Angry Vendor

A company’s account payable (AP) operations could easily have a major impact on its overall success. What that means is that businesses should be following best business practices if they’re going to make their mark on the business world and continue staying ahead. This includes building credit, avoiding the collection agency for as long as possible, and establishing a reputation as a paying customer.

Despite we all know about the importance of paying bills on time, it’s quite common for entrepreneurs and business owners to find they are dealing with angry calls from vendors because of overdue invoice payments. They also often receive emails and other written threats from vendors. You need to know how to handle these for your business and to prevent vendors from charging a late fee.

Guidelines For Dealing With Payment Reminders Emails And Phone Calls

Step.1 Verify the invoice

Before pushing through the payment, business owners should consider that it might NOT be their own fault. In some cases, it’s an error on the supplier’s end. This happens all the time.

Perhaps the vendor has improper accounting records. It is just as plausible an explanation as to the one where your accounting department is at fault for not making that particular payment. We have seen this happen many times where vendors fail to keep an account of unpaid invoices. They may lack the infrastructure or organization to send out bills in a timely manner.

In other cases, it could be a scammer trying to get money out of you and imitating the vendor. The Federal Trade Commission, or FTC, calls this phishing. Check the emails or phone calls for typos. Call the company’s customer service if you feel that an invoice is shady. The angry person may be someone hoping to bank on your impulse to pay immediately without checking.

Another step is to match the invoice number with others that you’ve gotten. PayPal numbers invoices automatically, so they have a pattern logic.

Suppose that you have verified the caller or email is legitimate. Often, the threatening vendor might be pretty forceful. It is important to consider that they might not have it all together on their end. It’s imperative to slow down and resist the urge to panic.

Don’t push the invoice payment through too quickly. It can negatively affect you, your AP team, and your entire company. It can cause elevated stress levels for everyone involved when the demands from the vendor include an invoice that might not be valid.

Step.2 Let your accounting process play out

Invoices can come in that are actually duplicates or have incorrect accounts receivable information. Maybe the amount or the quantity is completely different from what the company and the vendor originally agreed upon. While those are all things that a well-designed accounts payable system should catch, if an invoice is pushed through the system by an angry vendor, then the checks and balances of the AP system get skipped or bypassed. This could cause things like invoice discrepancies to get missed.

If you have a proper accounting process, you could rely on that system working and be able to reconcile the issue. It should also ensure that whatever is paid to the vendor is exactly what is supposed to be paid. In the event that you receive threatening calls or emails and the vendor starts coming down hard on your accounting department, causing them to forcefully push the payment through

Step.3 Deal with it

If the invoice turns out to be a valid one, don’t panic. The point is that slowing things down while taking a good long look into the company AP system/processes can lead you to identify whether or not the vendor’s demands are legit or not. Are their threats backed up by fact and is it true that they simply weren’t paid on time? If so, then it’s definitely important to get busy and process the payment as quickly as possible.

However, then it’s extremely important to investigate the AP system and AP processes. Identify where it broke down, what happened and why, and which chain in the AP process is actually broken. Fixing the chain and the process can ensure that the situation won’t ever happen again in the future.

Implement An Automated AP Process if You Don’t Have One.

In many ways, your accounting can benefit exponentially from implementing AP automation, E-invoicing, and Dynamic Discounting. In these cases, the payments are taken out of your bank account or credit card on a certain day. You just receive an email notification, or accounting does. Later you can check payments against credit cards.

For example, invoicing errors and misplaced threats on the part of a vendor could be nipped in the bud as soon as the invoice was submitted electronically to the AP department. The automated system would catch it immediately and eliminate any confusion, stress, or even overpayments. In general, it can eliminate late payments, prevent errors, and save a great deal of time and money. If you’d like to tailor a process for your business, check out our Business Process Design x Build. 

Manage Your Cash Flow More Easily With DeepSky

At DeepSky, we’re well acquainted with these processes and can help any business. Whether a startup, small-medium sized, or well established, we work in just about any field of business to set up these systems. Our Financial WingmanTM program is designed to help you with any accounting obstacle and help you pay on time.

Contact us today to get a quote. Make sure that you get paid faster, build your credit score, and ensure your business will thrive with our help. Lastly, if you love our content, we highly recommend checking our sister company MEASURE x HACK for more Ideas x Systems x Tools.

