A brand new business owner may not necessarily be found as a financial expert. It is quite common and natural that a start-up is often required to take a loan. Investors normally wish to be provided with an extensive financial analysis and data before considering granting any such loan to the owner for their start-up.
So, what is this data, and where does it come from? The data is from the bookkeeping records that calculate all of the company’s financial ratios. These ratios define a business’s health, well-being, and risks. Investors are highly interested in seeing these facts and figures before deciding whether to invest in a certain business.
Ratio analysis is one of the most recognized methods for determining a business’s financial condition. These ratios are also found to be most helpful in making comparisons and assessments between clients and other companies in the industry.
In accounting and bookkeeping, each of the ratios below is extremely important for credit professionals to make informed decisions. They can judge and decide whether to give credit to customers, exactly how creditworthy the business is, how much to invest, and what the appropriate terms of sale should be. Here are the financial ratios lenders review when deciding a business’s creditworthiness.
Debt-to-Equity Ratio
The debt-to-equity ratio permits lenders to compare a company’s assets with its debts. A lender considers a business a high risk when their debt to equity ratio is high. They would much rather invest in a company where the ratio calculated is found to be of little or no debt.
To calculate the debt-to-equity ratio:
Take a company’s recent balance sheet.
Divide the total liabilities by their total figure of shareholder’s equity.
Take, for example, a business with a figure of $200,000 as liabilities and a figure of $400,000 as assets.
That company’s debt-to-equity ratio will be calculated as 0.5.
Operating Margin
An operating margin calculates a company’s profit as a percentage of its total sales. Operating margins find a company’s total revenue and total profit. These figures give a clear picture of the company’s efficiency.
To find a company’s operating margin, divide the income from operations by the total net revenues. For example, a company with $1 million to $100 million in yearly profits from sales will have its operating margin calculated at 1%.
Current Ratio
The current ratio is used as a liquidityratio. It is calculated when the total sum of all current assets is divided by total liabilities. This ratio measures whether you have sufficient assets to pay for your liabilities. If your current ratio is calculated to be two, it means that you have twice as many current assets as current liabilities.
This ratio is similar to the debt-to-equity ratio, though in this case, total assets are divided by total liabilities instead of liabilities divided by shareholder’s equity.
Inventory Ratio
The inventory ratio can be used to calculate a company’s production and purchasing efficiency. It gives a fair picture of how many times the company is able to sell its inventory over a specific period of time.
To calculate this ratio, divide the entire cost of the services or products sold by the entire inventory cost. If the ratio is higher, the company is more efficient at turning over its inventory. Lenders will consider such businesses creditworthy and most likely to be successful and productive for investment.
Let’s take an example. If a business has sales of $500,000 and inventory of $100,000, the inventory ratio calculated will be 5-to-1.
Conclusion
In conclusion, understanding key financial ratios is crucial for start-ups seeking loans. Investors rely on these ratios to assess a business’s health and potential and make informed investment decisions. From debt-to-equity to inventory turnover, each ratio offers insights into a company’s financialviability and helps pave the way for successful funding and growth.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
The following are the top facts and figures related to the cyber security industry over the previous year, demonstrating what’s to come in the following years. Here are the top five cyber security facts and figures.
The Impending $6 Trillion Cybersecurity Expense
The expense is expected to hit $6 trillion annually by 2021. Everything starts and closes with digital wrongdoings. Without it, there’s nothing to protect in the digital world. Cyber security experts and significant media channels have widely agreed on the expectation that digital wrongdoing harms will cost people around the world an estimated $6 trillion annually by 2021, up from $3 trillion in 2015. This speaks to the best exchange of monetary riches ever, dangers the motivators for development and speculation, and will be more productive than the worldwide exchange of all significant unlawful medications joined.
Surging Cybersecurity Spending: A Trillion-Dollar Trend
Cybersecurity spending is to surpass $1 trillion from 2017 to 2021. According to Gartner, the ever-rising tide of digital wrongdoing has pushed data security (a cyber security subsidiary) spending to more than $86.4 billion in 2017. That excludes the Internet of Things (IoT), modern IoT, mechanical control frameworks (ICS), car security, and other cyber security classifications. Worldwide spending on cyber security items and administrations is anticipated to surpass $1 trillion in more than five years, from 2017 to 2021.
The Cybersecurity Workforce Crisis: Addressing Unfilled Positions
Digital wrongdoing will dramatically multiply the number of unfilled cybersecurity employees, which is anticipated to reach 3.5 million by 2021. Each IT position is additionally a cybersecurity position now. Each IT employee and innovation specialist should be involved in securing and guarding applications, information, gadgets, frameworks, and individuals. The cyber security workforce deficiency is surprisingly more terrible than the employment numbers recommend. Therefore, cyber security unemployment rates have dropped to almost zero percent.
