Have you ever thought of what your business’ life source is? What sustains your business’s health and helps you stay afloat?
Just the same way your body as a human being has your heart and other organs keeping you alive is the same way your business has a life source and other organs keeping it alive, healthy, and running. For us, as humans, it's our heart that tells the doctors the state of our health, but for your business, it's the Business Financial Metrics that tells you the financial health and performance of your business.
For doctors to tell if you are healthy or not, they carry out a series of tests on your whole body which includes all your organs. And so for you to be able to ascertain the health and performance of your business over a period of time, you should monitor your Corporate Financial Metrics to grow and understand your Line of work performance. So, how do you keep up your business’s financial health? How do you tell if your business's financial state and performance is tallying with your goals as the owner?
This is what Key Business Financial Metrics helps you keep track of; First, let's begin with what financial metrics are - these are indicators that you can use to measure the gains and losses of your Line of work. Even though there are a lot of Business Financial Metrics for you to understand and learn, these are the 6, you as a small business owner need to be informed about to grow your business properly with respect to its well-being.
- Cash Flow
- Real Revenue
- Gross Margin
- Real Profit
- Accounts Receivable
- Accounts Payable
This is the heart of any business, it is the amount of money that comes and goes out of a Line of work. The money made from sales are revenues; any profit you have made from selling your products, meaning this is your cash at hand or it can be the payment you are expecting from selling on credit. It all means the funds coming into your Line of work.
While the money spent on your business, your expenses; such as the money you spend to restock, the money you spend on rent, and other expenses are your expenditure.
Revenue is your cash at hand; not the money one Iya Bisi owes you. It is the money you can see in your account balance. And don't worry about debtors like Iya Bisi, Kippa has got you covered! Leave her to us, we’ll help send a reminder that she owes you money don't worry. Not only that, but we can also help you Track your real revenue as long as you record these details in the app and you're good to go!
Do you know the amount of money you made for your sales and the cost of the goods you sold? That is your gross margin. It is the money that remains in your pocket after you have deducted the money you made from sales and the amount of money you spent in acquiring your goods or services.
To avoid any kind of stress, Kippa has got your back. We can keep track of all this for you with ease. All you have to do is make sure the difference is never below 50% or else you will be at a loss.
Now you need to know that your real profit is not the amount of money you have, it's the money you have at hand after you have taken care of your business expenses and bills such as taxes and whatnot. Don't mix your personal expenses here. As usual, with Kippa you can keep track of what your profit each month or business season really is. Our profit analysis feature also gives you a real-time view of how
AKA Debtors. This is the money that customers are owing. If you sell products to Chinedu and he tells you he will pay at a later date, that money becomes the amount receivable for your business. Just keep in mind that it's still your money, but it's not just in your account. Kippa forever has your back with debtors. We have to collect the money back from Chinedu because the money you have in your pocket is the pillar of your business.
(AP) refers to an account within the general ledger that represents a company's obligation to pay off a short-term debt to its creditors or suppliers. This basically means the money you are owning external bodies different from your business; usually, your suppliers or banks if you have a loan.
A piece of advice for small businesses is to avoid spending money unnecessarily, avoid leases with no out clause, avoid any equipment that you really don’t need, keep the business purposely lean.
Your business can’t grow if you are not tracking the right Financial Metrics. To make running your business easy for you, the Kippa app has all these features and metrics readily available for you to use.
So how can Kippa help you?
- A data recording feature that lets business owners Track their everyday sales, expenses, and credit transactions.
- Track of your debts & Business Financial Metrics it even has a sweet feature that sends reminders to you within the app.
- It manages all your transaction data and information.
- Keeps tabs on the details of your inventory
- Organize and manage your shop within the app
With this, you can measure your business's health and performance from the comfort of your phone, without needing to use a pen and paper to track.
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