Short answer: after a seed round, a startup should move its books to accrual accounting, close every month on a fixed date, reconcile every bank and card account, track revenue and burn the way investors will measure them, keep a rolling cash forecast, and send investors a short monthly or quarterly update built from those numbers. Setting this up now costs far less than rebuilding a year of books during Series A diligence.
Here is what to put in place, in what order, and who should own it. For how we support founders, see our startup accounting and fractional CFO page.
What bookkeeping does a startup need after a seed round?
Before the round, a founder-run spreadsheet or a cash-basis ledger is usually enough. After it, you are spending other people's money on a plan, and the books have to show whether the plan is working. That means:
- Accrual accounting: revenue recorded when it is earned and expenses when they are incurred, not when cash moves. Annual contracts paid upfront become deferred revenue that is recognized month by month.
- A chart of accounts built for a startup: cost of revenue separated from operating expenses, and spend grouped by function (R&D, sales and marketing, general and administrative).
- Every account reconciled monthly: bank, cards, payment processors and payroll.
- A monthly close on a fixed date, so the board and investors see the same numbers every month.
Which numbers will Series A investors check?
Diligence teams rebuild your key metrics from the general ledger. The ones that cause trouble most often are revenue (especially recurring revenue versus one-time or services revenue), gross margin, monthly net burn and runway. If your pitch deck says one thing and the books say another, the conversation shifts from growth to cleanup. Clean monthly books mean the deck, the board update and the data room all come from the same source.
What should a startup set up in the first 90 days after funding?
- Separate and secure the money: raised funds in company accounts, a clear policy for founder expenses and reimbursements.
- Convert to accrual books and clean up the opening balance sheet, including the financing itself.
- Set the close calendar: books closed and statements out by a fixed day each month.
- Build a cash forecast: a rolling forecast tied to the hiring plan, updated monthly, so runway is a number you know rather than a guess.
- Standardize the investor update: revenue, burn, runway and a few operating metrics, pulled straight from the closed books.
- Keep a diligence folder current: statements, contracts, cap table support and board materials, filed as you go.
Does a seed-stage startup need a CFO?
Usually not a full-time one. Most seed-stage companies need reliable bookkeeping and a monthly close first, plus a few hours of senior finance help for the forecast, board reporting and fundraising prep. That is what a fractional CFO provides. Our comparison of a fractional CFO vs. a full-time CFO walks through the trade-offs, and the finance team cost calculator estimates what each option would cost your company.
Common bookkeeping mistakes after a seed round
- Staying on cash-basis books, so revenue and burn swing with invoice timing.
- Annual prepayments booked as revenue in the month the cash arrived.
- Payroll, contractors and software lumped together, so nobody can see spend by function.
- Books caught up once a quarter, which means investor updates are always stale.
- Founder card spend and reimbursements left uncoded until diligence.
Where River Edge fits
River Edge Advisors is a CPA-led outsourced accounting and fractional CFO firm with a team of 75+, based in Cedarhurst, New York, and working with venture-backed startups nationwide. We set up accrual books, run the monthly close, build the cash forecast and prepare board and investor reporting, with fractional CFO support when the company is ready for it. If you'd like a second set of eyes before your next round, we're happy to review last month's books for free.
Common questions
Should a startup use accrual or cash accounting after raising money?
Accrual. Investors, boards and Series A diligence teams measure revenue, gross margin and burn on an accrual basis, so books kept on cash will need to be rebuilt later.
When should a startup hire a full-time CFO?
Most companies bring in a full-time CFO later, often around a larger raise or when finance needs daily leadership. Before that, a fractional CFO plus a reliable bookkeeping and close process usually covers the need.
How often should a startup close its books?
Monthly, on a fixed date. A monthly close keeps investor updates current and makes diligence much faster when the next round comes.
What financial reports do seed investors expect?
Most expect a short monthly or quarterly update covering revenue, burn, runway and a few operating metrics, backed by a P&L, balance sheet and cash flow from closed books.
Can an outsourced accounting firm handle startup bookkeeping and a fractional CFO together?
Yes. River Edge provides both: a team that keeps the books and closes the month, and a fractional CFO for forecasting, board reporting and fundraising prep.