Expanding Vulnerabilities: The Growing Human Attack Surface
The human assault surface will reach around 6 billion individuals by 2022. As the world advances, people have pushed machines forward as the best focus for digital crooks. There were 3.8 billion web clients in 2017 (51% of the total 7 billion population), up from 2 billion in 2015. Cyber security experts predict that there will be 6 billion web clients by 2022 (75% of the anticipated population of 8 billion) — and over 7.5 billion web clients by 2030 (90% of the expected population of 8.5 million, six years old and more established). The programmers notice blood now, not silicon.
Ransomware Rampage: Escalating Global Threats
Worldwide ransomware harm costs are anticipated to surpass $5 billion. That is around $325 million more than 2015 — a 15X increment in two years and anticipated that would compound. Ransomware assaults on social insurance associations — the No. 1 digitally assaulted industry — will be fourfold by 2020. Cyber security experts expect ransomware harm expenses will ascend to $11.5 billion in 2019 and that a business will succumb to a ransomware assault at regular intervals at that point.
What does everything mean? In 2015, Ginni Rometty, IBM’s executive, President, and CEO, stated, “Digital wrongdoing is the best danger to each organization on the planet.“
Top 5 Cyber Security Statistics
The damage costs of cybercrime are expected to reach an amount of almost $6 trillion on an annual basis by 2021.
Cybersecurity spending is expected to exceed $1 trillion from 2017 to 2021.
Unified jobs in the cybersecurity industry are expected to reach 1.5 million by 2019.
Human attack surfaces are expected to reach 4 billion people by 2020.
Up to 200 billion IoT devices will require/need online protection by 2020.
Conclusion
The cybersecurity landscape is rapidly evolving, driven by staggering figures and alarming trends. With cybercrime costs projected to skyrocket, surpassing $6 trillion annually by 2021, the urgency to fortify defenses has never been more critical. The challenge intensifies as spending on cybersecurity surpasses the trillion-dollar mark and the workforce struggles to keep pace with demand.
The expanding human attack surface and the escalating ransomware threat underscore the imperative for robust cybersecurity measures. Ginni Rometty’s warning that “digital crime is the greatest threat to every company in the world” rings more accurate than ever. In this dynamic environment, vigilance, innovation, and collaboration are paramount to safeguarding our digital future.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
It is common knowledge that tax exemption is not straightforward; it takes a lot of time and effort to get it correctly. Tax exemption recognized by the IRS allows you to devote your financial resources to charitable causes instead of paying taxes. Tax accounting for non-profits includes similar accounting procedures for running an ethical business.
Determine Your Charitable Organization Type
The first task is to determine the type of charitable organization you run, whether it is a trust, corporation, or association. A charitable organization can be a sole proprietorship or a partnership. There are many different organizations to choose from. You should select the organization you relate to the most.
Filing Proper Tax Accounting for Non-Profit
After determining your organization type, the next step is collecting all the necessary documentation for the tax-exempt status. This is one of the essential steps in developing the procedure for tax accounting. Important documents could include the articles of incorporation, any paperwork related to the trust, or the organization’s reports. Ensure all the needed documentation is accurate and complete and not miss critical information.
After gathering all the critical information, you need to complete Form 1023—Application for Recognition of Exemption Under 501(c)(3) of the Internal Revenue Code (or Form 1023-EZ). The report is about 30 pages long and requires all the necessary information. You can also gather information and study to complete these steps accurately.
Maintain Tax-Exempt Status
Tax accounting for non-profits allows an organization to maintain its tax-exempt status after successfully getting the exemption. Biding by the various rules and regulations is necessary to ensure you keep the exempted status.
It is essential to enlist that the public owns the non-profit. The board of directors conducts the organization’s management to keep the exemption. The board officers can make important policy decisions, including overseeing all non-profit organization activities.
It is necessary to protect the board of directors from personal liability. Sometimes, it may seem complicated, but the members usually have voting rights and use them to make crucial decisions. Such decisions also include amending the organization’s articles or the company’s operational bylaws and electing new members of the non-profit organization.
An essential part of having a tax exemption status is to have a detailed record of every transaction conducted while determining the tax accounting for the non-profit. Most organizations use a double-entry transaction system to have all necessary documentation in the paper trails. Under the IRS-recognized tax-exempt status, the responsibility of senior management is to restrict activities and file all the paperwork on time when they are due for submission. Tax accounting for non-profits also includes the following:
The organization must not make any contribution to any political campaign.
The non-profit is not allowed to donate anything to any political party.
Non-profits are allowed to conduct limited lobbying, but the process is heavily restricted.
The non-profit must not provide revenue or profit based on its charitable activities.
Salaries and other operational costs are permitted.
