Grow Your Financial Skills Workshop

Do you make the most of your financial information?

Its easy to feel overwhelmed when managing your business finances. Information from accountants can mean very little without the knowledge of how to use it to plan and balance risk.

Matt Bellingham, facilitator of our Grow Your Financial Skills Workshop gives these three top tips for improving your balance sheet:

1.       Understand your working capital cycle

Your working capital cycle is the length of time it takes from using your cash to purchase stock, and using the stock to securing the sale and receiving the cash. Measure your stock days, measure your debtor days, and do everything in your power to speed this cycle up. The faster you spin it, the more cash you have to work with.

2.       Understand your margins

Work from the bottom up. You need to understand every cost that is going in to your product, and add your margin on top of those costs. Once you understand this, you should set one simple rule in place across the board: don’t discount. No matter how tempted you might be, as soon as you begin discounting to compete, it becomes a race to the bottom. If your differentiator is price, then price appropriately from the get-go, but understand your numbers and positioning right from the start and price your products to your position in the market.

3.       Understand leverage

Your debt-to-equity ratio tells you how much debt a company has in relation to its equity. Tracking this metric allows you to have some financial flexibility in terms of debt, while helping you monitor your assets and make sure you’re not borrowing too much. The goal is to find the ratio that works for your business, within your working capital cycle and avoid unnecessary risk. 

If you are interested in learning more about how to master your finances, and our Grow Your Financial Skills Workshop, click below. Our next workshop is in Auckland on 7 – 8 August.