Accounts Specialist

What is the Break-Even Point? A simple financial tool which helps you determine at what stage your company, or a new service or a product, will be profitable. To put simply, break-even point analysis will tell you the number of products or services a company should sell to cover its costs, particularly fixed costs. Break-even is a situation where you are neither making money nor losing money, but all your costs have been covered. Break-even analysis is useful in studying the relation between the variable cost, fixed cost and revenue. Generally, a company with low fixed costs will have a low break-even point of sale. For example, a company has a fixed cost of Rs.0 (zero) will automatically have broken even upon the first sale of its product. The purpose of the break-even analysis formula is to calculate the amount of sales that equates revenues to expenses and the amount of excess revenues, also known as profits, after the fixed and variable costs are met. The main thing to understand i

Cash is nothing but any form of money. To run any business successfully, you must have a regular flow of cash, and so companies often have liquefiable assets which can be readily converted to cash. These are called Cash Equivalents. Common examples of cash equivalents include commercial paper, treasury bills, short term government bonds, marketable securities, and money market holdings. An item should satisfy the following criteria to qualify for cash equivalent. An item should satisfy the following criteria to qualify for cash equivalent: The investment should be short-term. They should mature in less than three months. If they mature in more than three months they will be classified as other investments They should be highly liquid. This means that they should be easily sold in the market. The buyers of these investments should be easily available They should be convertible to known amounts of cash. This means that their market price should be available, and this market price should

Managing credit, both receivables and payables, is extremely important for your business. In our article  ‘Why is credit management important?’,  we have learnt about the benefits of managing credit well. Good credit management involves certain essential measures to be put in place. In this article, let us understand the 5 essentials of credit management. Formal credit policy It is important to have a formal credit policy in your business. Your credit policy will define the credit limits you are willing to give your customers, i.e. the maximum amount of credit you can give to your customers. You would also need to outline the maximum credit period you want to give to your customers. A credit policy also details out the process your business will follow to approve credit terms, exceptions and outlines the process for handling violations. When you have a formal credit policy in place, your entire process of granting credit becomes more systematic and well-thought out. Even exceptions wil

One of the key challenges while running a successful business is to deal with cash flow. Since every business model’s heartbeat lies in cash flow, it is important to draw immediate attention towards late invoice payments whether small or large. What might seem like a small amount which would not do much damage to the business, the journey of that amount becoming an unmanageably hefty amount won’t be too long. This major cash void in the business system would not only look ugly on papers but also ruin an otherwise successful business. For cash flow to become a major setback in a business, it only takes a small amount which would eventually lead to some unprecedented situations. Thus, managing late invoice payments with an  invoice software  would help the business escape this scenario, which is not so uncommon in the business world. While charging late payment fee is the primary solution to such an issue, but the messaging, frequency and the customer itself are the 3 key things to be ke

As a business owner, you must be already keeping a track of the overall financial health of the business. While you may hire an accountant for end-to-end tasks that will keep your books of accounts updated, it is imperative that as a business owner, you also go beyond the basic understanding of key financial reports to take your business to the next level. The three primary key aspects which would help you as a business owner to get a holistic view of your company’s books of accounts in sync with your business transactions are; Cash Stock and Taxation Cash What is the ultimate goal of any business? To have regular cash flow, right? So, where do we get these crucial insights about cash flow management in order to stay updated with your company’s finances from? Let’s take a look at how these cash flow reports will help you build your business and trigger long term, growth. Cash Flow Cash flow is the amount of money going in and out of your business. Healthy cash flow can help lead your b

Inventory is money sitting around in another form. You paid money for your inventory, and you will get that money back when you sell it. Until you sell them, managing inventory is crucial. The way you manage your inventory will have a direct impact on the cash flow of the business. Inefficiency in managing inventory will put your business at a disadvantage. Inventories hold a huge amount of your  working capital   and stocking excess inventories implies that cash tied up. Just like Cash flow, it can make or break your business. Being efficient in inventory management will boost your cash flow and creates enough cash cushion for you to invest better. Similarly, not being on top of inventory management will lead to the increased cost of managing inventories and it exposés to various risk such as loss due to price fluctuations, stock deterioration etc. Here are 5 Inventory management reports which help you to be top of your inventories and manage it efficiently. Stock movement analysis St