If you’re a business owner who has experienced slim profit margins in recent years, struggles with cashflow, or cannot afford to draw a decent salary or dividend at the end of each year, then you should keep reading, especially if you’re looking for guidance from a BAS agent.
You need to focus on the most critical numbers in your business. For instance, the gross profit margin is often overlooked by business owners, and straightforward solutions such as changing your pricing model can sometimes yield better results as well as provide an increase in revenue percentage without increasing your cost base.
Similarly, identifying and eliminating inefficiencies in the business processes can also shave significant time off the average job cost.
Cashflow improvements can sometimes be fixed with goods receivable/debtor management procedures and systems. For instance, things need to be fixed if you do not know your average debtor days or your customers are taking 90 days to pay, despite your agreed terms of 30 days.
You will be surprised what a big difference a reduction to 60 days with no increase in revenue would make to your cash position. Cash is King – without it, you cannot invest more into your business (i.e. buying more stock or paying a bonus to reward staff critical to your business).
Every business has different areas to concentrate on depending on their circumstances. So, if you are frustrated with your profitability or cash flow, contact us today to discuss how we can help.
Kreston Stanley Williamson Team
*Correct as of June 2016
*Disclaimer – Kreston Stanley Williamson has produced this article to serve its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.