How does Gust Launch Financial Management work?
If you are a pre-revenue company with a Gust Launch Accelerate subscription, you can elect to add accounting and bookkeeping services with the Financial Management package.
Our accountants work through Xero, which can connect to most corporate bank accounts. Xero will automatically pull in your expenses and other transactions from your bank account, and our accountants will use the software to properly categorize your financials according to Generally Accepted Accounting Principles (GAAP).
Accountants generally prepare corporations’ financial records (called their books) on a monthly basis. At the end of the month, the accountant takes stock of all the transactions the company has made, which goods or services the company paid for, and what (if any) income the company took in, and then makes a series of decisions about how the expenses match up with the revenue generated in that period. They turn this information into three standard financial statements:
- an income statement (also known as a profit & loss statement), which shows the amount of revenue the company collected versus how much it spent to generate those profits. The income statement tries to show whether or not the company is profitable overall, when you consider its costs over a given period in context of their relationship to the profits generated within that period. The income statement can help companies plan their operations by illustrating the relationship between what they spend and how it helps them grow revenue over time.
- a balance sheet, which describes the month’s financial activities in context of its longer-term health: is it growing its assets over time? Is it taking on too much debt or liability? Is the value of the company to its owners increasing or decreasing? The balance sheet is often where investors start when they evaluate a company’s viability.
- a cash flow statement, which (unlike the other two statements) is all about what cash went in or came out, rather than what revenue was booked or what liabilities were lessened. For early-stage companies, this statement is generally the most useful.
Because these books are closed at the end of the month, and any accounting errors need to be reconciled, it’s very important for founders to leave the accounting to their accountants—Gust Launch customers should not attempt to log transactions or change data in Xero directly, and should talk to their accountants if they believe there was an error.
If there’s anything about your financials in any given month that your accountants need to clarify, they’ll reach out to you by the 20th of the month. Then, they’ll provide you with the three standard corporate financial statements via email (which will also be accessible through Xero) by the end of the month.