Running a business is exciting, but let's be honest – keeping track of your finances can feel overwhelming. Don't worry! You don't need to be a math genius to understand the important numbers in your business. Let's break down the key figures that can help your business thrive.

Show Me the Money: Cash Flow Basics

Think of cash flow like your business's bank account – what's coming in versus what's going out. It's simple: if you have more money coming in than going out, that's positive cash flow (yay!). But here's the important part: even profitable businesses can struggle if they don't have enough cash available at the right time. That's why checking your cash flow regularly is crucial – it helps you spot potential tight spots before they become problems.

Getting Paid On Time: Your Secret Weapon

Here's a common headache: you've done the work, sent the invoices, but the money isn't coming in fast enough. We call these 'debtor days' – the time it takes for customers to pay you. The longer it takes to get paid, the harder it is to pay your own bills and keep your business running smoothly. A good bookkeeper can help you set up effective systems to get paid faster, like automated reminders and clear payment terms.

Profit: The Real Story

Everyone talks about profit, but what really matters is your profit margin – how much you keep from each pound you earn. For example, if you make £100 from a sale and get to keep £20 after all your costs, that's a 20% profit margin. Different industries have different typical profit margins, and a bookkeeper, like us, can help you understand if you're on track compared to similar businesses.

Making Your Numbers Work for You

The best part? You don't need to track everything. Start with these basics:

• Weekly: Check your cash flow

• Monthly: Review how quickly you're getting paid

• Quarterly: Look at your profit margins 

Small Changes, Big Impact

Sometimes, small tweaks can make a huge difference. Maybe you notice customers are taking longer to pay, or your profit margins are down (because your costs are creeping up). Spotting these trends early means you can take action before they become problems.

Need Help Making Sense of Your Numbers?

At LMN Bookkeeping Plus Ltd, we're experts at making business finances less scary and more useful. We help business owners just like you understand their numbers in plain English – no accounting degree required.

Ready to take control of your business finances? Let's chat about how we can help you make smarter money decisions for your business.

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