Use Your Financial Reports to Stop Profit Leaks

by MHolland | Oct 25, 2024 | Accounting Software, Business Tips, Cloud-based Accounting

Running a business or organization is challenging enough without losing money you didn’t even know you were losing!

Profit leaks—small, unnoticed losses—can quietly drain your bottom line.

There is a solution – using your basic reports in a new way.

At ControllershipPLUS we take pride in highly accurate reports. Reports and numbers you can trust. There is nothing more irritating than going through your monthly reports and having that gnawing gut feeling that things are just “not quite right”. That never happens with our reports.

Starting with accurate, reliable reports, you can shine a light on profit leaks and plug them before they get out of control.

Let us dive into how financial reports can help you keep more of your hard-earned profits…

What Are Profit Leaks?

Profit leaks are those small, sneaky drains on your finances that might seem insignificant at first. Maybe it’s a supplier charging a little more each month, or uncollected invoices piling up.

Over time, these tiny leaks turn into major drains. If you don’t track them, they can seriously cut into your profits. The good news? Financial reports are like a magnifying glass for finding and stopping them in their tracks.

Especially ControllershipPLUS reports that are accurate, reliable, and timely.

The Reports You Need

Not all reports are created equal. Some are perfect for spotting leaks. Here are the key ones to keep an eye on:

• Income Statement (Profit & Loss): This is the big one. It shows all your revenue and expenses. If costs are going up but revenue isn’t, you’ve got a leak. Look for rising expenses that don’t add value, like bloated overhead. Overhead is especially problematic because most overhead costs are fixed and so do not go down when revenue drops.
• Cash Flow Statement: This report shows how money flows in and out of your business. If you are making sales but still struggling with cash flow, you have a problem. Cash leaks here could mean you are paying out more than you should or not collecting money fast enough.
• Budget vs. Actual: Think of this as your business’s reality check. You planned to spend a certain amount on marketing, but somehow it doubled? That’s a leak. This report shows exactly where your actual spending is veering off from the plan.
• Accounts Receivable Aging: If customers aren’t paying you on time, that’s cash you are missing out on. This report helps you track overdue invoices and reminds you which clients need a little nudge to settle up. We use a software for many of our clients to help stay current with our client’s receivables.

Where Leaks Happen

Now that you know what to look for, where do these leaks usually show up? Here are a few of the most common areas:

• Overhead Costs: Office supplies, utilities, rent—overhead costs creep up if you are not watching. Regularly reviewing your overhead expenses helps you find areas to cut back. Can you switch to energy-saving utilities or renegotiate your lease? Every little bit helps.
• Labor Costs: If you are paying out more in wages but not seeing a boost in productivity, that’s a red flag. Maybe some roles are overstaffed, or employees need better training. Tracking labor costs as a percentage of sales will show you where the imbalance is.
• Inventory Management: Holding too much inventory ties up cash that could be better used elsewhere. Not enough? You’re missing out on sales. Keep an eye on your inventory turnover rates to avoid stockpile buildup or missed revenue opportunities.
• Supplier Costs: Suppliers may slowly raise prices over time. If you don’t review these costs regularly, you might end up overpaying. Check your vendor agreements regularly and do not hesitate to negotiate for better deals.
• Operational Inefficiencies: Rising operational costs—like manufacturing, delivery, or logistics—are another common leak. Are there tasks that could be automated or outsourced? Use your cash flow statement to pinpoint where you’re spending too much on day-to-day operations.

How to Plug Profit Leaks

Once you have found the leaks, it is time to plug them. Here is how to take action:

• Set Benchmarks: Use your financial reports to set performance targets for each part of your business. For example, cap overhead at a certain percentage of total revenue. Compare regularly to see if you’re hitting those targets and course-correct if needed.
• Review Regularly: Profit leaks do not fix themselves. Commit to reviewing your key financial reports—income statements, cash flow, budget vs. actual—at least once a month. The earlier you catch a problem, the easier it is to fix. This is why one key deliverable with ControllershipPLUS is having a monthly meeting to go over everything from the past month and year-to-date so course corrections can be taken.
• Use the Right Tools: The best way to stay on top of everything is with the right tech. Cloud-based accounting platforms like Xero let you run reports anytime and from anywhere. They also automate a lot of the reporting process, giving you real-time data so no leak goes unnoticed.
• Involve Your Team: You cannot do it all alone. Share financial reports with your department heads and managers. When they see the data, they can take responsibility for their budgets and help keep costs down. Accountability goes a long way in preventing leaks.