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TikTok

With the rise of its popularity, TikTok, a video-sharing social platform, dominates the digital space. Several factors contributed to its success.

Savvy Tech Design

Its user-friendly feature and tech flexibility allow anyone to get creative within a few simple taps. Its ability to be shared and lived on different platforms allowed the content to reach a broader audience. Popular genres include 10 seconds of dancing and lip-syncing, outfit ideas, financial advice, lifestyle vlogs, makeup videos, current events updates, and trendy challenge games. Within the advice category, personal finance surfaced. Finance, as close and vital to living hood and well-being was treated as a taboo subject for too long, but TikTok opens a door to financial literacy that DeepSky has been advocating for.

Users

TikTok users are primarily GenZ, the generation born after 1996, marking the first “digital natives” generation. They are known for being politically progressive and financially pragmatic, due to seeing their parents taking a big hit during the recession. They also come with a fighting spirit against the status quo, shined through the content where they got a humorous dig at hedge funds that practice predatory investment when the GameStops stock incident unfolds. TikTok combines with a unique audience lowers the bar to investments that used to only be accessible to the elite class. Whether you like it or not, TikTok and GenZ are here to stay.

TikTok Influencers

@Humphreytalks with 1.6 million followers penciled his bio as “personal finance and investing made easy,” 6 words that summed up what his brand is all about. He provides concrete financial advice on picking between a 15 years mortgage and a 30 years mortgage. He breezes through how credit scores work, easy to use stop losses in stocks, and so on. This information seems obvious to people who are already well advanced in the business world, but they’re not common to everyday folks. His timeliness in response to current events has attributed to his popularity. He dissected how Costco keeps its hot dog, I would argue its most precious product, priced at $1.50 after 36 years. Playing right into the hearts of peoples’ nostalgia.

@Sarafinance also garners views on TikTok. She focuses on practical advice on how to get rich by breaking down the stages of investing and the threshold of money you should have. She amuses the audience by giving an inside peek at how wealthy people avoid hefty taxation. Her amusing content lets people browse houses on Zillow and her breaking down the investing fee from the downpayment to mortgage and the return rate if one decides to sell. Ah! A person can dream.

How Good Are The Advice?

The short answer is- it depends. We should always be wary of financial information from sources we’re unfamiliar with. Unable to verify the background of our beloved TikTok influencers, it’s better to play it safe. They may be sharing financial tips that worked for them but there are chances that they won’t work for you. Similar to accounting, different sets of problems require different sets of strategies. At the end of the day, they’re not economic laundrette Paul Krugman, so perhaps take their information with a grain of salt. However, they do give practical advice that you can snack through the day or use as a pick-me-up.

TikTok shows us that it’s possible to make daunting information like money and numbers light. DeepSky has been advocating for financial literacy for all by educating our clients and simplifying complex accounting problems. We are on the side of entrepreneurship and will continue to be an ally to all the hustlers out there.

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Going broke is not an option when you run out of cash, your business is no longer sustainable. That means knowing how to protect yourself and your interests in a time of crisis. Measure your business health so that you know how to survive during tough times.

Benchmarks For Business Health And The Bottom Line

These benchmarks can help evaluate your ability to survive and adapt. Companies and industries can use them to decide what policies and strategies need to change.

Competitive Advantage In Your Industry

How unique are you within your industry? What makes your product or service different from that of your competitors? If you have a device that no one else can replicate, then that increases your odds. Now is the time to increase advertising, so that people will notice that you are occupying the spaces where your competitors formerly resided.

Technology is one of the most volatile industries in this sense; a new advancement can disrupt your current operations and render them obsolete. If you are in the tech industry, always have a research & development budget, so that you can prepare to switch when trends work against you. Even if you aren’t in technology, knowing the newest tools out there can help you reduce costs.

Customer Care

Your customers are the main reason that you will survive. If you build customer loyalty and trust, then you have a base that will not leave you. That means showing that you care about them, ensuring they have a good purchasing experience, and going the extra mile. You cannot cut back on quality here.

