Financial complexity can be overwhelming when you first start a business. Understanding the most important terms in finance for startups will allow you to make educated decisions and effectively manage your resources.

Basic Bookkeeping: Accurate record-keeping is the basis of financial management. It’s essential for any startup looking to secure funding from lenders or investors. This includes GAAP-compliant financial statements (income and expenses) and cash flow the balance sheet, as well as financial projections.

Revenue & Costs: Monitoring and tracking revenues, operational expenses and other expenses is a crucial part of financial startup fundamentals. This helps founders of startups manage customer acquisition, customer churn, and revenue growth. It helps them understand how customer pricing, product features, and other variables affect their bottom line.

Financing: Startups depend on credit cards and personal loans to fund their operations. This is an expensive and risky option for startups, especially when they fail to meet their obligations to repay. Alternative forms of financing for startups include business lines of credit, equipment leasing and crowdsourcing platforms.

Cash Flow: A startup needs to be able to predict its cash flow at any point in time. This can be a challenge for startups that bill annually or in arrears based upon the amount of usage, and don’t have the ability to provide an accurate picture of their cash situation over a period of time. Startups can avoid cash flow issues by streamlining the payment process by ensuring that vendor payments are processed promptly and accurately recording ownership equity.