1. Can you pay all of your debts on time?
If your business consistently cannot pay its debts on time, there could be a serious issue with cash flow. An accountant can analyze your statements and identify choke points for your cash flow, allowing you to re-organise and free up money to pay down debt. You may even need weekly cash flow forecasts to manage money in the short-term.
2. What’s your break-even point?
If you don’t know your break-even point, you don’t know the minimum amount of revenue required to stay afloat. Your break-even point determines the minimum sales you need to make a profit. To find this, you need to know your fixed and variable costs, the practice collections, and margins at the very least. If you can’t identify what you need to find the break-even point, you need an accountant to determine this for you and find strategies to meet and exceed it.
3. How does your cash flow look for the coming year?
Cash flow forecasts are critical for business budgeting – without them, you won’t know the true nature of your business’ performance. For example, you might have a lot of cash in the bank, but this is not your profit. You need to know this to project sustainable growth and whether your business can even keep operating. This means: taking last year’s sales figures
and adjusting for the current climate and next 12 months; incorporating investments, loans, rebates, and fees; determining expenses for the coming year; and factoring in one-off costs like equipment purchases.
If you can’t put this together, don’t leave your forecasting to chance – use an accountant to get a clear picture of whether your business will make money in the next 12 months.
4. Is your business performing according to forecast?
If you don’t go back and compare your cash flow and profit & loss forecasts to actual progress every month or quarter, you’re failing to improve your standing. This comparison lets you see where your business is not meeting expectations, when money is coming in, and where your finances stagnate.
With this comparison, you can implement specific marketing initiatives, or remove goods from production entirely. If you don’t know how to compare forecasts with actual performance, you’re going to need a professional accountant.
Talk to Sigma Accountants today about how to keep your business going during bad times and to prosper during good times. Time is of the essence!