Part II – What do your company’s vital signs tell you?
Of course, if you have organized accounting with an accounting office that gives you timely access to your company’s vital signs, you should pay special attention to some very important KPIs (Performance Indicators). Here are some tips for you:
Cash Flows – The main factors contributing to difficulties in your company’s cash flows are as follows:
– Delayed payments from your customers;
– Payment conditions to suppliers on terms unfavorable to the company;
– Very low gross margins for the sale of products or services;
– Stocks with a disproportionate amount invested with a very low turnover rate;
– Fixed cost structure too high for the sales made;
– Among others to be analyzed case by case.
Many companies, despite having been formed with a very promising business idea, fail due to lack of money to cover the investments and/or the current costs of their activity.
This indicator is one of several very important for your company’s financial health.
Too high stocks – What is the indicator measure of the value you have in stock? Carefully controlling the volume/value of the items you have in stock is very important for your company’s financial health. It is even more important for articles with short shelf life. Do you know the value of this KPI in your company?
One thing is for sure, the faster your stock turns, the smaller the investment required.
Payments to suppliers on the rise – Payments to suppliers result from purchases made on credit for the products you sell or the services you hire.
A track record of fulfilling the commitments your company has made with its suppliers is essential. In addition to ensuring the deepening of the partnership, it is a very important credibility factor for your business.
Commitments to its suppliers must reflect the practices in its sector of activity and must take into account the average payment terms of its customers. Of course, if the credit sales component in your business is very small, this guarantees you greater room for maneuver and strict compliance with your commitments, which will only not occur in cases where the organization of accounts payable is deficient.
Profit/Loss – Do you know how your company’s results are in good time?
The objective of a company is to make a profit.
–Without profit, there can be no investment that guarantees better working conditions, that guarantees more advanced equipment and systems, that guarantees improvements in productivity ratios.
– Without profit, it cannot improve the conditions of its workers, the vast majority of entrepreneurs, who invest in their micro, small and medium-sized companies, included.
– Without profit your company dies.
If your income is less than your expenses then there is a serious problem that must be tackled quickly. The gross margins of the products or services you sell must be analyzed to be able to determine the concrete steps to be taken. Its operational and structural costs must also be seen through a magnifying glass to see if they are oversized.
The accounting organized by G-Finance gives you access to the indicators necessary for an advanced management of your company.