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Finance

Setting up Financial Systems

by Sanjeev Archak Sanjeev Archak No Comments

At Integra Books we have helped multiple clients raise capital from Angels and VC’s. Fund raising is an exhaustive process involving due diligence , pre & post funding compliance’s. Investors look at not only at the business prospects  but also at the financial systems in the  company. Consequently, having a few key things tied up and organized can make all the difference.  We have already given you a primer on making your accounting effective.  Here is a quick guide on setting up  financial systems.

Set up Books of Accounts

An ideal  accounting system reduces the time spent by the founders on record keeping, provides the investors and founders with profit & loss statements, cash flow and balance sheets. A software like Zoho Books integrates with whole range of applications like Zoho Payroll, Zoho People,Zoho Expense in the background so you can concentrate on running your business.

Track your Expenses

A business must track every rupee spent. A clean Profit & Loss statement makes the audit a smooth affair. Moreover, there are tax rules which have to be  complied with regards to expenses. Hence, a keeping a keen eye on expenses is critical. A tool like Zoho Expense  can completely digitize the process of expense management. Say goodbye to shoe boxes of receipts, further Zoho Expenses syncs with Zoho Books enabling automation.

Set up a Payroll System

Employees are the most critical component of your business. A properly structured payroll can be a win-win for the employees and the employer. A payroll system must ensure compliance with tax & labor law, ensure payment on time to employees. Here is where Zoho Payroll can automate the payroll process, create diverse pay structures and enable payment on time. Integration of Payroll with Books reduces a lot of manual work.

Stay Compliant with Laws

India is has many compliance’s to be met by businesses. Recently, India has moved up on Ease of Business rankings  but a lot more remains to be done. Non compliance can have grave consequences both founders and investors. Every business needs help to stay on top of compliance’s. At Integra Books, we have developed a Compliance Calendar which intimates our clients on compliance due dates.   

 Set up a Reporting System

Now that you have an accounting software integrated with other tools, its time to set up a reporting system. Investors mandate that financial reports be provided regularly. This report goes beyond P&L and Balance Sheets and must provide key metrics of your business. As founders,automating these reports will reduce both time and effort. We recommend Zoho Analytics.

Prepare for  Due Diligence

Due diligence is a precursor to funding. It is a test a business must pass before money can roll into the company. We have provided a due diligence check list here , the next venture round or sudden acquisition suitor always happens at the least convenient time, so make sure you’re prepared ahead of time!

Financial systems are required to take the business to the next level. Every business must leverage technology and automation to avoid chaos. As companies grow the burden of managing numbers and compliance’s always tend to fall on few shoulders. Moreover, logistical challenges around these can overpower any business. Early adoption of financial technology can reduces these challenges freeing up founders to run the business.

At Integra Books  we have helped many business’s transform their finance functions. Get in touch to transform your business.

 

Retail:Financial Metrics

by Sanjeev Archak Sanjeev Archak No Comments

Anyone with a business knows that the numbers don’t lie.Retail is a hyper-competitive industry. And, I promise, your competition is already tracking and measuring retail metrics.  Retail, in particular, is data rich with constant tracking on so many levels. A lot of business owners lose out as they do not know what to look for or if they do they struggle to find a way to bring the data together. Let’s get familiar with key financial  metrics for retail businesses.

Stock turn/inventory turnover

Also known as inventory turnover, stock turn is the number of times stock is sold through or used in a given time period.Stock is a huge part of your retail operation. So if you find yourself replenishing an item frequently that item has a high turnover. If you rarely need to order it then it has a low turnover. 

To buy stock, you need cash, once you buy the stock that money is then tied up in that product until it is sold. If something has a very low turn rate it means it reduces your cashflow and essentially ties up funds on your shelves. Figuring out the worst performing items and reducing your number of lines on that basis can improve your cashflow and boost your bottom line.

Gross margin

Every business needs to make a profit in order to survive.Gross margin is defined as: total sales revenue minus the cost of goods sold, divided by the total sales revenue, expressed as a percentage.Tracking Gross Margin ensures you are actually turning a profit.Having this information available  real-time as possible means you can act fast and avoid  losses 

Cashflow

Cash is king. A business cannot survive without cash.A retail business needs cash daily to keep the show running. If you are selling seasonal products then cash management becomes crucial in the off season. Track these trends and understanding when they will occur allows you to stay ahead . A cash forecast always helps you stay on top of your cash situation.

Average Transaction Value

All retail marketing efforts are directed towards attracting new customers. A retail business needs to find ways of increasing the customer spend over a period of time. An increase in 10% spend by a customer,across product lines can be huge.Tracking the average sales value and then finding ways to improve it is vital.The key is to increase the average sale value and add to your revenue.

What metrics do you find the most useful in your business?

 

Quick Tips to Improve Cash Flow

by Sanjeev Archak Sanjeev Archak No Comments

Cash is King. There are no two ways about it. Effective cash flow management is one of the  the foundations of a business. How do you improve cash flow? In theory it is simple, increase your cash inflow and decrease the cash outflow. However, putting this formula into practice is easier said than done. Hence, managing your cash flows requires foresight.

