The statement of cash flows, (also known as the cash flow statement), shows how your business has generated and used cash (and cash equivalents) within a specific time period.

For each of the reporting categories, receipts and payments are listed (money in and money out), and this is reported as a net increase or decrease in cash held for that category.

The net change in all categories is added to the amount of cash on hand at the start of the reporting period to arrive at the current cash on hand figure at the end of the reporting period.

It is another important financial statement to understand in conjunction with the Profit and Loss statement and the Balance sheet. These three reports provide a good understanding of the financial position of your business.

How Does it Work?

The cash flow statement integrates the information provided by the profit and loss statement and the balance sheet into a current cash position. The cash flow statement is reported on a cash basis, while your other financial statements are usually reported on an accrual basis. Accrual income (from the profit and loss statement) is converted to cash by calculating the changes in the balances of asset and liability accounts.

Report Categories

The statement of cash flows is organized into sections that report on different types of business activity.

1. Operating activities – all business income, expenses, assets and liabilities (except for those assets and liabilities reported in investing and financing activities).
2. Investing activities – the purchase and sale of long-term investments, property, plant and equipment as well as security deposits paid to suppliers or received from customers and dividends received.
3. Financing activities – the changes in balances of equity accounts, for example, issuing and repurchase of stocks and bonds and payment of company dividends if applicable. Loans are also included in financing activities.

Formal financial report packages usually include notes to the financial statements. The notes contain supplemental information that explain significant items or activities that did not involve cash transactions. The notes may also include detailed reporting of categories that may have been reported as summary totals only in the profit and loss, balance sheet and statement of cash flows. Other items such as taxes, employee provisions, risk management or related party transactions may also be detailed in the notes.

Why is it Useful?

The statement of cash flows gives you a valuable measure of cash flow in and out of the business over a given period. It shows the ability of the business to pay its bills and fund its operating activities. This gives you a picture of overall performance.

It also shows the relationships between assets, liabilities, equity and cash accounts. It shows changes and movements over time, whereas the balance sheet and profit and loss reports show account values at a single point in time.

The statement of cash flows gives you vital information on your business.

• • • How strong is your cash position?
    • What is the long-term outlook for your business?
    • What activities generate the most cash flow?
    • What is the relationship between your net income and your operating activities?

If you’d like to understand your financial statements, cash position and future outlook in more depth, arrange an advisory session today. We’ll help you identify and appreciate the strengths of your business.

The following content was originally published by BOMA. We have updated some of this article for our readers.

Tech-savvy businesses are taking big strides in making software, AI and automation work for their enterprise. Going digital could be one of the smartest moves you make.

In this series, we’ll look at some keyways to optimize your business, exploring different avenues to evolve your enterprise and create a legacy you can be proud of.

Let’s explore how embracing the latest software tools helps you optimize your business.

Going digital and putting tech at the heart of your business

Cloud-based solutions and AI-driven tools are the foundation stones of a modern, digital-ready business. You might have legacy systems and operational processes that you know inside out, but if you’re not in touch with the latest tech this could be a major competitive disadvantage.

Why are digital solutions so important for a streamlined and productive business?

Let’s take a look at five important ways that tech can change the way you work:

1.  Move your infrastructure to the cloud

Being able to connect to your business systems from anywhere with WiFi is a major advantage. Switching to Google Workspace or Microsoft 365 helps you collaborate remotely, share documents in real-time and centralize all your data storage and management. Cloud platforms are also cheaper to run, always run the latest software versions and scale with the business as you grow.

2. Automate your routine tasks with AI

Repetitive tasks are an important part of your operational processes, but they eat into your time and productivity. Automating these repetitive administrative tasks turns you into a more streamlined and efficient business. AI chatbots can manage first-level customer service tasks, ChatGPT can speed up your content marketing and tools like Zapier can be used to automate a multitude of different processes and operational tasks in the business.

3. Switch to SaaS for your financial management

Software-as-a-Service (SaaS) financial platforms, like Xero or QuickBooks, will transform the way you manage your finances and accounting. All your sales, transactions and expenses are managed in the cloud, giving you instant access to your numbers. You also have detailed reporting and automated metrics available to you. This is vital for making data-driven decisions.

4. Analyse your business data

Financial data isn’t the only data you should be analyzing. Using platforms like Power BI, Google Analytics and specialist industry analytics software helps you understand your customers’ behavior, optimize your marketing strategies, predict the performance of your manufacturing processes or manage your inventory in smarter (and cheaper) ways.

