Updated: Jan 27, 2019
When you're busy working on your startup it's hard to find the time to keep a handle of all of the finances. So once you've recorded your transactions, what are the key figures to pay attention to every month?
You probably know your sales figures without checking your accounting system because of course, without sales there's no business, so the first figure I make sure my clients are reviewing every month is their sales.
You should have a forecast for your sales for the year, so keeping an eye on this number, whether it's more or less than your forecast, how it compares to last month, and how it compares to this time last year will give great insights into your business and raise important questions about how things are going to help keep you on track and to think about changing things if they're not working.
Generating profit is the reason for being in business in the first place so I recommend that my clients review their profit figure every month by running a Profit and Loss report. As well as looking at sales, it's important to keep a handle on your expenses to make sure your business is profitable.
A good business forecast will give you a profit goal for the year broken into monthly targets and keeping an eye on this every month will highlight any warning signs such as spending too much in a particular area.
3. Your bank balance
Sales and profit are important, but a business can't survive without cash so I recommend that my clients review their cash flow position every month. This involves looking at the current bank balance, reviewing money that is due to be paid in the next month (and looking further ahead too), and making a prudent estimate of money that's due to be received in the next month to give a forecast month end position. A good accounting system will help you produce a cash flow forecast for your business. Would you like to improve your cash flow in just three days? Why not sign up for our free 3 day Cash Flow Challenge?
If you'd like to talk to us about how we can help you with the bookkeeping for your business, please get in touch, we'd love to help.