Businesses can benefit from understanding their numbers

Businesses can benefit from understanding their numbers

If you’re finding that your business has experienced slim profit margins in recent years, is struggling with cashflow, or cannot afford to draw a decent salary or dividend at the end of each year, then you should keep reading.

There is a need to focus on the most important numbers in your business. For instance, gross profit margin is often overlooked by business owners, and simple 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, 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, then things need to be fixed.

You will be surprised what a big difference a reduction to 60 days with no increase in revenue would do 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 that are 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 cashflow, contact us today to discuss how we can help.

Kreston Stanley Williamson Team

*Correct as of June 2016

*Disclaimer – this article has been produced by Kreston Stanley Williamson as a service to 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 contained in this article, it is imperative you seek specific advice relating to your particular circumstances. Liability limited by a scheme approved under professional standards legislation.

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