5. Get your cybersecurity up to scratch

With so many systems now in the digital realm, watertight cybersecurity is a must. This means having strict encryption tech in place, training your people in good cybersecurity practices and making sure you have complete control of your various in-house and customer data sources.

Talk to us about ways to improve your digital transformation

Switching to digital systems and SaaS tools doesn’t happen overnight. This is a gradual process of bringing the latest tech on board and learning how to get the most value from the software.

If you’re wanting to embrace the newest automation and AI tools, now’s the time to talk to us. Our team will be happy to review your systems and suggest the next tech upgrades that will deliver the most improvements to your business.

The following content was originally published by BOMA. We have updated some of this article for our readers.

‘Uncertainty’ has been the defining phrase for the first half of the 2020s. The markets are unstable, supply chains have been wobbly and finding talent has been difficult.

But as we head into 2025, and the second half of the decade, what are the major threats, opportunities and challenges that your business should focus on?

We’ve highlighted five of the big business challenges.

Five big business challenges for 2025 (and beyond)

However well-organized you are, there are elements in the external environment that you just can’t control. These external factors can have a serious impact on your ability to trade, grow and turn a profit. So, are you on the ball and ready to tackle them in 2025?

Let’s look at five of the external factors you should be focused on:

1. Climate change and sustainability

It’s an unpleasant truth, but the environment is in real trouble. As a business, there’s a growing need to demonstrate your environmental responsibility. This means developing a sustainability strategy, investing in green technologies and demonstrating your environmental commitments.

2. AI and technological disruption

Artificial intelligence (AI) and automation have changed the game in a fantastically short timeframe. Finding the value in this tech is crucial, as well as understanding its limitations. Getting your digital transformation underway will be vitally important in 2025, as will exploring how AI and automation can kickstart your productivity, boost your customer service processes and create a real competitive advantage for the company as a whole.

3. Skills shortage and transforming your workforce

The ongoing skills shortage, combined with the reality of an aging workforce and changing employment expectations, is a major issue. To overcome the talent challenge, you’re going to need to rethink your recruitment policy, your training and what you do to retain your key people. Things like flexible working arrangements, continuous professional development (CPD) and a great company culture are all ways to attract and maintain your top talent.

4. Inflation and an unstable economy

The global and local economies are not out of the woods yet. Forecasts may be looking more positive but there’s still the ever-present threat of recession, rising inflation and high interest rates. Getting granular with your financial forecasting will help, as will exploring your options for additional revenue streams, better cashflow management and ready access to business finance.

5. Regulatory compliance and reporting

Regulatory environments are getting increasingly complex, as governments wrestle with the need for tighter structures. Regulations around your environmental reporting, workplace relations and digital privacy are all likely to get tighter over the coming years. This means allocating time and resources to understanding and implementing the relevant compliance requirements.

Talk to us about overcoming the big challenges

There’s no magic wand that can change these macro environmental and economic factors. But awareness, detailed planning and good use of forecasting can be a major boost.

Come and talk to our team about your concerns for the year ahead. We’ll help you understand the major external factors and what you can do to make your business more resilient.

The following content was originally published by BOMA. We have updated some of this article for our readers.

Effectively managing your expenses is crucial for sustaining growth and ensuring profitability of your business, while ensuring you have a smoother journey along the way.

Whether you’re a start-up or an established enterprise, maintaining control over your finances can be the difference between success and failure. Here are eight strategies to help you better manage your business expenses and keep your finances and operations running smoothly.

1. Establish a Comprehensive Budget

Creating a detailed budget is the foundation of effective expense management. A budget shouldn’t just be a one-time task but a dynamic tool that adapts as your business grows. Start by identifying your fixed and variable costs, and use historical data to forecast future expenses. Regularly review and adjust your budget to reflect changes in your business environment, ensuring it remains relevant and accurate.

2. Monitor Cash Flow Diligently

Cash flow is the lifeblood of any business. Keeping a close eye on your inflows and outflows will help you avoid cash shortages. Implement a system to monitor your cash flow in real time — this could be through accounting software that alerts you to discrepancies or potential problems. Regular cash flow analysis enables you to identify trends and make informed financial decisions promptly.

3. Separate Personal and Business Finances

Mixing personal and business finances can lead to confusion, making it difficult to track business expenses accurately. Open dedicated business banking accounts and ensure only business transactions are conducted through them. This separation not only aids in clear financial analysis but also simplifies tax preparation and legal obligations.