It is Better to Outsource Your Finances Than Do It Yourself

Financial reports are powerful, but digging through them and figuring out what they mean can be time-consuming. That’s where a trusted accounting partner, like ControllershipPLUS comes in. We analyze your reports, spot profit leaks, and give you actionable insights—so you can focus on running your business, while we handle the numbers.

Conclusion – Protect Your Profits

Profit leaks are the hidden enemy of every business, but they do not have to be a fact of life. By using financial reports to keep a close watch on your expenses and revenues, you can spot leaks early and plug them before they grow. The result? A healthier bottom line, smoother operations, and more money in your pocket.

Thanks for reading…

Maximizing Profit Margins While Scaling

by MHolland | Oct 16, 2024 | Accounting Software, Business Tips, Cloud-based Accounting

Growth is exciting, right?

However, if you scale unthinkingly, profit margins can shrink if you are not careful.

The trick? Boost efficiency, improve cash flow, and cut waste—without slowing growth.

Here is how to do it.

Number 1 – Streamline Operations

More growth does not have to mean more chaos. Tighten up operations for smooth, efficient scaling. Put systems in place for everything.

Start with operations, then marketing.

• Automate Repetitive Tasks

  Free up your team by automating routine work. Software tools can handle payroll, invoicing, and inventory tracking—faster and more accurately than humans.

• Standardize Processes

  Create clear, repeatable processes for key tasks. This ensures consistency and reduces time spent putting out fires. You can use software to help you create Standard Operating Procedures.

• Outsource Non-Core Activities

  Focus on what you do best. Hire third parties for things like accounting, IT support, and even customer service so your team can zero in on growth.

Number 2 – Improve Cash Flow

It is a cliché I know, yet cash is king. Managing it well ensures you are not just growing; you are growing profitably.

• Get Paid Faster
  Tighten up your invoicing. Send invoices immediately, follow up on overdue payments, and offer discounts for early payments.
• Delay Payments (Where Possible)
  Negotiate better terms with vendors. Pushing payments out by just a few days can give you a lot more flexibility.
• Track Your Cash Flow Regularly
  Keep a close eye on cash in and out. Use real-time reporting tools to spot issues before they become problems.

Number 3 – Cut Waste Without Sacrificing Growth

Cutting costs does not mean cutting corners. It means using resources smarter.

• Review Your Expenses
  Conduct regular expense audits. Are you paying for software no one uses? Could you negotiate better rates with suppliers?
• Reduce Energy Costs
  Small tweaks like energy-efficient lighting or automated thermostats can save money over time.
• Optimize Your Workforce
  Invest in training so employees can work smarter, not harder. The more efficient they are, the more profitable you become.

Consider offshoring Team members for non-core activities to lower wage rate countries like the Philippines.

Number 4 – Focus on High-Return Investments

Not all spending is bad. The key is to invest wisely.

• Invest in Technology
  The right tech can speed up operations, reduce errors, and lower costs. Do not skimp on tools that boost efficiency.

For our clients, we are hyper efficient at using online software for all repetitive accounting and bill paying tasks.

• Focus on Your Best Customers
  Double down on products or services that bring in the most profit.

Upsell to your top clients and nurture those relationships.

Scaling can be both exciting and challenging. But by streamlining operations, improving cash flow, and cutting waste, you will maximize profit margins while keeping your growth on track. Happy scaling!

Thanks for reading…

How We Keep Your Business’s Financial Data Secure with Xero, Plooto, HubDoc, and ApprovalMax

by MHolland | Oct 11, 2024 | Accounting Software, Business Tips, Cloud-based Accounting

As you know we manage all your internal accounting processes using online software…

Cloud-based platforms like Xero, Plooto, HubDoc, and ApprovalMax have made managing your finances easier, timelier, more accurate and efficient. But with the convenience of these tools comes the challenge of keeping your financial data safe.

