December 2023 - Plain English Guide to Profit and Loss
Here's our Plain English guide to profit and loss and what this report reveals about your finances.
What is profit and loss?
Your profit and loss statement is commonly called your ‘P&L’. It’s also sometimes referred to as your income statement or statement of earnings.
Your P&L is a breakdown of your company’s revenue (money coming into the company as sales and other income) and your expenditure (direct costs, overheads, expenses and other costs).
As a business, you obviously want to turn a profit and make money. Keeping a close eye on your P&L allows you to track your revenues and expenses over a set period, and look for ways to boost your profitability as a business.
How does profit and loss affect your business?
Being in control of your financial management is hugely important for any business. Your P&L is one of the main ways to track and analyse this financial performance.
To manage your P&L effectively, it’s important to focus on:
Revenue management – to keep your revenue (income) healthy, you need to be proactive about generating sales and monitoring your revenue streams. This helps keep your income steady and stable, while also identifying areas for growth and improvement.
Expense control – tracking and monitoring your operating expenses helps you spot where spending efficiencies could be made. Whether it’s overhead costs or inventory overspending, your P&L helps you spot unnecessary costs and boost profits.
Cost analysis – analysing your business costs can help you spot the opportunities for saving money. Whether it’s agreeing a discount for buying in bulk, or switching to a new supplier with cheaper rates, there are plenty of ways to cut costs and be more profitable.
Monitoring gross margin – reviewing the company’s gross margins helps you assess the profitability of each product or service. By pushing up prices, or cutting your production costs, you can boost those margins to drive up profits.
Financial reporting – preparing regular profit and loss statements is key to good financial management. Reviewing your P&L helps you assess the overall financial performance of the company and make better-informed decisions.
How can Finnegan Partners help you with managing your P&L?
When you’re in control of your P&L, you have a tighter hold on the reins of your profitability.
As your adviser, we’ll help you run regular P&L reports as part of a monthly or quarterly package of management information. We can help you track, review and analyse your revenue and expenses to spot the best opportunities for boosting the company’s profits.
If you’d like to know more about the impact of profit and loss, we’ll be happy to explain.
Get in touch to chat about managing your P&L by contacting our office.
September 2023 - 5 vital things to set up before you pass away
No-one wants to spend too much time thinking about their own mortality. But the reality is that forward planning removes a lot of the uncertainty for your loved ones in the event of your death. The following guidance may also be useful to help you guide others.
Passing on without any clear legal instructions regarding your finances, assets and estate can leave your nearest and dearest in a very difficult position. It’s far better to make plans well in advance and to have these documents safely stored away, should they be needed.
Here’s our five-point checklist of things to consider as part of your end-of-life planning.
Having a clear outline of your end-of-life wishes and planning
Yes, it may seem morbid to think about your own death. But with your affairs in order, and all the required legal documents in place, you can be confident that your end-of-life wishes will be carried out correctly and that your loved ones and dependents will be provided for.
Here are five vital elements to include in your end-of-life planning:
Make sure you have a last will and testament – it’s crucial to create a last will and testament. This legal document will state your wishes regarding the distribution of your finances and assets and will also appoint an executor. This executor will ensure your wishes are carried out accurately and efficiently and will manage your estate plan to deliver on your instructions re charitable donation, gifts and your legacy.
Set up power of attorney and health directives – you can choose to grant a trusted individual (or individuals) with the power of attorney (PoA). This PoA allows them to handle your financial matters and make decisions on your behalf. It’s also a good idea to establish health directives, such as a living will or medical power of attorney, to ensure your medical preferences are followed.
Create a funeral plan to cover these costs – funerals can be expensive and a financial burden for those you leave behind. You can ease this burden by arranging a funeral plan in advance, and setting up an insurance policy that sets funds aside to cover the costs. Preparing for funeral costs in advance alleviates the financial strain on your family and allows them to grieve without worrying about payment of the funeral.
Get your taxes in order – it’s important to organize your tax records and consult with a tax professional to make sure your tax affairs are in order. Setting aside funds to cover any potential tax liabilities is also sensible. This will prevent complications for your loved ones during the settlement of your estate and tax liabilities.
Think about digital legacy planning – in a world where so much of our life is lived online, it’s vital to have a digital legacy plan. This comprehensive plan will provide information and guidance regarding your digital assets, including compiling a list of online passwords and account information. It’s a good idea to name a digital executor in your will to manage and transfer your digital presence. This will help with social media accounts, but also software subscriptions or any online accounts you hold.
Talk to us about getting your end-of-life planning in order
When it comes to end-of-life planning, there’s no time like the present. The future can often be uncertain, so it’s good practice to have your will, estate plan, powers of attorney and digital legacy plan set up and safely stored away, should they be required.
As your adviser, we can help you review your financial and tax planning considerations and can put you in touch with the relevant legal advisers to create a comprehensive end-of-life plan.
May 2023 - Why your accountant is the mentor you didn’t know you needed
A business mentor can provide guidance and support, so you make the right decisions and stay focused on the end goal as a business owner. They can also help you move forward in your career by providing advice and feedback on what steps to take to reach the pinnacle of success.