Increased Scrutiny of Non-Profits
The IRS amplified its scrutiny of charitable organizations around 2007, holding tax-exempt organizations further accountable for their work. Hence, proper tax accounting for non-profits is essential. Continual variations in accounting and auditing standards increase costs to the certified public accountant or CPA, but establishments may not have improved their budgets to compensate. Make sure you are prepared for your taxes.
Conclusion
In conclusion, navigating tax exemption for non-profits demands meticulous attention to detail and adherence to IRS regulations. From determining organizational type to maintaining tax-exempt status, each step requires thorough documentation and compliance. With proper tax accounting practices, non-profits can ensure transparent financial management, enabling them to focus on their charitable missions. Despite increased scrutiny from the IRS, diligent adherence to tax regulations ensures that non-profits can continue their vital work effectively.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Organizing finances is a top priority for every business. A bookkeeping solution that is simple, secure, and scalable is what you need at this point. QuickBooks accounting is a tool that provides a rich archive for account tracking, invoicing, and vendor and employee management. While it is a simple tool that solves most of your accounting needs, it can be challenging to be pro at it right from the start. Therefore, with a few simple tips and steps, you will be on the way to managing your numbers with ease.
Find an Accountant
Migrating all your finances to QuickBooks requires the services of a professional accountant and bookkeeper so that you can discuss the details with someone with experience managing such tasks. Every business has unique needs. A professional accountant is best suited to understand them and match your business specifics with the QuickBooks accounting tools. Following specific state rules and regulations and setting proper conventions for tracking business expenses would be best. This is all best handled by someone familiar with the process.
Review QuickBooks’ Basics
Getting acquainted with the tools should be your next step, even if you consider yourself an avid learner. The Getting Started tab in the software lets you know how it works and how it thinks about managing your expenses. QuickBooks recognizes revenue as ‘Money in’ and expenses as ‘Money out.’ Therefore, you must get acquainted with these terms for efficient use. The flow of the revenue and costs is classified as ‘Getting around.’ Knowing these QuickBooks accounting basics will ensure you are ready to use them to the best of your abilities.
Secure Everything
Security is one of the most critical factors for managing your finances. Before you use QuickBooks for anything else, your priority should be to set a unique and complex password by navigating to the software’s ‘your account’ tab. You should regularly update the passwords because the tool will be linked to your bank account. Apart from setting up passwords, you can use advanced computer hardware that is resistant to hacking and viruses. Keeping backup data is also essential to avoid any unwanted situation related to data loss.
Enter Business Essentials
QuickBooks lets you manage all business essentials on the go, but you must first enter everything manually. Enter your financial information and other details in the ‘company’ tab under the ‘preferences’ link. Most critical information will vary depending on your type of business and preferences. However, some of the essential elements of every business are related to reporting forms, tax IDs, and reporting calendars. Once you have entered all details, ensure they are updated and error-free. Any mistake can be fatal because everything is interconnected.
Enter Client Info
The ‘customer’ tab in QuickBooks accounting is one of the most important for you because customers are the ones who will eventually bring profit to your company. While mentioning all relevant customer information is vital, it is critical to determine the payment method adopted by the customer. You must ask them if they will pay with cash, a credit card, or a check. Setting the correct option at the start will help you sort out many payments-related issues later. Send them a test invoice to ensure that everything is working smoothly.
Track the Money Flow
The banking tab on the QuickBooks accounting tool determines how money is spent and what is coming into the business. ‘Write checks,’ ‘you must use cash expense,’ ‘ Deposits,’ and other similar tabs to record your expenses and sales. ‘Activity’ reports will show who is responsible for specific transactions, which is crucial as you need to check everything.
After everything is set up, you are ready to generate a profit and loss report, which gives you a clear picture of your business’s performance. This is done with a few simple clicks and a QuickBooks accounting tool.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Starting a new business and acquiring business licenses and permits is no joke. A startup with a unique idea may be exciting since it may be your first business adventure, but procuring rights and access is one of the least exciting parts of the journey. For legal operations, virtually every business needs approval. However, knowing which one is right for your business can be tricky. It all depends on the rules and regulations of the local government and policies set by the federal government to ensure safe and healthy business operations.
Since we all need to abide by specific rules and regulations for operating a business legally, we need to involve state agencies and legal authorities to learn the legal obligations of a new business startup. Small businesses usually face many difficulties setting up a business from scratch since they lack awareness regarding licenses and permits. Often, it is better to hire the expertise of legal experts to get the job done right—the very first time!
Lack of Awareness Can be Troublesome
Entirely too often, small businesses overlook the need to procure licenses and permits as they may be unaware of the requirements. Entrepreneurs can face heavy penalties and jail time if they fail to pay and register their businesses with the relevant departments. These consequences may be highly costly to companies because startups cannot afford to pay anything extra for a fine since they already have scarce resources to run their business operations. However, the good news is that now you can acquire the correct license and permit without paying an arm and a leg, assuming you know which helps to register.
