Business owners are often concerned about the financial state of their business. But many are unsure about how to stay up-to-date with the comings and goings of their finances. That’s where their bookkeeper can help. While many people turn to family or friends for business advice, they are often no match for the expertise and depth of finance knowledge a bookkeeper can provide.
Many people start their business with a great idea but little to no financial literacy. Once the business is established, it becomes even more difficult to bridge this knowledge gap as business owners get caught up in the day-to-day running of the business. By this stage, most business people have employed the services of a good bookkeeper to help them manage the financial side of the business but many are still struggling to understand what’s actually happening and are afraid to ask for fear of looking foolish.
So, here are 6 questions you should be asking your bookkeeper to get a better understanding of the financial state of your business.
- Is my business profitable?
It sounds basic, but many business owners are uncertain as to whether or not their business is profitable. Your bookkeeper can provide information on the financial trends from one year to the next and how factors such as a spike in costs or a highly profitable sale can impact cash flow.
- What is my cash flow looking like?
Speaking of cash flow, there’s more to it than just sales and paying suppliers. It could be the case that you need to review your loans to see if it’s time to re-finance. Are there goods that you are paid up front for that should have been financed? Which suppliers could be put on a monthly payment schedule? Do you know when and how much you need to pay for superannuation, PAYG and GST obligations? Any and all of these can have a dramatic impact on your cash flow position and your bookkeeper is perfectly positioned to help minimise the damage.
- What are my wage costs?
Wages are a major component of most business costs in Australia yet many business owners don’t ask the question of how their wage costs are tracking. It is necessary to know that the wages being paid are a reasonable percentage of income. Benchmark rates vary depending on the industry but your bookkeeper can advise if your wage costs are on track or spiralling out of control.
- How can I get more business?
Generating new business can be one of the most challenging aspects of being a small business owner. Your bookkeeper will have deep insight into all areas of your business and can provide systems and procedures to help you streamline the processes in order to better serve and therefore grow your customer base. They can also give you information about your current customers such as what and how often they buy from you, are they a ‘good’ client in terms of paying on time, what industry are they in. These kinds of details can help you determine the types of customers you should be targeting with your marketing.
- Is there a better way to do things?
It can be difficult to stay up to date with constantly changing technology and software developments. Is there new technology available that can streamline and automate areas of your business that are chewing up your valuable time and not making money? Your bookkeeper can provide advice on new methods or software add-ons that can save you time and money.
- How can I become better at understanding the figures?
Have a frank and open discussion with your bookkeeper to let them know exactly the type of information you need to better run your business. Are you focussed on sales figures or is keeping overheads down more of a priority? If you’re not a numbers person, can your bookkeeper present the information in a different way such as using charts? Don’t be afraid to talk to your bookkeeper about the type of information you need and your preferred method of presenting it.
Financial illiteracy is something that can have a big impact on your business so it’s important that you do what’s necessary to have a better understanding of what the numbers in your financials actually mean. You’re already paying for your bookkeeper’s services so why not take full advantage of them. If you want to get the full story behind the figures, talk to us. We can help you get your business back on track.
Do you think others will enjoy this? Why not share with your friends