But have you ever thought of your accountant as a mentor?
Why your accountant is the ideal mentor
Having someone who understands your business journey is incredibly important. You might see an accountant as someone who files your tax returns. But, in fact, we’re experienced business owners, with access to a significant network of other business professionals.
An accountant can be the mentor you didn’t know you needed. No-one knows your business better than us, so we’re perfectly placed to offer you advice, guide your business journey and help you push your skills and capabilities as a business owner.
As a mentor, an accountant will:
Expand your knowledge as an entrepreneur – as business owners, we have the knowledge and experience to help you move your business forward. And we can work with you to expand your leadership skills, business thinking and entrepreneurial ideas.
Be a shoulder to lean on – we'll offer 1-2-1 mentoring sessions where we can listen to your unique worries and concerns as a business owner. Having someone on the same page to listen and empathise is vital for your business and your own mental health.
Guide the important elements of your business – we’ll help you manage and improve your business strategy, planning and decision-making skills. We’ll also provide the management information systems you need to guide your finances and planning.
Keep your finances on track – we'll show you how to maximise profits, reduce costs, and make better financial decisions. We’ll also help you plan your own personal wealth and tax strategies, so you can achieve your own entrepreneurial goals and lifestyle.
Introduce you to a broader business network – we work with hundreds of other business owners across a range of industries. This means we can link you up with other entrepreneurs and founders, so you have a network of other like-minded individuals to connect with. This can be vital when brainstorming and benchmarking, or if you need to talk to someone who understands the specific pain points you’re experiencing.
Having someone to guide your business journey can be invaluable. A business owner must grow and evolve along with their business, and having regular mentoring catch-ups is the ideal way to progress, offload your concerns and look for new inspiration.
If you want to grow as an entrepreneur, please come and talk to us about our mentoring services and how we can guide your business future.
February 2023 - 5 ways to get in control of your business finances
Having proper control of your business finances is a big advantage. It helps you make well-informed business decisions and keeps your organisation profitable.
With so many digital tools for managing your bookkeeping, accounting and management reporting, it's never been easier to manage, track and forecast your financial position.
But what are the main tools you need? And how do you set up your financial systems, apps, processes and reporting to put yourself back in the finance driving seat?
1. Bring your bookkeeping into the digital age
Digital bookkeeping apps are a great way to digitise your receipts, records and source documents. This not only saves a lot of time at year-end, it also makes it much easier for you to keep track of your company’s finances and accounting. Keeping your receipts in a box to manually enter at period-end is no longer enough. Take the next step and digitise your receipts at source, so you have up-to-date digital records and copies of source documents.
Optical character recognition (OCR) software, like Dext Prepare or Auto Entry, scans the receipt, converts it into a digital format and stores it in the cloud.
2. Do your accounting in the cloud
Cloud accounting is a software-as-a-service (SaaS) solution that helps you carry out all your main accounting and financial management online, without having to install any software.
Cloud accounting providers, like Xero, QuickBooks, MYOB or Sage, design their accounting platforms to take the pain and hassle of business accounting. You get all the tools and features you need to work on your accounting tasks. And your platform provider will also take care of all the data storage, backups and security of your data.
A good cloud accounting platform does more than just save your hard drive space. It also provides you with tools and dashboards that improve your access to management information, financial reporting, forecasting and projections, performance tracking and more.
3. Use the latest in expense management tools
Expense management can be a time-consuming and tedious job. But it’s also a vital task that helps you ensure you’re spending company money wisely and not overspending. If employees start going over their budget limits, this can be a costly mistake for the company and your cashflow.
Expense management tools, such as Soldo, Weel or Pleo, help you manage staff spending by giving employees virtual cards that are linked to a specific budget, account and code. This helps you track their expenses easily and make sure they’re staying within their budgeted limits. These platforms also give you detailed reporting and analytics, so you can see where money is being spent, and where savings can be made.
4. Make it easy to accept digital payments
The problem of slow payment is one of the most frustrating things for small businesses. If your customers don’t pay on time, this can result in a loss of revenue, poor cashflow and an inability to cover your basic costs and overheads. To resolve this issue, many companies have begun to switch to digital payment platforms that make it simpler, faster and easier to collect payment.
Payment platforms, like PayPal, Square or Stripe offer faster payment times and more control over the customer experience. Some platforms even integrate with your cloud accounting, so you get automatic bank reconciliations.
5. Embrace the latest in digital reporting and forecasting
With digital accounting changing so rapidly in recent years, there's never been a better time to embrace the benefits of the latest in digital reporting and forecasting.
Economic conditions are hard to predict. So it's crucial to be able to quickly analyse data, check your performance and make predictions about how your company will fare in the coming months. When you use cloud solutions for financial reporting and key metrics, you'll be able to monitor trends in real-time while having access to the data anytime, anywhere.
Having this information at your fingertips helps you make informed decisions faster than ever before – and that translates that into more sales, increased business growth and bigger profits.
Talk to us about updating your financial systems
If you’re looking to give your finances a touch of digital magic, please do come and talk to us.
We can walk you through the best cloud platforms, fintech apps and business tools to add to your app stack – so you’re ready to make the most of a digital approach to your finances