In this post, I will walk you through the key security features of these platforms, share some common risks to watch out for, and offer tips on how you can protect your business from potential threats. Let us dive in!

Why Protecting Your Financial Data Is So Important

Your business’s financial data is a goldmine for cybercriminals. From financial transactions and payroll to sensitive tax records, your data holds everything hackers want. And the larger your business, the more attractive you are as a target.

Using online accounting tools like Xero, Plooto, HubDoc, and ApprovalMax is a smart way to streamline operations. Making sure they are secure is crucial.

Let us see how each of these platforms manages security and what you can do to keep your data safe.

Xero: Simple Accounting with Serious Security

Xero is known for being user-friendly, but it is also packed with features to keep your data secure. We are making sure that its security features are being utilized for you.

Xero’s Security Features:

• Multi-Factor Authentication (MFA): To log in, you do not just need a password—you also need a code sent to your phone, making it harder for anyone to hack your account.
• Encryption: Your data is protected with encryption both while it is being transmitted and when it is stored on Xero’s servers.
• Regular Backups: Xero backs up your data regularly, so you do not have to worry about losing everything if something goes wrong.
• User Permissions: For your benefit, we control who gets access to what, making sure only the right people see sensitive financial information.

We Keep Your Data Safe By:

• Enabling MFA: We make sure all users on your team are using multi-factor authentication to add an extra layer of protection.
• Monitor Activity: We keep an eye on user activity logs to spot any unusual behavior before it becomes a bigger problem.

Plooto: Secure and Streamlined Payments

Plooto takes the hassle out of payments, and it is designed with security in mind. Whether you are paying suppliers or approving invoices, Plooto ensures that your transactions are secure.

Plooto’s Security Features:

• Encryption: Every payment you process through Plooto is encrypted, so sensitive payment data stays safe.
• Approval Workflows: Plooto requires multiple layers of approval for payments, so no one person can send out money without the right checks in place.
• Audit Trails: Every transaction is recorded, giving you a clear view of what happened and who approved what.

How to Stay Safe:

• Tighten Approval Workflows: Make sure you review your approval processes regularly so that only the right people are authorizing payments.
• Review Access Controls: Regularly check who has access to approve transactions and limit it to those who absolutely need it.

HubDoc: Safe Document Storage with Less Paperwork

With HubDoc, you can say goodbye to piles of paperwork. This platform helps you organize and store financial documents, and the security measures in place ensure that your sensitive files are safe.

HubDoc’s Security Features:

• Bank-Level Encryption: HubDoc uses the same type of encryption as banks, keeping your documents secure when they are uploaded and stored.
• Automatic Data Extraction: HubDoc extracts data from invoices and receipts automatically, reducing the chance of manual errors that could lead to security issues.
• Multi-User Roles: You can control who has access to which documents, helping keep sensitive data away from unauthorized users.

How to Stay Safe:

• Set Clear Permissions: Assign clear roles for who can view and manage documents, ensuring that only authorized users have access.
• Remove Old Documents: Set up a process to regularly review and delete old, unnecessary documents to reduce security risks.

ApprovalMax: Keeping Approvals Secure and Efficient

ApprovalMax helps you control who approves what in your accounting processes, adding an extra layer of oversight. It is a great tool for keeping things running smoothly, but it is also packed with security features to protect your approval workflows.

ApprovalMax’s Security Features:

• Segregation of Duties: ApprovalMax ensures that no single person has the power to approve transactions alone, which helps prevent internal fraud.
• Role-Based Access: Just like the other platforms, ApprovalMax allows you to control who has access to which approvals, based on their role in your business.
• Audit Trails: All approval actions are tracked, giving you a full history of who approved what.

How to Stay Safe:

• Audit Your Workflows: Regularly check your approval workflows to make sure everything is set up correctly, and no unauthorized approvals are sneaking through.
• Limit Approval Rights: Only give approval rights to people who need them—and remove access when roles change.

Conclusion

When it comes to managing your business’s finances online, security should be a top priority. Platforms like Xero, Plooto, HubDoc, and ApprovalMax come with built-in security features.

We ensure, on your behalf, that they are properly configured and used. By setting up multi-factor authentication, managing access controls, and reviewing your workflows regularly, we help keep your financial data secure, so you can focus on growing your business.

Thanks for reading…