Why Do Businesses Need Licenses and Permits?
Licenses and permits allow businesses to fall under the government’s legal protection. Registering with various government entities, such as the Chamber of Commerce and the Ministry of Trading, will help create more business growth and expansion opportunities. These government entities promote and support businesses by exposing them to international markets. The legal relationship with the government also allows subsidies (if announced by the government for the specific sector), which is enormous for a startup’s potential growth and success. It also eases the government, allowing them to track a business’s revenues for tax purposes.
Licenses and Permits—Done Right
Certain types of businesses cannot be initiated without acquiring licenses and permits from the specific departments that come under the direct control of the federal government. We refer to companies that involve international trading, alcohol, aviation, and agriculture by certain types. Therefore, finding an experienced legal expert to execute essential tasks like licensing and permitting specific industries is critically important. Experts can trace and contact federal departments better than we ever could. It is safe to hire them for the legal affairs of a business and will allow the startup to get the footing it needs to begin.
Managing and Maintaining Licenses and Permits
According to studies, even registered businesses must pay fines and heavy penalties because they fail to manage and maintain their licenses and permits. Acquiring an appointment is easy, but maintaining it by keeping track of renewal dates is difficult. You should maintain and produce a copy of the licensing application to avoid penalties. Display the licenses and permits so that customers can see them. You may need additional business licenses to expand your business operations locally or internationally.
Initially, most businesses used to manage and maintain their licenses independently. However, this responsibility has often been transferred to legal experts with professional accountants in the loop for ideal bookkeeping and accounting records to know the exact status of taxes and finances.
Conclusion
In conclusion, every startup must navigate the landscape of business licenses and permits. Ignoring these requirements can lead to hefty penalties and legal troubles. Seeking expert guidance ensures compliance and sets the stage for a successful business journey, allowing entrepreneurs to focus on growth and innovation while staying legally protected and financially sound.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
It is crucial to choose the exemplary billing service for your office as it can directly affect the reputation of your business. When selecting a medical billing service, it is crucial to consider every aspect of the chosen software. There are a wide range of options that you can avail yourself. Medical billing software helps you retain control because it builds trust by executing medical codes and RCM duties. You can have hands-on control of financial operations through this in-house billing system.
Bookkeeping is fundamental when installing medical billing software as it can maintain complete records of patient transactions. An in-house billing system allows you to generate a return on investment (ROI) through a good infrastructure. Doctors or physicians can use Several software options for medical billing services. They include Kareo, MedClarity, and NextGen Healthcare. A comparison of these three software programs is discussed below.
Kareo
Founded in 2004, Kareo is one of the best software choices for supporting your in-house billing process. Web and mobile applications easily manage patients and any complications with billing insurance. Kareo is a proven platform, as there are more than 40,000 potential providers. It can automate the entire process, so patients can pay even faster than they can from an outsourced billing process. It also allows patients to pay their bills online. The starting price of this medical billing software is $74.50/month/user.
This software offers various features, such as claim management, patient payment history, payment processing, remittance advice, statements, collections, and practice management. The product can be deployed through the Cloud, SaaS, and the Web and installed on Windows and mobile devices with an iOS Native. Kareo’s physician practice has 1 to 10 providers, and medical billing companies have 1 to 100 providers.
MedClarity
MedClarity is a powerful and easy-to-use billing software designed to increase an organization’s profitability and productivity. The popular medical billing software was founded in 2002. It provides complete transparency and control over the cycle operations of practice revenue through insightful reports. This medical billing software ensures that the payment process is faster as it comprises the leading engine rules of the industry and denial management tools. It is a cloud-based software perfect for any specialty or practice size.
It can also be deployed through SaaS and the Web. It is an online service and can be used for medical billing 24/7. It comprises several medical billing features, including billing estimates, claims to scrub, claims management, code/charge entry, and patient eligibility checks. In addition to these features, MedClarity can provide the patient payment history, payment processing, practice management, remittance advice, statements, and collections. This medical billing software is an accurate service for all medical practice sizes and specialties looking to reduce denials, optimize scheduling, and generate actionable reports to have greater control over their revenue.
NextGen Healthcare
Founded in 1994, NextGen Healthcare is considered among the top medical billing software options. It provides medical billing solutions that support a patient-centric revenue cycle and enables practices of all sizes to succeed in today’s complex healthcare climate. NextGen Healthcare’s real-time clinical and administrative workflow reduces physician burnout and achieves value-based reimbursement goals.
