How to avoid financial losses in your business

Profit is what we aim in doing business. By achieving it, we can gain financial power that we can use to stabilize our way of living including those of our family, friends and community. It is a joy for every businessman to have a net profit in their statements of income. On the other hand, a net loss at the bottom of those statements may make them frown. Financial losses may occur whether your business is big or a small one. But no matter how big or how small you have, you should do something to avoid those negative results in your operations. Income and losses are the possible results in your income statement. Hence to attract income and get rid of losses, we should know how to play with the nominal accounts – revenues and expenses. The following are the tips and ways on how to stay away from those losses. Read more

Seven Tips on How to Improve Your Cash Flow

Cash is the most liquid among the resources your business could have. It is the most conveyable and most efficient consideration for every transaction you will get into in carrying out your business. But because of the slumping global economic condition, you had an unfavorable cash flow. A better panorama of cash flow is an indication of a high liquidity status of a certain person or business. It also attracts creditors and investors. Now, if you are a bit frustrated and disappointed on the flow of you cash, the following are seven simple and direct tips you can do to improve how your cash runs.

1. Collect receivables. Strengthen your collection effort on your accounts receivables. Give discounts and other rewards to encourage early payments from your customers. Sending demand letters is also one way to knock your debtors to act on paying their debts on you. Read more

Reading your statement of income or profit and loss statement

Among the four basic components of financial statements (the balance sheet, statement of changes in equity, income statement and cash flow statement), the statement of income is the most interesting and exciting to read by its common users. This is true, since it indicates if an entity is having a profit or a loss, and that every business owners, investors, creditors and even the tax authorities may primarily want to see and know first if an entity is earning or making money out of running its business and utilizing its resources.

An income statement also called profit and loss statement (P&L) or sometimes prepared as statement of operation, is a formal statement showing the performance of an entity for a given period of time. The performance of the entity is primarily measured in terms of the level of income earned by the entity through the effective and efficient utilization of its resources. Income statement indicates how revenue (money received or receivable earned from the sale of products and services before costs and expenses are taken out) is transformed into net income or net profit (the result after all revenues, costs and expenses have been accounted for). This income performance is used to be known as the results of operations of the entity. Read more