Cash is the Lifeblood of Business

“Cash is the lifeblood of business, which makes receivables the heart that pumps the blood.”

 

“Even if you have an accountant, as a small-business owner you still need to be knee-deep in financials.Even if you’re not a CFO—or a numbers person—you should still review your company’s financial reports every month. When you’re reviewing, you need to look for profitability by project, overall profitability and trends, proper classification of revenue and expenses, cash flow and fraud—but that’s just an overview. Here’s what you need to do, step by step.
 
1. Make sure you have the systems and process in place to create solid monthly financial reports.

 
Make sure your accounting system is set up properly. This needs to be done before you can start your review. I set up my system so that you can track profitability by project. In some systems, this is called “classes,” where revenue and directly-related expenses tied to a particular project are put into its respective class. For example, my company may produce an email newsletter, a magazine and an event for one client. Each of those projects will be a separate class.

Accounting Uncategorized

7 Signs Your Company Has Good Financial Health

7 Signs Your Company Has Good Financial Health

 

Do you know how to tell if your company has good financial health? “There are more than a few ways, some of which may be more appropriate for your business than others.

It’s somewhat easy to determine if your company is doing well. You’ll be in the black every month, able to make yourpayroll and pay all of your monthly bills and expenses. But are there discernible levels or observable distinctions that reliably signify good financial health? Or are there ways to determine how well you’re doing beyond the norm?

There are more than a few ways, some of which may be more appropriate for your business than others. With that in mind, let’s review seven signs that your company is in good financial health.

1. Your Revenue Is Growing

When looking at your profit-and-loss statement, you should be able to see a pretty steady increase in your revenue month over month, year over year. It doesn’t have to be a huge spike in profitability, but even just an increase of a couple percent shows upward movement and a strong financial outlook.

Accounting Uncategorized