top of page

A Simple Guide to Keeping Track of Your Expenses and Profits

Are you tired of not knowing where your money is going each month? Do you want to get a handle on your finances but don't know where to start? If so, then this guide is for you!


We will show you how to track your spending and income and help you identify ways to save more and make your finances more efficient.


First of All, Why Does Cash Flow Matter?


In order to keep track of its cash flow, a business needs to document all of its financial transactions. This can be done using a simple spreadsheet, which will list all income and expenses as they occur. By subtracting total expenses from total income, a business can calculate its net cash flow for a given period of time.


A company's cash flow is important because it lets the business owner know if the company is making more money than it is spending (in other words, if the company is profitable). If the company makes more money than it is spending, it has a "positive" cash flow.


The thing is, a company's expenses exceeding its income is a common occurrence, especially for startups. While it is not ideal, it is important for companies to track their profit and expenses from the beginning. This will help them make necessary changes and improve their cash flow.


Tracking Your Profits


Send Clear, Professional Invoices


The invoice should be dated and include an invoice number for accounting purposes.


Indicate a Client's Purchase Order Number


The purchase order, or P.O., is a document generated by the client when they first request your product or service. This document helps the client's accounting department keep track of approved services and helps the payment process move along without any delays.


Your Company's Contact Information


Make sure your invoices include complete contact information for the person responsible for paying the invoice. This includes the full name, address, phone number, email address, and tax information (if applicable). Incomplete information can result in delayed payment.


Generate a "Profit and Loss" Report


A P&L Report is essential for any business owner to understand the financial health of their company. The report will show you how much revenue your company earned and how much money was lost to expenses. This information is important in order to make informed decisions about the future of your business.


A "Profit and Loss" report can help management better understand where the company's money is being spent. This type of report can show areas where the company may be spending too much money, such as on rent or a key ingredient for a product. Knowing where the company is spending too much money can help management make better decisions about future spending.


Tracking Your Expenses


Open a Business Bank Account


Before signing up for a business bank account, it's important to consider your needs and how many transactions you'll have in a month. Many banks charge fees for business accounts, so it's important to compare rates and find the best option for your company. Other factors, such as rewards and incentives, should also be considered when choosing a business bank account.


Categorise Your Business Expenses


The act of categorising your business expenses simply means organising your expenses into different groups. For example, you might have a group for office supplies, another for advertising, and another for travel. This makes tracking your spending easier and seeing where you can cut back.


Track Your Expenses by Client


By tracking your expenses per client, you can better understand which of them is costing you more to do business with. This can help you strategise for the future, potentially lose some clients costing you more money or rethink your pricing structure.


Conclusion


Overall, by following the simple tips outlined in this guide, you can keep track of your expenses and profits and ensure your venture is running smoothly. By understanding your financial situation, you can make better decisions about it, all the way towards its eventual success.


If you are looking for well-trusted accountants for eCommerce businesses in Australia, look no further than our expertise here at The ECommerce Accountant. We are the business advisors for all online stores and influencers in Australia. Call us today and let us tend to the profits and expenses of your venture in no time!

3 views0 comments

Comments


bottom of page