Do your best not to cut prices; this will eat into your margins. Instead, build a loyalty program and honor incentives. Simplify complicated terms into understandable explanations, and troubleshoot as much as possible. If using a chatbot, check transcripts to ensure no one is frustrated by certain answers.

Staff Management

How well is morale during a crisis? Is everyone prepared to pitch in and help? If so, then you can handle some of the financial issues. Good employees are the backbone of your business, from the entry-level intern to the highest manager.

Evaluate duties and the value that each person is contributing. Try to avoid layoffs as much as possible since they can reduce morale and if they need to happen, prepare to break the news gently. Communicate about new strategies and policies clearly, to reduce confusion and poor communication.

Survive The Next Economic Crisis With DeepSky

DeepSky wants you to handle any economic curveball that life tosses at your business. When you used our Financial WingmanTM program, you receive customized guidance and strategies on how to maintain consumer confidence and credit ratings.

Reach out to us today to prepare for the long term. DeepSky believes in preparing numbers to prepare for the worst and hope for the best, as the cliche goes.

The post How Healthy Is Your Business Against An Economic Downturn? appeared first on DeepSky.

How are you handling disasters in real-time? These can include hurricanes, workplace accidents, or recessions. Can you foresee economic downturns and know how to ride out the metaphorical storm? If not, then consider how you will survive especially when each day seems more chaotic than the previous one.

How To Handle The Worst-Case Scenarios

You can make crisis management decisions into a system when cash is involved. While CEOs need to be flexible within the moment, a few guidelines and steps can help.

Make Sure You Always Have Cash

This is our main point: you need to have available cash to stay in business. The minute you run out, your business is no longer profitable and you need to close shop. That’s why you can’t reinvest every dollar of profit into the business. Some money needs to be put aside for a rainy day.

We have seen that having an emergency cash flow line helps those in a crisis. Solicit help from angel investors or friends that may have some cash on hand, with paper guarantees that you will pay them back. Proactively apply for business loans, and maintain a strong line of credit.

Cut unnecessary expenses. Reduce travel, especially with the COVID-19 crisis. Does everyone have to work from home? Then try to renegotiate your lease. Review your owners’ salary, and determine that it is fair relative to the business.

Detail Procedures You Can Implement Quickly

Time is of the essence. Your lack of action can speak volumes to employees, investors, and customers. Thus, you need to prepare to act. It can save you costs in the long-run, as well as a reputation.

As a CEO, go into specific procedures that can cut costs and increase cash flow. If you decide not to cut prices on products — and we recommend never doing that — outline how you are going to increase the profit margin regardless.

Why do you need to be specific? So that people can follow the numbers, and repeat the process. Then you can identify areas of weakness and improve them. No one can misunderstand them.

Prioritize Communication

Along the supply chain, groupthink and poor communication can lead to exponential desires. Especially with the Internet sending messages within seconds, we have no excuse for when a game of telephone gets played. This especially applies when we are sending and receiving invoices, needing to pay them.

Have your PR team and social media managers on the same page when communicating with customers. Reach out to bank representatives and investors, to explain clearly what you need.

Send invoices on time, as well as regular reminders. Keep track of your payments and paperwork in order.

Post-Crisis Strategies

How about after the danger is past? The tremors have faded, and everyone is back in the office as usual. What can you do to ensure that the business operations resume as usual, as well as cash flow management?

First, thank your employees and investors for weathering the storm with you. Employees are the reason that you are still in business. Show that you appreciate their hard work. Investors want proof that

How does cash flow weigh into this? When cutting expenses, do what you can to not cut pay; if you have to, explain why to everyone clearly. Cut your own salary as well.

Improve Your Management Team With DeepSky

DeepSky wants to ensure that business leaders can handle their financials during any crisis. We offer outsourced accounting services tailored to your needs at affordable prices. Our Financial WingmanTM program is designed for custom advice and strategies.

Reach out to us today to get started on preparing for the future. Let DeepSky handle your working capital during the worst of time. We’ll ensure that your business model can handle the short-term and the long-term.

The post Cash Management to Help CEOs Grow and Thrive During a Time of Crisis appeared first on DeepSky.