This medical billing software can benefit you as it can help automate patient registration, appointment scheduling, medical billing, claiming processes, and reporting. The software can be deployed through the cloud, SaaS, and the web by installing it through Windows or mobile devices with Android Native and iOS Native. The offered features include billing estimates, patient eligibility checks, claims management, claim scrubbing, codes/charge entry, statements, collections, practice management, payment processing, payment history of patients, and remittance advice.
Conclusion
In conclusion, selecting the right medical billing software is vital for your practice’s success and reputation. Factors like features, ease of use, and cost can help you make an informed decision. Kareo, MedClarity, and NextGen Healthcare offer robust solutions tailored to different practice needs, ensuring efficiency, transparency, and profitability in your billing processes.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
As a small business owner, I am excited to share with you the significant impact customer retention can have on your business’s continued growth and success. Customers are everything to business! However, retaining loyal customers generates more revenue and creates brand advocates who actively attract new customers. Did you know research shows that it costs five times as much to acquire a new customer compared to retaining an existing one? That’s why I am eager to provide helpful tips on maximizing your ROI with customer retention. Moreover, by prioritizing customer satisfaction, implementing loyalty programs, and maintaining regular communication, you can foster long-lasting relationships with your customers and ensure the continued success of your business!
Here are some critical steps to take:
Step 1: Build Strong Relationships with Your Customers
The first step to maximizing your ROI with customer retention is building strong customer relationships. Moreover, it means going beyond just providing great products or services. It’s about creating a positive customer experience at every touchpoint with your brand. However, this includes providing exceptional customer service, engaging with them on social media, and sending personalized messages and offers.
Step 2: Offer Loyalty Programs and Incentives
One of the best ways to retain customers is by offering loyalty programs and incentives. Moreover, these programs reward customers for loyalty and encourage them to continue doing business with you. These can include discounts, free products, and exclusive offers. Furthermore, not only do these programs help retain customers, but they also increase the average order value and encourage repeat purchases.
Step 3: Collect and Analyze Customer Feedback
You must collect and analyze customer feedback to truly understand what your customers want and need. This can be done through surveys, feedback forms, or social media. However, by understanding what your customers like and dislike about your products or services, you can make the necessary changes to improve their experience and increase retention.
Step 4: Personalize Your Marketing Efforts
Personalization is critical to retaining customers. Personalizing your marketing efforts can create a more meaningful connection with your customers and make them feel valued. It includes personalized emails, targeted ads, and even product recommendations. However, by providing a customized experience, you can increase customer loyalty and retention.
Step 5: Focus on Customer Service
Providing exceptional customer service is crucial to retaining customers. It’s essential to ensure your customers feel heard and valued, even when they have complaints or issues. However, responding promptly to customer inquiries and complaints can help prevent negative reviews and improve customer satisfaction.
Step 6: Use Data to Make Informed Decisions
Data is critical to making informed decisions about your customer retention efforts. By tracking metrics like customer lifetime value, churn rate, and customer satisfaction, you can identify areas for improvement and make data-driven decisions to increase retention.
Step 7: Continuously Improve Your Customer Experience
Finally, it’s important to continuously improve your customer experience to keep your customers coming back. It can include improving your website’s user experience, offering new products or services, and providing better customer service. Furthermore, continuously improving your customer experience can increase retention and drive growth for your business.
Summary
To maximize your return on investment (ROI) by retaining customers, you must adopt a comprehensive approach. Moreover, this approach should involve building strong customer relationships, offering loyalty programs and incentives, collecting and analyzing customer feedback, personalizing your marketing efforts, focusing on customer service, using data to make informed decisions, and continuously improving your overall customer experience. Overall, following these steps can increase customer retention and drive growth for your small business.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
This blog illustrates how the virtualization journey is undeniably the pragmatic recipe needed to achieve cloud computing in business. From the moment an IT organization virtualizes its first server, it lays the groundwork for cloud technology. Virtualization is required to move from server to server, cluster to cluster, or sometimes even across the data centers to separate the operating systems and applications from all of the underlying hardware platforms.
Virtualization of Cloud Computing
Virtualization abstraction is also one of the major ingredients for resourceful pooling, which is the ability to link computing, memory, storage, and resources across data centers into one big virtual computer. By updating and provisioning the systems and software, you can realize the tremendous advantages of using consolidation to save capital expenditures and drastic time savings.
Although both transformational characteristics may deliver a lot of value early on, they are the core foundation of greater business values later in the journey. The ratio between the serveradministrator and the servers in one of the leading cloud providers is one to a thousand, on average more than the typical enterprise.
In phase two of the entire virtualization journey, commonly known as Business Production, clients begin to drive operational savings by automating the provisioning of the new servers, distribution, and balancing the computing resources, all based entirely on the application load. Apart from this, if something goes wrong, the servers will be restarted and fall over, along with the recovery of the entire data center in case of any disaster.
