As a business owner do you know your bookkeeping basics and what your key financial metrics are?
Key financial metrics are vital when your hands are full, trying to run and build a great business. You have a team in place to handle the most essential functions that you no longer have the time to do yourself. In fact, you may not have touched particular tasks for some time, like bookkeeping for example. Business owners don’t have to be the bookkeeper for their own company, but there are some key financial metrics of bookkeeping basics that a business owner should know.
Business Owners and Key Financial Metrics
Occasionally, analyzing and reviewing key financial metrics helps you do a strategic job of managing your company. Made possible by simply understanding the essential bookkeeping basics. Financial metrics help you measure your businesses’ performance and keep track of your company’s growth.
This means you need to have a firm grasp of bookkeeping basics like the structure and purpose of an Income Statement, also referred to as a P&L or Profit and Loss statement. This includes understanding and knowing the purpose of the numbers in your Cash Flows statements and your Balance Sheet.
Bookkeeping Basics and Business Revenue
The bottom line no matter what business you’re in, you must manage the money that makes it operate, knowing key financial metrics helps you to do this. There is a lot more to it than making and spending money to operate a business. It does take some financial knowledge, if you don’t have that financial knowledge you can always use an expert bookkeeping company like BooXkeeping.
A strategic business leader should be concerned with the equity value first and foremost of the business. This is determined by the Balance Sheet. The value of a business’s equity is in direct correlation to how well a business runs. And how well a business runs is impacted directly by the effectiveness of accounts payable (A/P) and accounts receivables (A/R) systems you have in place, as well as the operational and productivity cost-effectiveness.
Revenue is also an essential fuel that runs a business. Every action in a business either generates or consumes money directly, or indirectly. If a business consumes more money than it is making, then that company won’t be in business for long. Money needs to be coming in at a greater pace than it is going out.
Last but not least, quantification, or measurement, is essential for a business to know how it’s performing. Since most everything that happens in a business either indirectly or directly involves finances, the metrics are available to you. What is needed is capturing that financial information, analyzing it, and using it to manage your business.
Outsourced bookkeeping services are a great way to know exactly how much your business is making every month. For more information on how outsourced bookkeeping services can help your business contact us for your complimentary consultation. Click Here