Four questions to make FY16 easier
There’s really only two ways to increase profit in FY16; sell more at a better margin, or cut unnecessary costs. The most profitable businesses find ways to do both of these at the same time.
Here are four key questions for your accountant:
How much is the business earning and spending?
It’s important to look at how much the business earns and how much it spends each year to establish break-even. The breakeven point helps you work out how much you need to earn to stay in business. If you decide to discount, you need to know the effect on your income and profit.
How can I improve cash flow?
Every business needs their customers to pay on time or even early. If they pay late, you are effectively giving them an interest-free loan. Talk to your customers about paying by credit card instead of delaying payment. If they structure their repayments properly, they can get 55 days from the transaction date interest free. On top of that, ensure you ask your accountant or bookkeeper to chase up people who owe you money.
Is my profit margin in line with the industry average?
On average, Australian small businesses make between 5% and 15% in net profit margin. You should ask your accountant where you sit, as this can vary by industry.
What can I do quickly to increase profit?
Ask your accountant for tips to improve profit fast. Can they help you with systems to track your costs – there may be opportunities to reduce them with better planning? Can they help review your prices – have you kept pace with supplier price rises and your competition?
If you need some help managing your cash flow, give us a call on 1300 555 887 or contact using the form located here. We can facilitate fast, unsecured business loans with 24 hour approvals and access to funds within 3 days*.
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