The Virtualization Journey
Due to the flexibility of the fundamental virtualization layer, numerous tasks can be completely automated in a completely virtualized data center. Once these applications are free from fundamental hardware and begin to run on the virtualization platform, it is possible to enrich them using new cloud technologies, even if the legacy applications were designed and built a few years ago. This evolutionary approach is perhaps one of the most enthralling advantages of the entire virtualization journey.
When we think about cloud technology, we expect these technologies always to be available and responsive. One of the most outstanding examples of the journey is the virtualization of numerous business applications, which generally happens during the business production phase.
Enterprise-class virtualization stages comprise features such as fault tolerance and high availability, designed to be readily available. Moreover, the virtualization-based recovery from disaster solutions expanded the business continuity competence to a new datacenter. This is why clients who are way past the early stages of adoption and have been steadily updating all of their mission-critical applications and databases to the virtual environment show us why both the new and old applications run better when they have been virtualized.
Clients are changing their IT infrastructure throughout the first two phases of the entire virtualization journey. When they finally reach the final phase three, known as IT as a service, this all comes together, and they are ready to change their relationship with the corporate world.
Conclusion
In conclusion, the virtualization journey is the essential gateway to achieving cloud computing in business. From initial server virtualization, which forms the basis of cloud technology, to the later stages, driving operational efficiency and resilience, this journey reshapes IT infrastructure profoundly. By embracing virtualization, organizations unlock the potential for resourceful pooling and automation, paving the way for seamless integration of cloud technologies. As enterprises progress through the phases, from foundational setup to operational optimization, they transition towards a future where IT becomes a service, fundamentally transforming their relationship with the corporate world.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Like it or not, accounting is the central contemplation for companies of any magnitude. Thanks to the wide variety of bookkeeping applications for today’s small and medium-sized businesses, keeping a precise record of your company’s money is easier than ever. Though accounting software has made bookkeeping easier for small businesses, it has also made errors and accounting mistakes—from inaccurately classifying a transaction to doing all accounting yourself, which is much more common.
Some accounting mistakes are slight and inconsequential, and—when someone within your business unsurprisingly detects them, they are easy to correct. But others are more severe and could substantially affect your company’s financial health. Over time, poor accounting practices can falsify the genuineness of your business’s economic health. In severe circumstances, recurrent bookkeeping mistakes and bad accounting practices can lead your business to bankruptcy or company failure.
Here, we will discuss the most typical small business accounting errors that can produce small and necessary problems for your business.
Data Entry Errors
Some accounting methods are more trustworthy than others – you could use:
An elaborate automated database
An Excel worksheet
A handwritten record books
No matter what method you use, attention to detail is vital. The most typical data entry error is caused by transposition: keying in 85 instead of 58. Less common are transcription errors or simply striking the wrong key by fault. These mistakes often go unobserved because the individual entering the numbers is in haste. Consecrating adequate, distraction-free time on the job will lower the prospect of costly blunders.
I Am Not Taking Accounting Seriously Enough
The key to operational accounting is recording everything. Ensuring that everything is logged and classified adequately in your accounts is essential, from small transactions to significant expenses for customers and clients.
No matter how small your business might be, bookkeeping gives you a precise, consistent picture of your corporation’s health, allowing you to regulate precisely how well (or poorly) you have achieved your goals in each period.
Managing All Your Accounting In-House
When you run a small industry with limited income, handling your bookkeeping alone can be alluring to lower expenses. While taking care of accounting yourself might seem like a great way to save cash, it could cost your company money. An accountant will have more outstanding charges than managing your accounts and saving money.
I Am Failing to Reconcile Books with Bank Accounts
Your company must merge its accounts regularly. Reconciling is inspecting that an account balance listed on your books is exact and accurate, confirming that it equals the actual proportion of your bank account.
You Forget to Record Small Transactions
By keeping a record of small transactions, you will easily manage your books as your company grows and its number of transactions increases.
Poor Communication with Your Accountant
Communicating with your bookkeeper is essential. Keeping a paper record of all transactions, whether digitized or not digitized, makes monitoring your income and spending more manageable.
You Are Not Allocating Transparent Budgets to Each Development
Going into a venture without knowing how much it could cost your business is an easy way to outlay far more than you planned. Failing to budget effectively also makes it problematic for you to rein in a venture that has cost you more than it should have. This can cause your business to expand its limited funds on developments that will not produce a return on investment.
Final Note
The best way to prevent these errors is to create an organizational system that keeps everything in order. Avoiding accounting errors is nowhere near as difficult as it may seem. It simply takes a skilled hand and a careful approach. Double and even triple-checking your work is always a good idea before committing it to your archives.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Enhancing Strong Liquidity for SME Success and Growth
Strong liquidity for SMEs represents the financial foundation that enables small and medium enterprises to meet short-term obligations while maintaining operational flexibility and growth capacity. This critical business metric determines whether your company can survive cash flow disruptions, seize growth opportunities, and build long-term financial resilience in an increasingly competitive marketplace.
