How To Harness Data From Your Bookkeeping Software
Bookkeeping software is better than it’s ever been. From QuickBooks to Kashflow to Xero, there are all kinds of advanced, user-friendly tools at the disposal of the average business owner, handing every SME the essential equipment they need to keep their accounts in check.
But access to these tools alone is not enough. You need to know how to harness data from your bookkeeping software in order to understand your financial situation. Is there opportunity for growth? Do you need to cut back on certain expenses? Is there an area where your business is lacking?
Follow these tips to interpret the data and get savvy with business finance:
Income analysis reports
Revenue is all well and good, but income analysis reports provide greater insight as to where the main sources of finance are coming from and why. These feedback forms detail income by source to provide you with a clear view of which revenue streams are yielding results and which are not.
Income analysis reports can also itemise revenue by region – to show you the areas where business is coming in from – and by stream analysis – which provides a picture of the products and services selling at their peak.
By tapping into income analysis reports, you can gain a clear picture of your earnings, and make an informed decision on how to focus your efforts going forward. It might be that you need to nurture a particular revenue stream, or call it a day and shift your resources to a more profitable area of the business.
Monthly profit and loss statements
A glance at your monthly profit and loss statements will reveal whether your business is in the black or the red in terms of revenue, but the data included can also help you make big decisions when it comes to altering your financial projections. Profit/loss statements offer the information you need to appropriately adjust your forecasting and ensure there’s nothing chipping away at your profit margins.
Misinformed projections can cause all kinds of problems in the future, so having an accurate idea of your company’s financial position early on is essential to keep the ship stable.
Cash flow and profit forecasts
Forecasting your profit is made easier and more reliable with monthly profit and loss statements to consult, but you’ll also need to take advantage of the data supplied by cash flow and profit forecast documents. Perusal of these statements allows you to determine what has happened to your business over the past few months/years, what needs to change in order to improve potential outcomes, and what kind of results you can expect to see in the short to medium-term future.
Get in touch with Nabarro Poole to learn how to use the data generated by your bookkeeping software to proactively enhance the fortunes of your business. To arrange your free initial consultation, get in touch by phone on 0161 998 4276 or send a message using our contact form.
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