16 Sep Show Me the Money!!!!
Do you ever look at your Profit & Loss and wonder where all of your money has gone?
Have you ever asked “Where is all my profit”?
When I had my tax compliance accounting firm, this was a question I was asked frequently, and to be honest it broke my heart. My amazing, passionate clients had poured their heart and soul into their business, only to end up scratching their head wondering what had happened to all of their hard-earned income and on top of that they now owed the tax office!!! Ouch!
Can you relate to this? Do you ever scratch your head and wonder what has happened to all of your supposed profit?
Do you ever feel like you are slogging your guts out but have nothing to show for it?
How would you like someone to actually show you where all your money has gone? And then help you to actually increase the money in your bank so you truly have something to show for all of the blood, sweat and tears running your business takes?
These are my 3 top tips you can use to track the cash as it flows through your business:
TIP 1 – Prepare a simple Cash Flow Report
Setting up a simple 12 month cash flow report enables you to see how the cash flows through your business on a monthly basis, the report details your opening bank account balance, your ending bank account balance, and then all the different payments that have occurred throughout the month that have impacted your bank account. Those payments, incoming or outgoing, that have actually increased or decreased your Cash position;
TIP 2 – Understand your Balance Sheet
Many business owners focus solely on their Profit & Loss report (is this something you do?) and often they only look at the very top line, being sales. This gives a business owner a false sense of security, especially if sales have increased for the past month. Often they don’t look at, or understand, how the Balance Sheet Report actually impacts the cash in their bank account. For example if you have had your best month of sales ever and for the first time you have hit $10,000 or more in sales, however your customers still owe you $8,000, this amount will be sitting in your Aged Sales receivable account, not your bank account, on the Balance Sheet. Your cash position won’t have improved as a result of your increased sales, in fact it could even have become worse;
TIP 3 – General Ledger Review
Requesting a detailed General Ledger report from your bookkeeper or accountant each month enables you to review exactly who & what you have paid this month. By reviewing this report, you can see when your expenses are starting to creep up or if you have had any exceptional expenses or payments that may need to be reviewed in closer detail. To be honest, the General Ledger report is one of my favourite reports to review with a client, if you only ever look at your Profit & Loss you can easily allow expenses to creep into your business that you either really don’t need or could be reviewed to see if you can get a better deal, putting more cash into your bank on a regular basis.
Do you need help with any of these strategies, or more, to “Show you the Money” for the blood, sweat and tears you have poured into your business?
Hi, I’m Phoebe. I love business, especially the Numbers! As a sought-after qualified accountant, I come from a place of experience, with over 15 years of running my own accountancy firm, MGA Accountants, I scaled the business to double the size before successfully selling in 2015. Now I am focussing on what I love, helping female entrepreneurs create business success by understanding their business numbers so they can make smart, savvy business decisions to live the life of their dreams.