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This presentation gives an idea on how startups and entrepreneurs can manage their finances efficiently.
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Banking Presentation
Presentation for improved and easy account maintanance for startups.
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Current Scenario
The company has a single account with XYZ Bank.
This symbolizes that the company has all its cash holdings at the same place.
All the important payments like salary and operational costs are made from the same account.
Any other ad-hoc payments are also made using the same account.
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Drawbacks with Current Scenario
As all the payments are made from the same account, the account statement for a month or for a quarter will be overloaded with transactions and hence the company cannot precisely check the details of the money spent.
Unwanted expenses if any will become very difficult to identify and eliminate.
Also the company will face difficulty in case any cost cutting measures need to be implemented in the future, as it will be a tedious job to identify on exactly where to cut the cost.
Calculating profits and determining the company’s net worth would be a tedious task.
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Major Banking Transaction
The company has three major banking transactions.
Salary cost
Operational costs
Receivables
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Solution Suggested
The company's bank account are segregated as mentioned below.
ABCD Bank (Salary account)
XYZ Bank (Operational account)
WEH Bank (Receivable account)
XXX Bank (Profit account)
YYY Bank (Cash reserve account) (optional)
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Mode of Account Operation
The accounts will be operated in the following manner:
The salary account will hold the salary cost of three consecutive months.
The operational account will hold the operating cost of the three consecutive months.
The receivable account will be receiving the receivables of the three months.
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At the end of the three months the salary account and the operating account would be empty (due to payouts).
The salary & operating cost of the next three months will again be transferred to the respective accounts from the receivable account.
Any balance in the receivable will be the profit of the company which will be transferred into the profit account.
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Benefits
This process of account keeping will increase the finance department’s efficiency and also the management team’s efforts to implement cost cutting or check avoidable expenditures and efficient spending of the company’s money and resources.
Any unwanted expenses can be easily identified and controlled.
Any additional charges, charged by the bank can be easily isolated and sorted out with the bank.
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The profits of the company can be easily checked every quarter and also the growth process can be accordingly planned.
The profits accumulated over a period of time can be re-invested in the business to increase ROI.
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Thank You!