As an entrepreneur, you must be aware of what is happening in your company. You have to check yourself if there is good cash flow if there is enough income if it is necessary to reduce expenses to have more possibilities to invest – even if you have income. SkyCap Financial offers personal financing to Canadians, providing loans up to $10,000. You can also check Skycap Financial reviews where Hundreds of satisfied customers have posted their experiences on SkyCap Financial.
Do you control your working capital?
Financial health is seen in the working capital. It is the difference between permanent capital and fixed assets. There has to be a part of the long-term funding aimed at financing short assets.
Do you control the cash-flow level?
You must control the cash flows: that the terms in which you have to collect the income are enough to meet the payment obligations. If your clients pay you two months and you pay your suppliers to one or you play with the times or with your own funds or you get into debt.
Do you take care of the collection and payment deadlines?
As much as possible you have to be able to adjust the collection and payment times. It is not the same income to collect 180 days and pay in cash or 30 days that vice versa: pay 60 days and charge to 90 days. It is necessary that you do not get unbalanced.
Do you analyze the composition of the benefit?
You have to compare the benefit with the one foreseen in the business plan, to see its evolution, but, above all, to analyze its composition. It is not the same that your benefit comes from the ordinary activity of the company that comes from liquidating an asset.
Do you distinguish between benefit and cash?
One thing is profit and another thing is the case of your business. You can have benefited and had no cash. The income comes in the profit, what you sell, but if you charge 180 days, you really do not have the money to face it. The benefit does not stop being an accounting concept. The box is real.
Do you evaluate the profitability of the company?
This ratio is more useful than analyzing the benefits – which, eye, you also have to evaluate. It is one thing to have a margin and another thing is to have profitability. In the end, the margin is a comparison that you have in the income statement between income and expenses, and profitability is a concept of efficiency.
And you measure the economic performance?
In the same way, you have to evaluate the financial profitability of your business, this indicator will allow you to know the remuneration corresponding to the own funds, conditioned both by the performance of your investments and by the level and cost of the debt.
Do you reflect the costs of the price?
It is important to establish a cost scan. Be clear that, in the end, what you sell is not only the direct cost margin but also the cost allocations that go to my product: transport, marketing … I have to see if with that price I earn money or not to my product.