There are many terms for similar professions that tend to be used interchangeably by mistake. A few that come to mind—psychologist and psychiatrist, paramedic and EMT, nurse practitioner and physician’s assistant, also architect and contractor. For people who work in these industries, the differences are apparent, but for those who do not, it’s easy to make the mistake that the two jobs are more or less the same. We can tell you that accounting and bookkeeping are not the same at all.

Let’s explore each role further.

Bookkeeper versus Accountant

Bookkeeping and accounting are both key business functions within the accounting department, that provides strategic guidance to the clients. They work with numbers to provide financial advice. Beyond that, there are few similarities.

In the simplest of terms, bookkeeping is the recording and classifying of financial information after the fact, and accounting is actually part of the system that produces the financial data. They keep track of your financial history to ensure that your books are balanced.

A higher level of accounting also includes data analysis and interpretation. An accountant will make recommendations based on your numbers. They look forwards rather than backward to ensure that your business can grow or prepare for hard times.

Difference Between Bookkeeper And Accountant

The biggest contrast between hiring an accounting professional compared to a bookkeeper is the use of data and its relevance in time. A bookkeeper will keep your business’s financial records in line, to avoid liability. While the process seems like simple data entry, they ensure that your general ledger remains updated.

Bookkeepers record the business’s daily transactions, while accountants verify, analyze, and interpret the recorded information. But, what does that mean exactly and how do those differences affect you and your business?

What Does A Bookkeeper Do?

A small business bookkeeper typically uses a ledger or journal to log the business’s daily financial transactions—including payments, sales, receipts, and purchases. The goal is a balanced accounting system with a matching total of debits and credits. They keep track of your history to ensure everything adds up in the long run.

Other job duties include creating and processing invoices, covering payroll-related work, posting both debits and credits, and maintaining the ledger. Bookkeeping is sometimes done in-house (possibly even by the business owner) using software like QuickBooks or Xero—or by hiring an external bookkeeper.

To be a bookkeeper, you do not have to have a formal college degree but do need a high school diploma. There are bookkeeping programs at the certificate level although it is not required you become certified. Learning bookkeeping software can help ensure your position remains relevant.

Financial decisions cannot be made strictly based on records provided by bookkeepers, and they also do not participate in creating financial statements. Bookkeepers are ideal when it comes to handling expenses but should not be asked to interpret any of the information. The result of successful bookkeeping is a clear, accurate, and current set of financial data that tells you exactly what your business did within a given period of time.

What Does An Accountant Do?

Accountants, on the other hand, look at the complete picture of the company’s finances based on the bookkeeper’s compiled information. At its most basic level, an accountant’s job requires them to be part of the system that produces the actual fiscal data.

At a more advanced level, accountants are capable of using that financial information to understand the health and future needs of the business. Top-notch accountants have the ability to help entrepreneurs make informed fiscal decisions—utilizing metrics and financial data. This could include helping to create strategies for improvement, find ways to prevent fraud, and with the preparation for tax season.

Other accounting tasks include preparing financial reports, evaluating operation costs and cash flow, taking points during an audit, projecting future monetary numbers, and helping the company understand the impact of financial decisions. Accountants rely on the scrupulous records maintained by bookkeepers to analyze the company’s data, so they can provide leadership with valuable insight into the company’s strengths and weaknesses.

The Requirements To Be An Accountant

Financial decisions are made based on the advice and recommendations from the accounting department. The accountant prepares company financial reports, helping business owners better understand profitability and the financial impact of their decisions.

Compared to bookkeepers, accountants perform more complex job duties and are, therefore, more expensive to employ. To become an accountant, a Bachelor’s degree is the minimum requirement followed by a lifetime of ongoing education to continue developing their skills and expanding their understanding. Some accountants may also complete a Master of Business degree in accounting, to specialize in specific fields.

Why Small Business Owner Should Outsource Their Accounting

A functional accounting department typically requires three people in different roles to maximize both effectiveness and to ensure proper checks-and-balances. As companies try to save time and money, many outsource their books instead of hiring in-house employees.

Outsourcing is a widening trend as businesses recognize the value addition and improved efficiency. It can be a great way to make better use of time, reduce overhead costs while increasing efficiencies, and improve cash flow and budgeting practices. It also allows you to align yourself with a team of qualified and dedicated experts—who have a wide knowledge of the subject and concentrated expertise.

