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The role of the accounting system in financing startups

With the increasing number of companies in the Egyptian and Arab market and every company's desire to expand further to obtain a more excellent profitability base. Each company is looking for a source of capital that helps them achieve their goals and increase their products, which is known as corporate finance.

However, with the evolution of time, funding for startups is no longer limited to the funds provided to the company. Still, many tools and functions have interfered with them that significantly affect the future and performance of the company. Due to this development, we can define corporate finance as follows:

?What is corporate finance

A set of administrative work and administrative functions related to managing the cash itinerary, including its source, the extent to which it is necessary to obtain it, investment aspects according to market trends, the expected return to it, what risks it is threatened, ways to pay it, how much debt the company can afford, and everything It belongs to him.

To enhance the company’s position and material value and deal with financial risks. Corporate finance differs from financial management. Financial management is concerned with the company’s financial decisions to obtain finance and profits from it, meaning that financial management and corporate finance are integrated.

Corporate funding sources

Corporate funding sources are divided into Internal and external sources of financing 

Internal financing funds may be due to retained profits, assets sold, or depreciated. External sources include bank loans, bonds, and facilities provided by suppliers

Sources of financing for the company from its owners, such as increasing invested capital or not distributing profits and investing them. There are sources of financing that belong to lenders, such as bank facilities, suppliers of equipment and manufacturing materials, etc.

The sources of financing companies in terms of funding time can also be divided into

short-term funding

Medium-term funding

Long-term funding

?What tasks does the Corporate Finance department do

Startups companies to a professional accounting office that makes it easier for them to understand financing procedures, especially if it is part of financing SMEs. As we said earlier, corporate finance management performs many functions within the company, including:

Prepare future planning studies that include drawing the future budget

Conducting studies and reports that help corporate heads make appropriate investment decisions

Prepare reports that help evaluate the success and performance of companies, whether prepared for board presidents, investors, or tax authorities

The financing of small and medium enterprises significantly impacts the project's general budget. The concept of the general budget can be clarified as the integrated financial plan developed by the company's senior management, indicating the objectives it wants to achieve during a specific financial period and the methods and tools it will follow To achieve its goals at the lowest reasonable cost.

A tour of corporate finance management, the first lecture (planning budgets)

Budget types

An operational budget. It relates to the expected lists and estimated budgets for both sales and costs, whether costs of wages, materials, goods, marketing, etc. The operating budget also includes the lists of income and expected financial position.

Cash budget: It is a list that shows the estimated movement of cash in and out of buying and selling operations and estimates the value of profits and losses

Investment budget: It concerns future long-term lists for expected project planning, expansion, capital movement, and future investment.

Budget functions

Plan the company's objectives accurately, taking all the expected possibilities into account.

Coordinate between the departments and departments of the facility, which helps to achieve goals quickly and at lower cost with more quality performance.

Communication between the company's departments to learn about the estimated budget and main plan helps coordinate the work, and there is no conflict between the decisions of each department.

Motivate all company employees and develop team spirit and belonging to the company to accomplish the most significant amount of work with the highest quality, especially if they are involved in drawing up the plan and budgeting.

Control the plan and budget set level of performance and observe any deviations that occur. The control function includes four sub-functions:

 

- Analyze the extent of the deviation.

- Identify its causes.

- Suggest appropriate treatment methods.

- Make reports on deviation, treatment methods, and level of adjustment.

The components of the budget system

There are many components to be available when developing and designing a budget system within the company. The most important of these components are:

Participation:

The company's board members should cooperate with directors and department officials to draw up the estimated budget, make objectives more realistic, and develop a spirit of responsibility among members.

Determining responsibility:

Determining responsibility for each department and department helps clarify each department's initial cost and the size of the expected accomplishment.

Accurate analysis:

Using modern statistical methods and accurate market analysis will help draw a more accurate estimate balance, predicting sales volumes and profits.

Periodic reports:

Monthly, quarterly and annual reports are prepared to follow up on the extent to which the plan has been achieved, the objectives set, and what revenues and expenses have been achieved.

Integrated accounting system:

The accounting system components depend on accurate financial documents, books, and reports. These components are the main element in building the budget, and all budget statements are derived from them. Therefore, the accounting system components are considered the first evidence of the achievement and success of the goals set

Budget advantages

A tool to plan the activities of each department and department within the company.

Helps senior management control the level of performance within the company.

Enables the Board of Directors to make appropriate investment decisions and formulate policies that achieve their objectives.

A tool to coordinate work within the company and determine responsibilities.

Cooperate and participate with departments in drawing up the budget plan to help achieve maximum success.

It is a natural and positive impetus towards achieving the company’s goals.

Participation of management in drawing up short- and long-term plans for the project.

Assist in evaluating and modifying future and current policies and addressing their mistakes to suit the objectives.

It is considered one of the tools to measure the efficiency of work performance and the success

A tool for convergence and communication between the company’s departments and employees.

Careful planning and monitoring of expenses and financial inputs

What is a documentary cycle? | ECPA

Difficulties encountered in implementing the planning budget

Senior management neglects the role of managing corporate finance and budget planning.

The lack of solid accounting system components based on the basis that allows the ability to analyze accurately.

Not to study the appropriateness of decisions made for the time being.

Overlapping responsibilities and disorganization of departments.

Neglecting the company’s project manager and not pursuing work.

Lack of components of an accounting system that allows evaluation of what has been implemented and compared with planned objectives.

Try to hide the deviations created by departments and not communicate errors accurately.

The most crucial electronic accounting software

Startup Finance Management relies on reliable accounting offices to enable them to deal with the best and most essential accounting software. Therefore, we offer you an accounting office, "ECPA" It is one of Egypt's most prominent accounting offices. We have an integrated team with a great deal of experience and updates on the latest developments in accounting programs and Egyptian and international accounting laws.

Accounting software provides companies with the best accounting services while saving your company's time, effort and money. We can provide the best and most essential electronic accounting software that allows you to see the performance of your work at anytime and anywhere.

:One of the most popular programs

Cash Click Program

Microsoft application for a small accounting business

Quick books Quick books

Peachtree program

Myob app

Simple accounting software

And many other accounting programs

Obtaining financing for SMEs is one of the most important events that may change a company's life. Either it will raise it and achieve its successor just the opposite. Therefore, the ECPA Office assists its clients in providing more than one alternative and financing opportunity from more than one financing entity.

Our first goal is customer satisfaction and company success. So our office provides you with many comprehensive accounting services related to corporate financings such as cash management and studying expected and unexpected cash flows. We also continuously follow our customers and report on how your company benefits from financing. Has it achieved the return behind it, and how much is it paid? We provide the necessary recommendations, technical support, and many other services.

Mr. Usama Mohamed
Head of corporate finance department