4. Implement Expense Tracking Tools

Technology offers numerous solutions to streamline expense management. Consider using expense tracking software or apps that allow you to photograph receipts and automate entries. These tools can generate comprehensive reports, providing insights into spending patterns and helping you identify areas for cost reductions.

5. Review and Reduce Unnecessary Expenses

Regularly review your expenses to identify non-essential costs. This could include subscriptions, services, or supplies that are rarely used or that don’t add significant value to your operations. Make sure expenses are worthwhile, and approach vendors for better rates or seek alternative suppliers.

6. Foster a Cost-Conscious Culture

Encourage your team to be mindful of spending by promoting a culture that prioritizes cost efficiency. Educate employees about the impact of expenses on your business bottom line, and empower them to suggest improvements. When everyone is aware of financial goals, they are more likely to contribute to cost-saving initiatives.

7. Plan for Taxes Early

Taxes can be a significant expense, so it’s crucial to plan for them well in advance. Work with a tax professional to ensure compliance with all tax obligations, and take advantage of any deductions or credits available to your business. Setting aside money for taxes up front helps prevent cash flow issues at tax time.

8. Regular Financial Audits

Conduct periodic audits of your financial statements. This doesn’t necessarily mean hiring an outside firm; instead, engage a team member or business partner to review the records. These audits can help you discover discrepancies, unexpected expenses or even fraudulent activities early, allowing for timely correction.

Conclusion

Effective expense management is not a one-time task but an ongoing process that requires vigilance and adaptation. By establishing a robust budget, employing the right tools, and fostering a cost-conscious company culture, you can ensure your business maintains financial health. Implement these strategies to transform your expenses from a potential pitfall into a pillar of your business strategy, driving growth and sustainable success.

Need assistance with managing your business finances? Contact us today to learn how we can help streamline your expenses and improve your cashflow and profits.

The following content was originally published by BOMA. We have updated some of this article for our readers.

We’re trading in uncertain times at present. But there’s still a pressing need to refine your business model, add value and look at the opportunities for growth.

In this series, we’ll look at some key ways to optimize your business, exploring different avenues to evolve your enterprise and create a legacy you can be proud of.

Six ways to optimize your business

Your game plan might have been to sell the business, achieve a great deal and retire on the profits. But in the current market, it’s possible you’ve had to press pause on this exit strategy.

However, instead of letting the business just tick over, why not get proactive about improving and enhancing your business model, so it’s a more profitable and viable business?

Here are six key areas you should be looking at:

Go digital and automate the business

Now’s the ideal time to embrace digital technologies. With the latest cloud tech, AI and automation solutions you can streamline your operations, improve your overall customer experience and boost sales. You can also explore e-commerce solutions, social media marketing and digital marketing.

Get proactive with your finances

Strong financial management sets the foundations for making the business profitable. Switching to the latest cloud accounting software helps you get a handle on your cashflow, a better overview of costs and a more informed view of your overall financial position. Many accounting platforms will also offer integrations with other helpful business tools, such as inventory, invoicing and point-of-sale (POS) tools.

Build on those customer relationships

Exceptional customer experience helps to build loyalty and drive repeat business. This means getting granular with your customers’ needs, providing excellent customer service and listening to (and acting on ) your customer feedback. It’s the best way to improve your customer service and brand.

Diversify into new areas

It’s easy to get stuck in a rut when it comes to your product range and industry focus. One way to shake things up is to diversify and explore new product ideas, new customer audiences and new niches. Diversification can reveal a whole new customer demographic, not to mention additional revenue streams.

Nurture your team and employee experience

Engaged employees are the foundation of a great business. Invest in training and development to improve your team’s skills and motivation and do everything you can to build a positive work culture. When hiring, look to create a diverse and inclusive team of people, so you have a real melting pot of talent, ideas, skills and experience in the business.

Look for strategic partnerships

Navigating the market is far more successful when you explore the benefits of business partnerships. Connecting with other businesses can extend your market reach, reduce costs and allow you to share resources. You also open up your brand to a whole new customer audience, boosting sales and growth.

Talk to us about optimizing your business model.

There’s no single strategy for turning around the success of your business. But looking at new ideas, markets, products and business tools can certainly add considerable value.

If you’re looking to add some pizazz to your business model and operational effectiveness, drop us a line. Our team will be happy to review your current business and identify the opportunities.

The following content was originally published by BOMA. We have updated some of this article for our readers.