We have explored the need for cash forecasting and budgeting in our previous post .In this post we will provide you with some pointers on how to improve cash flow :

1. Review of Costs

Review the costs being incurred in your business and formulate a budget for major expenses. Bench mark these expenses against a  previous period. Look for cost savings by looking for cheaper products and services.

2.Inventory Management

If you are a manufacturing business or a retail business then managing inventory must be a focus area. Categorise inventory into fast,slow and non moving items. Stocking fast moving items will lead to quick inventory to cash cycle and cut cash blocking in piled up stock. There are various inventory management tools available. We recommend Zoho Inventory.

3.Get paid faster by Customers

Make it easy for customers to pay you by using payment gateways. These integrate cloud based accounting apps and makes collections & reconciliation a breeze. Monitoring credit periods is a must to manage cash from customers. 

4.Price your products/services

It is important to price your products/services to maintain their perceived  value. Increase in sales prices will lead to positive cash flows whereas decrease in sales price may result in increase in sales volume thereby leading to increased cash flows. So these decisions should not lead to loosing customers or decreasing  sales. It is a fine line to tread.

5. Build a cash forecast

Cash forecast is a strategic decision making tool. Hence it is important to run forecasts at regular intervals, this could be monthly, quarterly or even annual. A forecast always gives you a heads up.

Get proactive with cash flows

Work closely with your accountant to do all this. A cloud based accounting software helps you to do this and much more for your business. 

Our experts at Integrabooks will advise you on your cash flow management and working capital which helps to streamline your finances and produce improved cashflow. Get in touch with us today!

 

 

SaaS metrics

by Sanjeev Archak Sanjeev Archak No Comments

Keeping track of key metrics is very important and can give you a great overview of how the business is doing. Traditional financial metrics like EBITA,Net Profit, Cash to Turnover does not cut it for a SaaS business. What metric should a SaaS company use to measure performance?  It doesn’t need to be all-consuming so let’s keep it simple. 

Here are the top metrics a SaaS business should track to keep growing and stay on the right path.

1.  Cost Per Acquisition (CPA)

Acquiring customers costs money. There is a cost involved in running Facebook ads, Email campaigns, Google ads. The formula for measuring CPA is simple.Your total marketing costs divided by a number of new clients you attract is your CPA. If you have a high CPA then you will have to re-look at your marketing processes and adjust accordingly. 

2. Customer Lifetime Value (CLV)

It is apparent that CLV has to be higher than CPV to generate a profit. This means that you consider the net profit over the entire course of your business’s relationship with a customer rather than just an initial sale. Depending on your business model this might be weeks, months or even years. SaaS companies have a recurring billing model which result in a loss in the initial transaction due to trial period discounts.

3. Gross Margin

A positive gross margin is required for a business prosper. So what is gross margin it is the difference between sales revenue and cost of goods sold. Increase in sales volume should allow increase in gross margin due to efficiencies.

4. Customer Churn

Customer loyalty is critical for a business. Customer retention costs nearly five times more than acquiring a customer. It is important to measure the time that the customer stays with your business. Something as simple as adding some user-friendly training videos your customers can access may improve churn.

Some simple ways to examine the drop-off points are to survey existing customers and test some changes, ultimately implementing the most effective changes.

5. Cashflow

Cash is King. Without cash, a business dies, it’s that simple. A profitable business need not be a cash rich business and would be struggling to pay day to day expenses.

Its important to build a cashflow forecast for a range of scenarios. A dynamic forecast will enable to make strategic business decisions. 

There are endless financial metrics you could track in your business but getting a handle on just these five will give you a great starting point and help you keep your business on track, improve your bottom line and manage growth in a profitable way.

If you are a SaaS company, we recommend Zoho Subscriptions to handle all your subscriptions. Let our experts Integra Books help you with setting up Zoho Subscriptions.

Happy Tracking.

 

 

Get to Know About the Penalty for Late Filing of Service Tax Return [And More]

by Sanjeev Archak Sanjeev Archak No Comments

Every service provider in India is aware of service tax and many have at some point dealt with a penalty for late filing of service tax return. For those who are not aware, service tax is an indirect tax that is levied on the services provided by any service provider. Consumers are responsible for paying this service tax which is included in the invoice, and service providers are responsible for collecting it and paying it through the service tax return.

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Significance Of Having a Financial Plan For Your Business

by Sanjeev Archak Sanjeev Archak No Comments

You have always dreamt of starting a business of your own and finally, you got the right business idea which you are very enthusiastic and pumped up about. What’s the next step after this? What do all successful entrepreneurs have in common that makes them turn their small startup businesses into multi-million dollar companies? Well, one common advice that all these entrepreneurs would suggest is to have a sound financial plan for your business.

Planning is bringing the future into the present so that you can do something about it now.

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