After two decades of helping SMEs navigate financial challenges at Complete Controller, I’ve witnessed countless businesses with strong revenue streams fail simply due to poor liquidity management—82% of small business failures stem from cash flow problems rather than profitability issues. The difference between thriving enterprises and those that struggle isn’t always revenue—it’s maintaining accessible cash resources when opportunities arise or challenges emerge. In this comprehensive guide, you’ll discover proven strategies for building liquidity reserves, optimizing working capital, and implementing systems that protect your business from the cash flow crises affecting 45% of small business owners who currently sacrifice their own paychecks just to keep operations running.
What is strong liquidity for SMEs and why does your business need it?
Strong liquidity for SMEs means maintaining sufficient liquid assets to cover 3-6 months of operating expenses while preserving growth investment capacity
It provides financial flexibility to handle unexpected costs, seasonal fluctuations, and market downturns without disrupting operations
Enables strategic decision-making by ensuring cash availability for time-sensitive opportunities like bulk purchasing discounts or equipment investments
Builds creditor confidence and improves lending terms, creating additional financial leverage for expansion
Serves as insurance against supply chain disruptions, economic volatility, and other business risks that could otherwise threaten survival
Understanding the Financial Foundation of Strong Liquidity Management
Strong liquidity management begins with understanding the relationship between current assets and short-term obligations, forming the bedrock of financial stability for small and medium enterprises. Unlike large corporations with diverse funding sources, SMEs must carefully balance immediate cash needs with growth investments, making liquidity planning a critical survival skill.
The foundation rests on three core components: accessible cash reserves, predictable cash flow cycles, and strategic working capital optimization. Each element works together to create a financial buffer that protects against disruptions while enabling strategic flexibility.
Liquidity ratios for SMEs: Measuring your financial health
The current ratio, calculated as current assets divided by current liabilities, provides the primary snapshot of your business’s short-term financial position. A healthy current ratio for most SMEs falls between 1.5 and 2.0, indicating sufficient assets to cover immediate obligations while avoiding excessive idle cash that could be deployed for growth.
The quick ratio offers a more conservative measure by excluding inventory from current assets, revealing your ability to meet obligations using only the most liquid resources. This “acid test” particularly matters for businesses with slow-moving inventory or seasonal sales patterns.
Working capital optimization as your liquidity engine
Working capital represents the operational fuel that powers daily business activities, calculated as current assets minus current liabilities. UK SMEs face particular challenges here, with businesses owed an average of £23,360 in late payments at any given time—capital that remains trapped and unavailable for operational needs.
Effective working capital management involves synchronizing the timing of cash inflows and outflows to maintain consistent liquidity without tying up excessive resources in unproductive assets. This optimization process requires careful attention to:
Inventory turnover acceleration through demand forecasting
Accounts receivable collection period reduction
Strategic payment timing to suppliers
Cash conversion cycle monitoring and improvement
Cash Flow Solutions: Building Predictable Revenue Streams
Developing predictable cash flow patterns forms the cornerstone of sustainable liquidity management, enabling SMEs to anticipate financial needs and prevent cash crunches before they occur. Modern cash flow solutions extend beyond basic forecasting to include automated invoicing systems, diversified payment methods, and strategic customer payment term negotiations.
The most successful SMEs implement rolling 13-week cash flow forecasts that account for seasonal variations, customer payment patterns, and operational expense timing. These forecasts provide early warning systems for potential shortfalls while highlighting opportunities for optimization.
Effective cash flow management for SMEs: Real-time monitoring systems
Contemporary cash flow management relies on real-time financial monitoring tools that provide instant visibility into cash positions and upcoming obligations. These systems enable SMEs to identify potential shortfalls weeks in advance, allowing proactive management through:
Invoice acceleration strategies
Payment term adjustments
Short-term financing arrangements
Expense timing modifications
Advanced cash flow management incorporates scenario planning that models best-case, worst-case, and most-likely outcomes. This approach prepares businesses for various conditions while maintaining optimal liquidity levels.
Funding options for small businesses: Strategic capital access
Modern SMEs benefit from diverse funding mechanisms that provide liquidity support without compromising equity or operational control. Lines of credit offer flexible access to working capital for temporary cash flow gaps, while invoice factoring can immediately convert outstanding receivables into cash.
Alternative financing options including revenue-based financing and embedded lending solutions provide additional liquidity sources tailored to SME cash flow patterns. The key lies in selecting funding options that align with your business cycle and growth trajectory.
