End of the year can be a busy time for business owners. In this episode of MissionBusinessPodcast.com Bernard Roesch shares tips you can use to make year end accounting and taxes easier.
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Having best practices for security and fraud prevention in your company is important. We share below some of these best practices and how you can integrate them into your QuickBooks and accounting routine.
If you have proper security best practices in place, you can find security issues in fraud problems quickly. In addition, you can prevent these issues from happening in the first place.
There are a number of fraud and security problems that small businesses often face.
There are a number of features within QuickBooks that you can use to identify and even prevent the above fraudulent situations from happening in your business.
1. Accounts Receivable Fraud – By reviewing accounts receivable information regularly, you can identify fraudulent activity and address it quickly. For example;
2. Preventing Accounts Payable Fraud – You can also create reports within QuickBooks that shows expenses categorized by vendors. Using this information;
3. Review Voided and Deleted Transactions – QuickBooks enables you to void or delete transactions if needed. Though not all QuickBooks users will have this available to them, it is sometimes needed.
4. Reconcile Bank Accounts – Another important best practice to prevent and identify fraudulent activity quickly is to regularly reconcile your bank accounts.
Certain businesses have unique needs that come into play when they start using QuickBooks to run their business and contracting is one of them. In this episode of MissionBusinessPodcast.com Bernard Roesch shares specific ways that a contracting business can use QuickBooks.
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If you don’t stay on top of your accounting and bookkeeping, it can cause problems for your business. In this episode of MissionBusinessPodcast.com Bernard Roesch shares a process you can use to stay on top of accounting in your business.
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As you grow your business, its important to be able to have financing options that you can use to take your business to the next level. In this episode of MissionBusinessPodcast.com Bernard Roesch shares some of the financing options available for small businesses that you may not be aware of.
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In this episode of the Mission Business Podcast, we talk about specific metrics a business should track to gauge its overall profitability and health. While every business is unique and will have different metrics, there are foundation level metrics that apply to any business. In this episode, we share those metrics and how to use them.
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We’ve transcribed the audio into text and formatted it for easy reading below. Please excuse any typos or odd wording, as this transcript is taken directly from the spoken word within the audio above.
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Interviewer: Welcome to the Mission Business Podcast. What we’re going to talk about with Bernard today is specific metrics that you should be tracking in your business to gauge the overall health of the business.
Interviewer: Obviously every business is unique and there are going to be different numbers tracked in different businesses, but there are foundation level metrics that apply to any business. Before we get into specific metrics that you should be tracking, Bernard, can you share with us the overall importance of why a business needs to be tracking metrics?
Bernard: It’s important to track metrics because as a business owner you may be very much embroiled in the day-to-day business and you may have some preconceived notions as to what you should do to achieve a profitable situation with good cash flow.
Interviewer: That’s definitely a good point.
Interviewer: Let’s transition into talking about specific metrics that a business should be tracking. Can you share with us one specific metric that a business should be tracking and what next actions a business owner can actually take using that metric?
Bernard: As I‘ve said, sales is only one metric and everybody is thinking of capturing sales and how much do we sell. But in my opinion what’s more important than sales is the gross profit.
So, the bottom line is really what’s important for the business is to achieve a very healthy gross profit. My favorite metric is really the gross profit as a percentage of sales or gross margin. We want a business to be really taking a look at that and make sure we don’t inadvertently let this metric erode. We want to have healthy gross profit percentages.
Interviewer: How would different businesses go about actually tracking that gross profit percentage? Obviously different businesses have different numbers that impact that percentage. So how do you accommodate for that?
Bernard: Essentially in my world you have two types of businesses. You have businesses that sell goods and businesses that sell services.
If you’re selling goods, you want to have a good inventory system so that;
In case of service businesses, these would be more of project cost type. Say you have a consulting business. It would have a project cost and would require you to record the following information;
Once you have that, you can do a cost analysis and see how some of the products are more profitable than others.
Ideally you want to do more of the more profitable stuff and less of the less profitable stuff.
Interviewer: So apart from gross profit, what’s another metric that you’ve seen business owners make the mistake of not tracking?
Bernard: Obviously, once you’ve focused on gross profit, you’ll want to optimize your gross profit.
What’s the difference between gross profit or the topmost line and the bottom line? – It’s really your overhead expense and the cost of running your business.
These are the costs that are not directly attributable to either;
With the cost of your accounting, your rent, your insurance and all these costs, you really want to have a good command as to what really it is per month. Let’s say it’s $50,000 per month. You really want to have a sense to what this figure is and what this overhead cost or general cost amounts to, as a percentage of your gross profits.
