Bookkeeping and accounting are essential to ensure smooth business operations. These administrative tasks allow you to monitor the money that comes into and out of your enterprise and gain insight into your business’s expenses as well as cash flow status. In addition, using your business’s financial information, you can evaluate your business’s financial health and make informed decisions when investing in your company’s growth.
With this, it is crucial to ensure accurate and current records. As the world transitions towards the digital age, investing in business automation tools can boost your operation’s efficiency and increase your profits.
Many enterprises operating in the modern business landscape are leveraging the best bookkeeping app programs to expedite the process of recording, categorizing, and monitoring financial transactions. Accordingly, some businesses also utilize free accounting software for small business to streamline the process of generating accounting statements.
By using accounting and bookkeeping automation tools, you can streamline processes and minimize errors. It can also enable you to efficiently generate financial records and accounting statements needed during the evaluation process.
Various factors or metrics are considered when evaluating your business’s financial health, including balance sheet, income statement, expenses, account receivable, account payable, and cash flow statement.
Your company’s balance sheet will help you determine if your business is experiencing financial troubles. Meanwhile, your income statement shows you the financial performance of your business by providing information on your enterprise’s expenses, revenues, and profits.
Having detailed financial information on your business’s expenditures also helps you see if your enterprise is able to settle financial obligations as agreed upon. Also, extensive information on your accounts receivables and payable also shows whether your clients pay on time and if your company has settled invoices from creditors or other vendors. Lastly, your business’s cash flow statement shows how it uses its cash within a given accounting period.
For more information on the different factors that you need to consider during the evaluation process of your business’s fiscal health, see the infographic from KIPPIN, Inc. provided below:
