that no one individual inside an organization can spend money or authorize payments to suppliers, certain “checks and balances” must be in place.
Designing and implementing controls and approval processes doesn’t have to be difficult with a free receipt maker app and free invoice templates. The workflows may be based on a monetary amount, department, project, category, etc., depending on the organization’s compliance needs and the most often processed financial transactions.
4. Make the audit your number one priority
Auditing is a time-consuming process, and it isn’t easy to keep up with all that has to be done. However, if you want a successful audit, you must put the audit at the top of your priority list. According to the size and scope of your firm, an audit committee comprising important employees from several departments may be advantageous.
During an audit, if any concerns appear, address them immediately. And an intelligent online billing software helps in the same. Don’t wait until the last minute to get everything done since this might postpone the audit. You could also ask the auditors if they have any special requests. Audits operate more efficiently when they are given a deadline.
So, I hope this post will help you get ready for your first audit. No matter what happens in the audit, you must use the free invoice generator app, which lets you manage your business transaction on the go.
To get a free demo of Moon Invoice’s online invoicing software – contact us at +1-805-491-9393 or email@example.com.