When it comes to business finance, you really need to know your numbers. But what exactly does that mean? When we talk about numbers, we’re talking about particular numbers that mean particular things − like the numbers in your profit and loss statement, the numbers in your balance sheet and the numbers in your cash flow statement. These numbers show the health of your business, and that’s why you need to know them.
This is where a good Melbourne bookkeeper can help put you ahead of the pack. Before you can grow your business, you need to know what kind of ground you’re currently standing on. Without knowledge of your numbers, you won’t know what is needed to turbo charge your business growth. If you’re really lost, a decent bookkeeper in Melbourne can help you find your feet. But for now, we’ll provide an overview of the numbers critical to business growth below.
Any bookkeepers in Melbourne that are worth their salt can draw up a profit and loss statement for you. This is your monthly scorecard that shows how many wins and losses you’re getting. It outlines your expenses and income, and the resulting figure at the bottom of the statement tells you a lot about the health of your business. You want to be in a situation where you’re creating profit every month.
Your balance sheet provides you with today’s snapshot of your business. If you need help creating a balance sheet, ask one of the many bookkeeping firms for assistance. A balance sheet details your assets, your liabilities and your resulting equity. For example, assets include banked cash, petty cash, inventory you have on hand and any invoices your clients haven’t paid yet. Liabilities are the things you owe, including debts, unpaid taxes and invoices. When you add up all the assets and subtract all the liabilities, you’re left with a figure that represents the net worth of your business.
Your cash flow statement shows you where you’re heading and is perhaps the most important for business growth. Without forecasting cash flow, you won’t be able to plan where your cash is going, meaning you might be caught short of cash. This is a very real problem when you’ve got employees and invoices to pay. You can fix all this with a bit of preplanning and the use of up-to-date software and professional bookkeeping services. When you’re deliberate about your use of cash, you can plan for sustainable business growth.
If you want to grow your business, you need to start with a solid foundation. At IZ Bookkeepers, we can provide a wide range of quality bookkeeping services to help you grow your business. Call our Melbourne bookkeeper today on 0403 905 272.