At Vanilla Accounting, one of our most sought-after services is the one-hour free financial health check report. This is an excellent way to give your organisation an in-depth financial MOT, which can be used to launch a range of benefits. For example, chartered financial analysis can illuminate strategic directions, increase agility, and help to stabilise the bottom line. Here’s what’s involved, and how it can benefit you.
1. Revenue Growth Analysis
The first thing that the team at Vanilla Accounting will do is explore your revenue growth analysis. This involves examining your revenue growth now, and comparing it to past performances. Your business financial health check will take multiple internal and external factors into consideration to understand exactly how and why you have the numbers that you do. Then, we collaborate to design actions that can enhance future revenue. For instance, this may involve tweaking your pricing systems, or putting additional emphasis on customer relations.
2. Gross Profit Evaluation
A gross profit evaluation is the only way to see the real picture of your organisational financial health. The equation involves deducting direct costs from revenue, which can be quite a complex task. Importantly, the exercise reveals potential actions for improvement. Often, this involves using technology to optimise processes that are draining resources. For example, many SMEs discover that many of their most time-consuming tasks can be automated, and this can unlock the door to agility and flexibility.
3. Operating Profit Review
It’s often very difficult to determine exactly how much it costs to operate a business. Some costs, such as tax and property rental, are reasonably straightforward. However, there are many esoteric costs that are very difficult to keep an eye on. Marketing is a classic example, but even something such as employee turnover can significantly alter your operating expenses. Once the team at Vanilla Accounting have deducted your business running costs from your gross profit, we can start to make suggestions regarding reducing any of the numbers that are not adding value.
4. Revenue Per Employee Assessment
Understanding employee revenue is one of the most challenging elements of managing an SME. As with operating profits, there are some aspects that are reasonably straightforward to calculate. For instance, determining whether all of the potential skills are being optimised can make a significant financial difference. However, some employees have value in that they motivate others into action, or they lift the mood on a gloomy day. Employee morale is directly related to productivity, but putting an accurate value on it requires real time and insight. However, understanding this type of revenue can help you to develop a genuine picture of your organisational projections.
5. Cash Flow Analysis
Cash flow is the Achilles heel of many SMEs. It is also one of the most frustrating elements of chartered financial analysis, with slow-paying customers being one of the biggest contributors. There are a range of solutions to this, including optimising supplier payments. However, it is first crucial to determine if there are any blockages in the flow of cash, and to then analyse those blockages to determine the best way of either removing them or circumnavigating them. The overall aim of this part of the financial health check report is to ensure that you have strong, predictable, and reliable cash flow moving forwards.
What Next?
If you would like to look under the financial surface of your organisation and give your management accounting a boost, the experts at Vanilla Accounting are here to help. Book your free financial health check report today.
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