Do you know what your profit is?

Home » Knowledge Centre » FAQs » Do you know what your profit is?

Have you made lots of money this week, this month, this year so far?

Truthfully, do you know the answer to this question?

If you are feeling uncomfortable about it and can’t shout out a resounding yes, then you don’t really know your numbers.

The truth is as a business owner of a SME you are not on your own.

About 80% of business owners do not have a handle on their numbers. That is not because they are inept or not capable, it’s usually because they just don’t have the information to hand, in the right format at the right time.

They just don’t have the right tools to do the job.

If you were going on a long car journey, you wouldn’t just jump in without knowing some basic facts would you? Like where you were going, what route you had chosen or how long it was going to take. Nor would you set off without refreshments, your mobile phone or some money in case of difficulties. Yet many businesses do just that where profit is concerned.

Here are the key things to remember:

- - You need to identify your goal
  - Understand the different routes available
  - Understand how long it might take you to get there
  - Have the resources to attempt it
  - Know how to measure it so you know when you have got there.

You need to plan and have all the tools to make sure you have the best chances of success.

Eight steps to go through:

1. 1. Know your numbers. How many customers do you want and need in a month, 3, 6 and 12 months?
  2. What do those customer numbers mean in terms of turnover?
  3. What price do you need to sell at or can sell at?
  4. What is your cost base?
  5. What is your profit?
  6. Do you need to plan in additional costs to replace machines that are coming to the end of their useful life?
  7. Can you meet demand?
  8. Is your product or services affected by seasonality?

The reality is that many business owners are so busy producing, selling and doing the day job they stumble along not actually knowing if they are making any money at all.

They are just being guided by what is left in the bank account.

If you are one of the 80% who doesn’t know how much money they made last week, then I urge you to talk to your accountant. Don’t start the journey blind and leave it to chance to be successful. It doesn’t have to be that way.

You can implement simple information systems using management accounts and key performance indicators to ensure you can understand, measure and correct results.

This is what a good management accountant does every day of the week. If your accountant doesn’t offer this support then contact a CIMA qualified accountant for your best chance of success. You owe it to yourself.

You will sleep sounder and have super charged those profits before you know it.

If you don’t get this help and support from your accountant why not contact us on the details below to see what’s possible.

Call 0161 410 0020 or email [email protected] for a free no obligation chat.

Remember “Not all accountants are the same!”

It is important that you take professional advice before making any decisions based on the information that you learnt here. While every effort has been made to make sure it is accurate it cannot be precisely tailored to your personal circumstances. This article is for general information only and no action should be taken, or refrained from, as a result of this information. Professional advice should be taken based on specific circumstances in each individual case. Whilst we endeavour to ensure that the information contained in the article is correct, no liability will be accepted by Krystal-Clear Accounting which is a trading name of Kim Marlor Associates Ltd or damages of any kind arising from the contents of this communication, or for any action, inaction or decision taken as a result of using any such information.

What are Bank Feeds and how do they work?

[related_posts_grid]

In short, bank feeds create a digital link between your business bank account and your accounting software, such as Xero or QuickBooks.

This means bank transactions are automatically downloaded into the accounting software. This simple piece of automation, completely removes the need to manually input every bank receipt and payment into the accounting software.

Having bank feeds in place, saves a HUGE amount of time bookkeeping. That’s because it completely removes the need to manually input bank transactions into the accounting software.

Saving time bookkeeping isn’t the only benefit for the business….

What are the main benefits to a business using bank feeds?

Bank feeds automate, what was previously, a time-consuming task of entering all the bank transactions into the accounting software.

This saves the business a HUGE amount of time (& money) spent on bookkeeping.

With bank transactions being downloaded from the bank every day, it means it’s quicker and easier to keep the bank balance in the accounting software up-to date.

With the accounting software up-to date, the bank is updated daily which gives you a clearer, real-time view of your business’s cash flow.

This makes it easier for you to plan your cashflow, and take action to improve it.

There is always the risk of errors being made when data is being manually inputted into the accounting system. It is often time-consuming to find and correct any errors. Also, if an error is large then the Profit & loss and Balance Sheet reports will be inaccurate and potentially misleading.

Automating the bank transaction entry previously manual process, reduces the risk of errors being made and ensures that the bookkeeping records and reports are accurate.

How to Link Your Bank to Xero

Ensure that your bank account is set up for online banking. This feature is typically available from all major banks.

Log into your Xero account and navigate to the banking section. Select ‘Add Bank Account’ and follow the prompts to search for your bank.

After adding your bank account details, you’ll see an option to set up bank feeds. Click ‘Agree’ to the terms, then securely log into your online banking portal through Xero to authorize the connection.

Are Bank Feeds Safe & Secure?

Yes.

Firstly, having bank feeds in place ONLY means bank transactions are downloaded into the accounting system. They do NOT give anyone else access to the business bank account.

Secondly, XERO has various security measures in place to give you a piece of mind that your financial data is safe and secure:

Encrypted Connections: Xero uses advanced encryption technology to secure the data transmission from your bank to Xero. This means your sensitive information is encrypted during transit and cannot be intercepted or read by unauthorized parties.

Compliance and Standards: Xero adheres to high standards of data security compliance, thus ensuring that its practices meet or exceed industry security standards and regulations.

Regular Renewals: To maintain a high level of security, XERO requires that the bank feed connection is renewed every 90 days. This process is straightforward and helps ensure that the integrity of your financial data is always protected.

In Summary

In short, having bank feeds really saves businesses time and money on their bookkeeping.

They automate and eliminate what is otherwise a time consuming and error prone manual process.

Bank feeds is just one of the ways technology can be used to help business owners improve the financial side of their business.

Do you know what your profit is?