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Are you making money or losing it?
Bear in mind that the importance of knowing where your business stands financially through your profit and loss statement should never be underestimated.
Suppose you are not able to monitor the financial progress of your SME company. In that case, it can leave you in the dark about whether you have a sustainable and lucrative business to keep operating or perhaps you are already running at a loss, but since you are unaware of it, you won’t be able to save your business from potential financial issues and, worst case—permanent closure.
You see—without valuable insights into your financial health, it’s impossible to make well-informed decisions regarding how to improve your business and remain profitable in the long term. Therefore, it’s crucial to really track, manage and understand your profit and loss with the help of a reliable mobile-enabled cash flow tool, Moolamore, so your business can stay afloat and thrive.
As you read this blog post, you’ll gain valuable knowledge about the basics of your profit and loss, its importance and how utilising the Moolamore mobile app can help you better understand how it works. Let’s begin.
What are Profits and Losses?
By definition, a profit is your income minus expenses (e.g. debt payments and operating costs such as materials and labour). Thus, if your business experiences a return on investment (ROI), it also refers to making a profit.
Your profit has three forms: gross profit, operating profit, and net profit, and you can use these forms to assess the different areas in your business.
Conversely, a loss is when your business fails to produce enough returns to cover all expenses associated with its operations. Likewise, if your business suffers from loss for far too long, it could lead to bankruptcy.
Tracking, Monitoring and Managing Your Profit & Loss Through the Moolamore Cash Flow Mobile App
Generate Your P&L Statement
Aside from your balance sheet and cash flow statement, your profit and loss statement is another critical document that will provide a clear picture of your SMEs financial standpoint so you can make brilliant decisions on how to improve your bottom line.
Thankfully—with the simple interface dashboards, report exporting and powerful integration features of Moolamore, should you choose to do it weekly, monthly or quarterly, it’s easier to generate your P&L statement based on accurate and real-time data in just a few clicks.
Here are the advantages of a P&L statement in a nutshell:
- Instantly see if you are earning a profit in your business so you can look for methods to decrease costs and maximise the revenue.
- You’ll be able to attract new and existing investors since they would want to see how your business is doing financially, and that’s why you need to provide them with periodic profit and loss statements.
- Preparation for business funding, for instance, if you apply for a business loan to finance a new project, you will be required to submit your profit and loss statement for them to review.
Compare Your P&L Statement To Your Past Financial Periods
Now that you have your profit and loss statement, it’s time to make comparisons.
By comparing your P&L statement to your past financial records using a reliable cash flow app Moolamore, you’ll get insights into how effectively your business has performed over time—whether it is stagnant, declining or growing. Moreover, you’ll also be able to identify areas of improvement you must address and help you plan better for your budgeting, spending and investing.
Make Significant Changes To Your Finances
You’ll be able to determine the issues in the financial health of your SME and devise an excellent strategy for achieving greater profits and eliminating losses once you generate, compare and get a good understanding of your P&L statement using an innovative cash flow app Moolamore.
Not knowing your financial standpoint can lead to missed opportunities and financial ruin. And that’s why if you want a thriving and healthy business, you must know how to track, manage and understand your profits and losses using a powerful cash flow tool Moolamore. This will also enable you to understand what strategies or investments will benefit your business most to ensure its sustainable success.
Take your business on the path to profitability! Start using the Moolamore app today to get a clear view of your financial health, easily monitor and understand your profit and loss and optimise your financial performance. Request a demo today!