Entrepreneurs’ Biggest Challenges

A substantial problem I see in small businesses is that a bookkeeper will receive high-level tasks and waste time struggling to complete them. Alternatively, a high-level accountant wastes valuable time doing mundane bookkeeping tasks.

Both situations are senseless because the wrong talent is doing the wrong tasks, and it is wasting the very two resources few entrepreneurs can afford to squander: time and money. To get a good feel on what you should pay for your accounting efforts based on your needs, check out our handy My Accounting Budget calculator.

Why Full Charge Bookkeeping Is Outdated

Incidentally, as you navigate whether or not your business needs a bookkeeper, an accountant, or both—decades ago a position was invented for busy entrepreneurs who needed someone that knew a little bit about everything (accounting related).

“Full charge bookkeepers” were a kind of a jack of all trades, and hired to assist with every stage of the financial process. They were responsible for recording and paying bills, writing invoices, collecting payments, and maybe even doing some light reconciliation at the end of the month.

Most of these individuals were adequate bookkeepers, but seldom had the insight to make sense of accounting as a whole. Because of this, an outside CPA was usually called upon several times a year to do a general oversight and make sure things were being done correctly. Thus, they add to your costs rather than reduce them. You would get more value out of outsourcing your accounting and bookkeeping respectively.

We cannot in good conscience recommend you hire someone for this position. The full charge bookkeeper is now a thing of the past, mainly due to their limited scope and knowledge. Plus, with technology and new thinking, companies have options. The position of a full charge bookkeeper can often be replaced by a complete Outsourced Accounting Department—with a carefully tailored team. In a firm environment, accountants are held to a higher standard of knowledge than individuals with their own practice.

Most firms provide their employees with training, seminars, continuing education hours, and encouragement for an advanced degree.

Bookkeeper Versus Accountant? Which One Does Your Business Need?

Which one does your business need? Well, that is completely dependent on where you are at with your business. My suggestion is to start off with a bookkeeper and graduate to an entry-level accountant as soon as you can. That is because the incremental addition in costs to upgrade to an accountant will be easily covered by the additional benefits yielded.

With that said, brand new business owners might require an accountant initially, to set up an accounting strategy and determine which method (such as cash-based or accrual-based accounting) would work best for the business. No matter if you choose a bookkeeper, an accountant, or both, you can consider it an investment into your business that will undoubtedly pay off over time.

Optimize Your Accounting Process With DeepSky

DeepSky wants to provide more than outsourced accounting services. We want to customize our services for you to ensure that your business can grow and thrive. Our FinancialWingman™ program goes beyond record transactions to help make strategies based on your numbers.

Reach out to us today to get started. With our specialists and their expertise, you will learn to leverage your recorded financials for good business.

The post What’s The Difference Between A Bookkeeper And An Accountant? appeared first on DeepSky.

What’s more, revenue can assist with calculating profit and serve as a viable metric to know if your products and services are reaching customers. The marketplace determines if you have value and speaks with numbers.

How To Calculate Revenue

We believe that revenue is vanity and that cash matters more. Nevertheless, calculating revenue is still necessary. You can’t just toss money at bills when costs spike in the middle of a growth period. That’s an easy way to solve superficial problems rather than dig deep into finding long-term solutions.

For starters, the minute that you run out of that cash from revenue, then your business is dead. You are no longer profitable when your business is not making any money.

The first step after calculating a simple revenue is to figure out what metrics you want to use, and if you have a viable record for tracking which products and services as selling. This can include a quarterly income statement, which will use the revenue within a certain time period to calculate profit. Other options can include looking at incoming cash flows and to identify the source.

In our experience, the simplest way to calculate revenue is to multiply the number of a certain product or service sold against the set price, within a designated time period. In this case, the time period would be 3 months’ worth of business. This result gives you a benchmark, and you can then use it to see if current performance is meeting expectations.

We believe that you need to find an existing metric and then work with it to assist with generating revenue. This gives you a starting point when you pair with a goal for numbers. That’s not the only factor, however; you also want to pinpoint the types of customers that you want to attract. Target audiences are key to growth especially when you are starting to see traction.

You may have strength in repeat buyers rather than attracting new ones. Perhaps your website doesn’t have as many conversions as you would like. No matter the issue, when you identify it, then you can act on it.