Let’s say your gross profit is $70,000 a month and you find that your overhead is $50,000. So you look at that and you say, “Well, that’s about 75% of my gross profit.” Obviously you want your general expenses to be less than your gross profit so that you can have a healthy bottom line.
Interviewer: That’s definitely helpful. Between tracking gross profit and keeping track of your overhead, it sounds like you’re going to be in good position in your business to know those foundation level numbers in the business.
We’re going to be putting out more episodes and more content on the website about how to actually track these metrics and much more about running your business. Thank you so much for your time in reviewing this today, Bernard.
Bernard: You are very welcome.
You can contact us today to book a free consultation. We can do a comparative analysis of your business’s expenses and cash flow to work out the profitability percentage.
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Tax season can be a headache for anyone unfamiliar with the subject, and finding the best software to take care of most of its annoyances is no exception. While QuickBooks is great for taking care of much of the heavy lifting, it can still take some time for new users to get used to it.
With that in mind, here are the top 6 tips to getting the most out of QuickBooks during the tax season.
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When it comes to small businesses, a majority of business owners consider profit and loss to be the best measurement of their organization’s success, but cash flow is just as important in determining whether or not a company can stay in business.
Regardless of whether or not you make a profit, you must have enough cash coming in to purchase materials, pay bills and make payroll in a timely manner or it won’t take long before your business is struggling. That is why every owner needs to understand how cash flow affects their company and how to forecast it in order to ensure that enough cash is available when needed.
Cash flow is simply the money coming in from customers and clients and the money going out to purchasing materials and supplies and to pay bills and employees.
Profit or loss, on the other hand, is the income made by selling your goods and services less the costs of running your business. Income is typically recognized when it is earned, meaning when the goods or services are sold, rather than when the customer’s payment is received. Likewise, expenses are usually entered when the bill comes in, not when it is paid.
Therefore, it is possible that
This is why understanding and predicting cash flow is essential to keeping a business operating.
QuickBooks users have a number of tools at their disposal for viewing their company’s cash flow and for forecasting it into the future. The first report to use is the Cash Flow Statement. Go To the “Reports” menu, choose “Company & Financial”, and click on “Statement of Cash Flows.”
This report will break down your cash flow as follows:
You might want to run this report for several different time periods, such as the past month, the past quarter and the past year. This will give you a good idea how often are you struggling to meet your cash needs, or if you routinely have enough cash on hand.
Once you understand how cash flow is affecting your daily operations, you can use these tools to predict cash flow for the future. This can be especially helpful if you are planning a big project or considering taking out a loan. Instead of selecting “Cash Flow Statement” on the “Reports” menu, select “Cash Flow Forecast”. With this tool, you can determine what will happen to your cash flow if your customers start paying more slowly or if you delay payments on certain bills and expenses.
You can also enter other assumptions, such as a higher profit or larger loss. This will give you a good idea of whether or not you can afford to move forward with a planned project without putting your company in jeopardy of running out of funds.
So, now you know why understanding cash flow is vital to managing any business. No matter how profitable a company may be, if cash isn’t being received when it is needed, the organization will struggle to remain viable. Using QuickBooks tools, you can easily see how your company’s cash flow is currently working and what might happen to it in the future. With these reports, any business owner has the information needed to make decisions about how to operate today and expand in the future.
Keeping your business’s budget in QuickBooks is the easiest way to access this crucial information whenever you need it. It’s a cinch to track budgets by department or project and print reports to gauge performance throughout the year. A budget that is simple to access and generate reports will serve you well, and you won’t find one that’s as simple to use as QuickBooks.
In fact, you could be taking advantage of QuickBooks’ budget accessibility by looking at it and revising it more often. Your business’s forecast will change throughout the years as the factors that affect it change – factors like salaries, staffing levels, projected sales. Make sure to keep your budget updated in QuickBooks.
Here are a few more tips for getting the most out of QuickBooks budgeting tools.
QuickBooks lets you build a new budget based on the previous year’s actual numbers, and it’s easy to do. But there’s a catch.
Use QuickBook’s Class feature to establish and track budgets by department (or project, or any organizational principle you choose).
Revising your budget throughout the year is a smart habit to form. Just because you set an annual budget doesn’t mean you should only attend to it once a year. To forecast different scenarios, it’s helpful to copy a budget and change some numbers around before saving the final revision.
Keep your budget in user-friendly QuickBooks and you should find yourself paying more attention to it on a continual basis. That’s a smart move for any business owner, and one that will help you stay on top of your business’s financial picture. Make sure you start with the correct year’s data, break up the budget using the Class tool, track expenses by Class, and run reports.
