Tag Archive for: Accounts

Development and keeping of a balance sheet are imperative for any startup or successful business. A balance sheet is a listing of all the assets your business owns and how much you owe, which cover all the liabilities and equity management. The assets and liabilities are more like your balance sheet, in simple terms, it accounts for the things you own and the things you owe.

The type of assets you have, whether it has variable cost or fixed every aspect of it needs to be looked into in detail so that a correct estimation of the overall profits and losses can be made. Some companies make a yearly balance sheet while others, make it quarterly to optimise and enhance their assets and minimise their liabilities. Your net assets need to be calculated, which is the difference between your assets and your liabilities. Keep in mind that net assets are not the same thing as the net business value. With the expertise of double-entry bookkeeping, one can make sure that their net value of assets is equal to their value of equity.

This entire process of making the balance sheet and making your profit and loss statement must be done on a regular basis by an accountant so that one can look into the losses and minimise them before they start the reduce your investment. Creating and managing a sound balance sheet is the key to surviving and thriving in this competitive world of finances for business organisations today.

Cash flow forecasting can be defined as the flow of financial sources in the future for your business during a given period. Here the cash in incorporates receipts, taxes and any money contributed by the owner into his or her business. Whereas cash out refers to any amount paid as wages, paid suppliers, etc.

Cash flow forecast is not a very difficult task, but when undertaken manually, can lead to a lot of time consumption. Every organization needs to develop a plan for a short-term cash flow as well as a long-term cash flow.

For short-term cash flows, one needs to make a list of all the expenses one will be making, taking into account how much you spend on the resources required for the manufacturing of the products or keeping up with the services, the travelling charges, the charges as are necessary for paying the labourers and the professional charges too. All the receipts need to be kept in proper condition and be accounted for. The cashout forecast needs to be made similarly.

The same principle needs to be applied to long-term forecasting too. The annual budget and the balance sheet will help you maintain a good cash flow. Estimating an accurate cash flow is not possible, so probable measures are taken. Excel is an outstanding and widely used tool for long-term cash flow forecasting. A realistic forecast of cash position helps you maintain a better position in the market.