Accounting Basics Archives

Tips on how to control your Cash Flow

by admin | Dec 17, 2019 | Accounting Basics, Bookkeeping

Cash is your businesses super power and in order to operate efficiently and effectively while accelerating your business growth you must maintain a positive cash flow always. Below are a few tips that will guide you along the way: Get clear on the cash outflows in your business. This means the when, the how and why to every penny that is leaving your business. Also determine the R.O.I ( Return on Investment) of the expense before you make any purchase. Is the outflow needed in the operations of your business or is it just a money wasting outflow? Get CRYSTAL clear on every single coin that is leaving your company. Operate on 80% or less of your revenue. Assuming your business earns a monthly revenue of Kshs. 100,000 you can not spend more than Kshs. 80,000 on expenses. Set a cap on how much you should spend per week or per month in your business. Put the extra Kshs. 20,000 in a separate cash reserve for your business. Set spending caps for each category Let’s say the categories for your business are Inventory, Operating and Marketing expenses further break down the Kshs. 80,000 mentioned earlier. e.g 50% on Inventory, 30% on Operating expenses, 10% on Marketing expenses and 10% on miscellaneous. Hire a Finance Manager They will hold you accountable and provide insights and oversight on how you will achieve your MONEY GOALS. They will make sure that you that you don’t exceed your allocations and provide an accurate, reliable and timely Financial Management System. On top of that they should be able to dissect that information and provide you with strategies that will help you increase Revenue, CashFlow and generate Profits.

Accountant, C.P.A, C.F.O? This is how you know what you need

by admin | Oct 28, 2019 | Accounting Basics, Small Business Advice

The main purpose of a business is to make MONEY and the only way to know if you are doing so is by having a proper financial management system in place irregardless of whether your business is just one month old.

Based on your revenue the following tips will help you figure out which kind of financial help is suitable for your business.

1.If you are making less than Kshs. 200,000 p.m

During the early stages of your business you are validating your business idea. You are testing if you have a sustainable business that has longevity and so your focus should be on creating recurring revenue.

Don’t bring on anyone to reduce expenses.

Separate your business accounts and personal Accountant.

Use Quick books self employed, Quick Books online or Waves.

Hire a finance expert e.g. Quick books expert to TRAIN you.

2. If you are making between than Kshs. 200,000 – 500,000 p.m

The key focus should be on streamlining processes and improving margins. Focus on being efficient with your time and resources because you can make more money without making more sales.

Bring in an Accountant or specialized bookkeeper at least once a month.

The 80/20 rule says that 80% of your income comes from 20% of your clients so improve your value and offer by streamlining inefficiencies.

Determine your low profit products or services and improve or eliminate them.

3. If you are making more than Kshs. 500,000 p.m

It’s about scaling your business strategically and the key is to become proactive as opposed to being reactive to your business.

Bring in a Virtual C.F.O who will help you predict your future and bring your business to the next level.

Create custom dashboards and reporting

Build out a tax strategy.

Let’s get a clearer understanding of the role of each person that you bring on board.

Bookkeeper

Has the knowledge of doing basic accounting by managing activities such as making sure invoicing is done, bills are paid e.t.c

Accountant

Is in charge of tracking the day to day transactions of your business so that they are properly recorded. Makes sure that past records reflect in the financial data.

Virtual C.F.O

Takes the financial information prepared by an Accountant and figures out how to get to the next level. C.F.O’s are forward thinking and usually take on outside data i.e industry analysis to make decisions.

And that’s how you know .