As business people, we must not only pay attention to the current cash flow but also need to think in the future after the Covid-19 pandemic is over. By having good financial planning and management, we can immediately adapt back when the situation returns to normal. Additionally, if it is hard for you to manage your business finance yourself, you can hire the bookkeeper eastern suburbs.
There are some business measurements that need to be considered by business people as a benchmark for managing business finances. When these five things go well, then business finances can be safe and the business can run smoothly. What are the five things?
Income
All business people must understand how important it is to have a stable income stream. One of the biggest challenges especially for SME businesses in a pandemic such as this is a drastic reduction in revenues. It’s because at times like this the community activity is greatly reduced because it is only at home.
Therefore, a careful analysis of business income is needed. By reviewing daily, weekly, monthly, quarterly, and annual income, you can analyze revenue trends and estimate your current business conditions.
Spending
By reviewing expenses, you can know the costs needed to run your business. If you’re not sure, accountant services can help you categorize those expenses. For example, some expenses may be related to production costs, while other expenses are fixed expenses such as office rental costs. The difference between expenses and income determines whether your business can run well and be profitable or not.
In an economic situation like this, managing expenditure in detail becomes very important. One way to measure each expense is to analyze whether the expenditure helps keep your business running, generate ROI (return of investment) or add value to the business.
Due date
Every business is different, but if the cash flow is not smooth because of the affairs of receivables over time your business profits will be exhausted to cover these overdue payments. There are several options you can do to prevent late payments.
First, you can regularly within 30 days to the payment deadline. Another way is to offer discounts for those who pay early. The final way is to apply cash only payments to customers who cannot meet the specified deadline or completely block them.