Plan For Long-Term Revenue With DeepSky

DeepSky is ready to help you plan successful business ventures during these uncertain times. With our FinancialWingmanTM program, you will get specialized accounting services for a fraction of the price that you would get from in-house professionals. We also customize our services so that you can receive exactly the advice that you need.

Reach out to us today to get started. DeepSky wants to take you to the next level so that you can stay healthy and keep an eye on your business operations.

The post Do You Know How Much Revenue You Will Generate In 90 Days? appeared first on DeepSky.

What Does Profit In A Business Mean To CFOs?

The CFO’s job is to manage your numbers to help you turn a profit. They look towards the future so that your business can grow in the long-term. Your ideal CFO is a leader in your company that turns the tide.

To a CFO, profit means that they have introduced vision and clarity to your business. You also have a healthy and sustainable enterprise, which looks good to potential investors. When you can attract capital for future investments and emergencies, then you are in good shape.

How To Increase Profit In A Business?

We believe you can increase profit by keeping your processes and operations simple. Reduce your accounting infrastructure and ensure that business activities are not too complicated. Otherwise, administrative costs increase with the time that managers have to input on a regular basis.

You want to keep your admin operations lean. That way the investments can go into creating products and services and finding customer leads. With that said, there are other strategies that you can implement in the case of an economic downturn.

Strategies To Increase Your Profit

Maintain Or Increase Your Advertising

During a recession, your competitors and other businesses will be cutting back on advertising. This takes them out of the public eye. As a result, they become less reliable and relevant to the designated target audience, while advertising networks need to reduce their charges towards companies.

Take advantage of reduced advertising costs to maintain or increase your spending. You’ll get better deals and people will remain aware of your brand. They’ll think that you are strong and reliable, and stay with you.

Track Your Cash Flow

Cash is king; that is one of our mottos. When your business has incoming revenue streams that outnumber what goes into paying bills and other costs, then you remain in the black. The minute you run out of cash, it’s game over. You have to close up shop or file for bankruptcy.

See how cash is incoming and outgoing through your business. Where do you spend the most, and which products or services are bringing in the most revenue? Where can you make cuts? See if you can negotiate lower deals on rent and utilities with your landlord and power companies.

Check Your Credit Score

You want to have good credit for your business, for two reasons. A healthy credit score allows you to borrow against your debt. This works when you need emergency cash in a hurry, or when you want to expand your venture to take advantage of new opportunities.

Conversely, a low credit score does not just mean that you are locked out of good loans. It also could signify unpaid debts or a negative reputation in the financial sense. You want to avoid phone calls from collections and creditors

Protect Your Business In The Long-Term With Deep Sky

DeepSky wants to ensure that you can survive any financial crisis. Our team of specialized accountants and outsourced CFOs will ensure you received customized services at a fraction of the price. Our Financial WingmanTM program is designed to assist you

Reach out to us today to get started. DeepSky is ready to help you make your business recession-proof and take your profits to the next level.

The post 3 Strategies To Increase Profitability During A Recession appeared first on DeepSky.

Whether or not businesses have to shut down proactively, they need to anticipate disruptions and radical changes within the select industries. That’s where the numbers can help.

Do You Really Need To Analyze Your Financial Statements?

Yes, you always need to analyze your financial statements regardless of the current situation. During healthier economic cycles, data about your sales and profits can help you pinpoint opportunities for growth.

With that said, there is no telling what will happen six months from now. We believe that financial analysis and forecasting must not be tedious.

What Is the Importance Of Financial Statement Analysis For Your Business?

Financial statements measure your business’s health and if you can continue to operate as normal. You can spot red flags ahead of time before they become a problem.

These statements also measure cash flow, and how much fluidity your business has as a result. Cash is tangible that you can use to exchange for goods and services while taking timing into account of when you buy raw material and when you sell a finished product. The day that you run out of cash to pay bills is the day that your business dies. Thus, you want to recoup every dollar you spend in revenue as soon as possible.

In addition, various statements notify you about ongoing trends and patterns within your business. If an economic downturn is looming, you can decide proactively where to cut costs and aim to increase revenue. The same goes for deciding when to switch suppliers for different raw materials, or which distribution systems are more efficient.

