A great business needs great financial organization. Why? Because those who “wing it” when dealing with things like revenue and expenses, eventually find themselves in a downward money spiral—that is really hard to get out of. Any serious landscaper or interior designer will tell you to properly measure the ratios of products you’re using, in order to get the most out of them. Otherwise, it’s just money down the drain. Know where your money is going, how often and why. For instance, when you have a clear understanding of your cost of goods for the month, you will be able to plan with greater ease the number of products needed for the following months. Then you will be able to see amounts of money spent and where best to apply it within the company. To get more control of your finances, maintain these 3 monthly reports.
1. Income report – Also known as the Profit and Loss Statement, shows a business its revenues vs. expenses within a monthly, quarterly or yearly timeline. The end result will be your net income or net loss (not to be confused with gross incomes or losses). Net income is company profit made after all business expenses have been paid. Seeing how you might “break even” one month, will set you up for a better chance of success for the coming months ahead.
2. Budget vs. Actual report – What would you like to be spending on the company every month and what are you actually spending—to maintain a growing revenue? For businesses like Landscaping and Interior Design, the list of inventory and tools needed etc… might seem endless. But, when creating an effective budget, you’ll need to be very thorough and list every operating expense used to keep it going. This includes things like Overhead Costs (rent, & utilities…) Equipment (manufacturing supplies & hardware..) Office Maintenance (security systems, & cleaning…) Licensing (permits & compliance fees…) and so on. Don’t leave anything out. Both landscapers and interior designers This report is directly related to the Income Report. In order to create and project a reasonable goal of expenses, you’ll need to know your income and expenses from the prior month or year. Once all expenses are accounted for, you can start to make the necessary adjustments for a good budget plan that reflects a better outcome. Consider using software like QuickBooks Online to maintain this customized report for easy access.
3. Accounts Receivable Aging report – Learn which customer always pays on time and which has a pattern of always being late—a little or a lot. The timely payments on invoices from clients are directly linked with the cash flow health of your company. Once you get a good idea of how your accounts receivable is getting backed-up, you can begin to form a good plan of action to fix the issue. For those who prefer a more direct approach when it comes to collecting payments, consider creating a policy for clients or setting them up with an auto-pay situation. This way you could avoid making an Accounts Receivable Aging report altogether.
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