Financial metrics – how they can help your business
While we may have flattened the coronavirus curve, there’s still likely to be a way to go before many Australian businesses recover from its economic impact. Understanding and monitoring your financial metrics could be the key to you recovering faster.
What are financial metrics?
Financial metrics are a range of numbers that can tell you about the financial health of your business. If some of those numbers aren’t where you need them to be, you need to make decisions to help you improve them. If you don’t, your business could run into trouble.
Examples of key financial metrics for any small business include:
· your cash flow (money coming in versus money going out on a weekly, monthly, or quarterly basis). If you’re having cash flow issues, you need to increase your revenue, cut your expenses, or both.
· your gross margin (this is the difference between the cost of the product or service that you provide and how much you sell it for). Your gross margin on each item needs to cover all of your business expenses associated with it so that you can generate a profit.
· inventory turnover (this is how often you’re selling your stock if you sell products. If your inventory turnover is low, you could be unnecessarily tying money up in stock. Ideally, you should be turning over your stock regularly).
Think of key financial metrics as the financial equivalent to key marketing metrics like Google reviews that let you know what your customers think of your business.
How we can help
At Scorpion Bookkeeping, we can help you to calculate your financial metrics so you can make the right business decisions. We can also help you with any bookkeeping support services that you may need, no matter what type of business you have. We currently have clients in a diverse range of industries in South Australia, Victoria and New South Wales.
Contact us today to find out how we can help your business!