What should be evaluated to know if a company is financially healthy?

In our last blog we discussed how Check & Balance Business Solutions provides Business and Financial Health Consultations. Here we will break down how to assess if your companies financial health needs some professional attention. To understand your company's financial health, you can measure the following data points:

Revenue: measures how much money is coming in from the sale of solutions.

Receipt: different from revenue, because it measures what was actually received. An important index for companies that sell on credit.

Average ticket: measures how much customers spend, on average, on each purchase.

Debts: measures how much of funds from loans are being used to make business operations viable.

Profits: goes beyond revenue and shows whether sales are resulting in a profit, or, what is left after covering all costs.

Breakeven point: the sum of fixed and variable expenses and their relationship with sales volume.

Here are 3 useful tips on points of attention in managing your businesses accounting:

1. Planning

In addition to accounting, any company needs effective strategic planning based on market, customer, and product research. When the stages are followed correctly, the odds of mistakes are reduced and it is easier to foresee alternative outcomes.

Prepare possibilities for different scenarios and be prepared for emergencies that can destabilize finances.

Know your expenses and keep track of them, preventing delays, and choosing automatic payments whenever possible.

2. Emergency fund

In financial planning, specify an emergency fund. This should be able to cover 6 to 12 months of expenses – explore what works best for your company. In the event of the unforeseen, the business will be able to maintain salaries and other expenses while it forms recovery strategies.

3. Profitable investments

Invest in solutions that will bring your company additional profit. This applies to developing new products and services, as well as the coming up with marketing campaigns and financial portfolio investments.

If you have questions about your company’s financial health or need more eyes on your books contact Check & Balance today by scheduling a free consultation! We’ll be happy to ensure your records are always accurate.