The Importance of Understanding Your Finances
Posted on 27th June 2021 at 12:30
We have a question for you and we’d like you to be 100% honest with your answer: Do you really understand your finances?
There’s absolutely nothing to be embarrassed about if you don’t, as it can be an extremely difficult thing to achieve, especially when you have multiple employees to manage and clients to keep happy.
Here at TreyBridge Accountants, we’re dedicated to helping you to genuinely understand the entirety of your business transactions and financial health. We call this Navigating Your Numbers, which allows you to identify where things can be improved and how to achieve sustainable business growth.
Plan for the future
Understanding your finances, which includes every instance of income and expenditure, allows you plan more effectively for the future of your business. When we say “future” it really is wide-ranging, as we’re talking about everything from next month to five years from now.
Financial management and tax planning means the difference between simply getting by and having complete control over your company finances, which opens up a world of opportunities.
Manage your cash flow
Cash flow management is absolutely crucial to the running of a business, as you need to know that there’s more coming in than there is going out. When you understand your finances, you gain the ability to pinpoint areas of improvement and streamline regular costs.
Sometimes even the smallest changes can bring sizeable results. Whether it’s cancelling a subscription you don’t really need or simply buying your stationery and staff room supplies from a cheaper supplier, it can make all the difference in the long run.
Strategise your spending
What’s the main thing standing in your way when it comes to business growth? It could be that you need to take on a new member of staff, ramp up your marketing activity or move into larger premises, yet your current financial situation won’t allow it. Though understanding your finances may not free up all of the capital you require right away, it will definitely speed up the process.
By cutting down costs, managing your cash flow and building up your company savings, you’ll be able to make significant changes to your operational structure sooner and with greater confidence.
Prepare for the unexpected
The coronavirus pandemic is a strong example of how unexpected circumstances can arise. Though COVID is an unprecedented situation, there are other factors that can suddenly affect a business, such as temporary labour shortages, changes in consumer behaviours, an increase in competition within your sector, and in-house situations such as absenteeism or a key member of staff leaving the team.
Whilst it’s impossible to know what the future will bring, understanding your finances gives your business more freedom and agility. This plays a huge role in allowing you to respond effectively rather than falling behind on output and service delivery.
Increase your profits
Last but certainly not least, understanding the ins and outs of your company finances is key to increasing profits. By reducing costs, allocating core funds more precisely, staying on track of your transactions and forecasting for the future, you’ll get more from your business and make it more profitable in the process.
We’ll help you to understand your finances
The finance specialists at TreyBridge Accountants are dedicated to helping our clients take control over their finances and plan for sustainable business growth. To find out more, call our Yorkshire office on 01482 235575, our London office on 0207 885 0605, or fill in the contact form below.
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