How to track profit-loss in your business projects

How to track Profit-Loss in your business projects

How to track Profit-Loss in your business projects

So many companies come up with innovative products and services, build the best-in-class teams, and devise all kinds of strategies for business upscaling. However, a good portion of these business owners doesn’t pay attention to the cash flow as much as they should. It’s no surprise that about 50% of the businesses fail within the first 4 years.

There are several risks associated with ineffective tracking of profit and loss in your business projects. These are:

  • Frauds: When your profit-loss monitoring system is flawed or ineffective, your employees could be tempted to steal money from the business itself. Believe it or not, it’s fairly common for employees to write cheques to themselves from their company’s account. You could be losing 5% of your annual revenue to frauds like these.
  • Human Error: Reconciliation mistakes can often be costly. You could be making major business decisions on the basis of erroneous data, thus potentially opening a Pandora’s box.
  • Cashflow Leaks: Cashflow leaks is the money you are losing for no reason. These should be identified and plugged immediately.

Now that we have established how ineffective monitoring of your profits and losses can cause monetary damage, it’s time to look at some of the ways you can avoid this from happening:

Financial Statements

There are three types of financial statements that you need to track- balance sheet, income statement, and the cash flow statement. The first one shows the overall financial health of your business, the second one is about the business profitability reflected through the profits and losses, and the third one shows the liquidity.

Business Expenses

There are two types of expenses:

  • One-Time: These include replacing a damaged computer, an overseas business trip, etc.
  • Recurring: These are your office space rent, utility bills, vendor costs, etc.

Every single business expense should be accounted for. The employees must keep the receipts of such expenses with themselves and upload the same on a centralized system through which you can assess the losses. This also helps in keeping in-house frauds under check.

Orders, Shipments, and Returns

If you sell goods, then orders and shipments can greatly affect your business performance. For instance, if orders are getting misplaced more frequently, and you have to resend them, then these additional shipping costs contribute to the overall loss. Similarly, if a customer returns a product back, then it’s money wasted in the form of shipping cost, as well as the loss of the sale itself.

Taxes

Small businesses can only afford to employ the “essential” talent. Thus, they often keep marketers, branding experts, and accountants, etc. out of their core team. However, filing the correct amount of taxes is important. This has become even more critical now under the GST regime as you are expected to pass on the benefits of the new taxation system to your customers in order to avoid any action undertaken by the anti-profiteering authority against you.

There are various tax-deductible expenses that can be subtracted from your company’s taxable income. The more you add, the lower will be the taxes that you have to pay. However, to do that you have to track and record the appropriate expenses so that you can file your IT return properly.

Technology is the Solution

Technology, the Internet, Social Media, etc. have changed the way we do business today. In fact, these are one of the main reasons why a growing number of start-ups are able to achieve unparalleled success with a limited budget.

You don’t need an expert bookkeeper to monitor the profits and losses of your business project. Best-in-class expenses and invoice management software is enough to provide you a snapshot of your business cash flow.

It would greatly help if the platform of your choice is GST-ready and offers linkage of your business bank account directly with the accounting module. This can help minimize human errors and in-house frauds, and increase overall transparency in your business profits-losses.

Best Strategies to Improve Your Business Productivity

Best Strategies to Improve Your Business Productivity

Every business owner likes to improve their business productivity and see the business grew quickly. If you are trying to improve things for your business, then there are multiple strategies that you can work on. Most of the businesses end up spending a lot of money as an investment and don’t get the desired results. If you are also investing money without focusing on the end results, then you will end up wasting your money.

If you are worried about the business productivity and you are unable to improve things for your business, then you are at the right place. There are multiple ways to improve things for your business and you can easily get the desired results. However, you will have to oversee every single thing when you are starting your business.

Most of the business owners forget to oversee things when they are implementing new strategies to improve business productivity. Even managing expenses and cash flow management is also a key to run your business operations successfully. If you are not overseeing these things, then you are making a huge mistake. Let’s have a look at some strategies to improve the business productivity.

Always select the right equipment

Most of the business owners end up making mistakes by purchasing the equipment that they don’t even require. When you are making purchases, you must focus on the things that you actually require. It can help you practice proper expense management when you are purchasing equipment. Make sure that you are purchasing the right equipment so you can avoid all the problems that you are facing. Before you go on to make purchases, you must ask few simple questions from yourself. The equipment should be useful and purchased for giving you the desired results.

If you need to replace the existing equipment to improve productivity, then only then you should make a purchase. Whatever you are about to purchase, it should be able to provide you multiple benefits and it should be able to improve the productivity of your business.

Take help of technology productivity

In the modern world, you cannot improve business productivity without the help of latest technology. The latest technology can help you in a number of ways and you will be able to avoid most of the problems by using the technology. For example, you can always purchase your products online and avoid the unnecessary expenses. It will give you a proper way to manage your expenses as well. You will have all the receipts saved online when you are purchasing products for daily use. Moreover, if you are using smart inventory control systems, then it will help you in a much better way. You can always reduce the inventory levels by using the smart inventory control system.

You can use the technology in almost every business operation including expense management, account management software, e-business and much more. Technology can help you improve the business productivity in a number of ways and you should explore your options when using technology.

Keep reviewing your current setup

Every business has its own way to manage things. If you have set up a good system to manage business operations and you have a proper setup for inventory management, accounts management, and you are keeping all the good records, then you must also review it frequently. Every business operation should be overseen by a responsible person. If you are setting up a proper system to manage your business operations, then you should also focus on reviewing your current setup to see if there is any glitch in the system. It will help you improve things and you will be able to eliminate the factors that can create problems for you.

Moreover, you can also find more ways to improve the expense management and cash flow management if you are reviewing your current setup frequently. Make sure that you are always looking to introduce new and improve methods to increase the productivity.

You must have a continuous improvement approach

When you are trying to improve your current business situation and you want to introduce multiple ways to increase the productivity of your business, then you should search for the ways that will help you improve the current business scenario. It can only be done if you are taking a step by step approach to increase your production line’s efficiency. If you are looking to increase the productivity, then you will also require more team members, and you can only expand if you are managing things properly. With small steps, you can achieve great results.

However, the whole improvement process can also take a lot of time and you will have to be patient and passionate. If you are working passionately, and you have a positive approach to make things better, then you will be able to get the desired results.