The Steps Of Accounting Analysis Of Financial Statements

Accounting analysis is not rocket science. It requires a different set of calculations, for one, and a financial perspective, for another. You need to know some simple guidelines and processes.

Set A Standard For Existing Statements

The first step is to figure out how the current financial statements look compared to industry standards. Sometimes it is easy for businesses to overlook important data to input into their numbers. View balance sheets, income statements, and so forth to assess potential gaps such as ongoing investments and sources of cash flows. Note if there are missing assets or vehicles, and always track where the money is going. The results may surprise you.

Include Forecasting Despite Economic Uncertainty

Even if no one knows what will happen with the pandemic, analysts should still make educated guesses. They can use math and relevant laws to reasonably predict what will happen. In the case of COVID-19, for example, it is reasonable to predict how a business will do if international shipping is restricted or outright prohibited.

Assess Profitability And Risk For Business Operations

This is fairly straightforward. Risk does not mean operating during a pandemic and risking getting ill. It refers to potentially incurring a loss on an investment, including your business ventures. Thus, you need to determine the risks that come from running regular operations as usual or on a limited basis, or if it makes sense to temporarily close shop and furlough employees.

Refine Your Accounting And Financial Reporting With DeepSky

DeepSky has spent years handling clients’ financial positions to help them reach the next level. With our Financial WingmanTM program and outsourced CFOs, you can receive customized accounting at a lower price than from in-house experts.

Reach out to us today to get started with a financial wingman. DeepSky will help you understand risk factors, and how to thrive in the face of economic challenges. Trust us to interpret the numbers and translate them into viable business strategies.

The post How to Analyze Your Business’ Financial Statements During COVID-19 appeared first on DeepSky.

Anyone with any amount of accounting exposure can tell you that the 3 most commonly used financial reports are the following:

1. Profit & Loss Statement, also known as the income statement, profit & loss report, or simply the P&L.
2. Balance Sheet
3. Statement of Cash Flow or Cashflow

While Steve Blank suggested that metrics may be more important than these traditional financial statements for a startup company, one cannot argue the relevance and importance of the information these reports provide. Fred Wilson of A VC is doing his MBA Mondays on the basics of these three reports, what they are and how they are important. See What is the Profit and Loss (Income) Statement?

What Is A Profit And Loss Statement?

A profit and loss statement is a document that covers revenues, costs, taxes, and net profit overall within a designated time period. That time can be as little as a few weeks or as much as a year. In any case, it provides a picture of your financial health and how your business is doing.

The statement itself has several categories: revenue from your business, fixed costs such as rent, variable costs, the cost of goods sold, net profit loss, income before taxes and net income for the designated time period. Employee salary, credit card bills, and raw material invoices also fall under this category.

Profit and cash are not the same; cash takes timing into account and the tangible amounts that you have on hand for your business. You can have high profits recorded, but a negative cash flow if you sell a product but receive a delayed payment. If a business owner or manager can’t distinguish the two, they run the risk.

How To Use A Profit And Loss Statement

As mentioned, a profit and loss statement will organize all of your revenue and expenses. This is important because the minute you run out of cash, you are done as a business and have to declare bankruptcy. A cash flow statement can assess how much cash you have at the moment, but profits and losses allow you to look at the whole picture and pinpoint it.

You also won’t overanalyze every project, to figure out the profitability of a single customer interested in your products and services. We advise that sometimes, it’s better to not fix a broken project and figure out what is your golden ticket. That can take time and money out of your business, and the benefits may not outweigh the admin costs. Instead, the profit and loss statement lays it out in black and white which projects are not viable.

Expenses and bills are another concern. You may analyze if you are paying too much on rent relative to the revenue earned from a brick-and-mortar office. A CFO may recommend changing the facilities or moving locations to pay less in rent.

Receive The Best Profit And Loss Services From DeepSky

At DeepSky, you receive the stellar outsourced accounting services from all of our specialists. Our Financial WingmanTM program is designed to cater to your individual business needs. Have an outsourced CEO providing the strategies and numbers you need to reach the next level.

Reach out to us today to get started. Let a Financial Wingman show you how to leverage your profit, and outperform yourself.

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