Strong Liquidity Strategies for SMEs: Implementation Roadmap
Implementing robust liquidity strategies requires a systematic approach that addresses immediate needs while building long-term financial resilience. Tech Innovators Inc. exemplifies this approach—they reduced accounts receivable days by 30% and inventory holding costs by 25% through enhanced credit policies and just-in-time inventory management.
Successful implementation follows a phased approach: assessment and baseline establishment, system implementation, ongoing optimization, and crisis preparedness development. Each phase builds upon the previous, creating cumulative improvements in liquidity position.
Improving liquidity in small enterprises: The 90-day action plan
Days 1-14: Establish accurate financial baselines through comprehensive cash flow analysis and liquidity ratio calculations. Gather historical financial data, calculate current metrics, and identify immediate optimization opportunities.
Days 15-30: Implement quick wins:
Adjust invoice terms with early payment discounts
Accelerate collection processes
Optimize expense timing
Negotiate improved supplier terms
Days 31-60: Deploy systematic improvements including automated invoicing, real-time monitoring tools, and formalized accounts receivable processes. Establish cash reserve targets and implement rolling forecast procedures.
Days 61-90: Focus on optimization through scenario planning development, contingency funding arrangements, and performance tracking systems. Fine-tune processes based on initial results.
Financial resilience for small businesses: Crisis-proofing your cash position
Building financial resilience requires creating multiple layers of liquidity protection. During the 2007-08 Global Financial Crisis, SME lending flows plummeted from 25.6% to 19.7% of total business lending, while bankruptcy rates spiked 22.14%—demonstrating why crisis preparation matters.
The foundation involves maintaining emergency cash reserves equivalent to 3-6 months of fixed operating expenses in easily accessible accounts. Secondary protection includes:
Pre-approved credit facilities
Diversified customer bases
Alternative revenue streams
Business interruption insurance
Technology Integration and Modern Liquidity Management Tools
Digital transformation has revolutionized liquidity management for SMEs, providing sophisticated tools previously available only to large corporations. Cloud-based platforms offer real-time monitoring, automated reconciliation, and predictive analytics that enhance decision-making accuracy.
These technological solutions integrate with banking systems, accounting software, and customer platforms to create comprehensive financial visibility. Automated invoicing systems alone can reduce collection times by 15-25% through electronic delivery and integrated payment processing.
Industry-specific liquidity challenges and solutions
Different industries present unique liquidity challenges requiring tailored approaches. Retail businesses must balance inventory investment with cash flow requirements, often committing capital months before revenue generation. Manufacturing enterprises face complex challenges related to raw material purchases and production cycle financing.
Service-based enterprises encounter project-based revenue recognition issues and variable expense timing. Each sector requires customized strategies that address specific cash flow patterns and operational requirements.
Conclusion
Strong liquidity management represents the difference between SMEs that merely survive and those that thrive in competitive markets. Throughout my experience guiding hundreds of enterprises, I’ve consistently observed that businesses with robust liquidity systems demonstrate greater resilience, capture more growth opportunities, and build sustainable competitive advantages.
The investment in comprehensive liquidity management pays dividends through improved vendor relationships, enhanced lending terms, reduced financial stress, and increased strategic flexibility. As markets evolve and uncertainty persists, SMEs prioritizing liquidity position themselves for sustained growth and market leadership.
Ready to transform your business’s financial foundation? Visit Complete Controller to discover how our expert team can help you implement these liquidity management strategies and build lasting financial strength.
Frequently Asked Questions About Strong Liquidity for SMEs
What is the ideal cash reserve amount for small businesses?
Most financial experts recommend maintaining 3-6 months of operating expenses in readily accessible cash reserves, though the exact amount depends on your industry’s volatility and revenue predictability.
How can I improve my business’s liquidity ratios quickly?
Focus on accelerating accounts receivable collection through electronic invoicing and payment incentives, while strategically timing accounts payable to optimize cash flow without damaging supplier relationships.
What’s the difference between profitability and liquidity for SMEs?
Profitability measures your ability to generate earnings, while liquidity measures your ability to access cash for immediate obligations—profitable businesses can still fail due to poor liquidity management.
Should I use business credit lines to improve liquidity?
Lines of credit can provide valuable liquidity backstops for temporary cash flow gaps, but they should complement rather than replace proper cash flow management and reserve building.
How often should I review my business’s liquidity position?
SMEs should monitor liquidity weekly through cash flow reports and conduct comprehensive liquidity assessments monthly, with quarterly strategic reviews for long-term planning adjustments.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Jennifer BrazerFounder/CEO
Jennifer is the author of From Cubicle to Cloud and Founder/CEO of Complete Controller, a pioneering financial services firm that helps entrepreneurs break free of traditional constraints and scale their businesses to new heights.
Brittany McMillen is a seasoned Marketing Manager with a sharp eye for strategy and storytelling. With a background in digital marketing, brand development, and customer engagement, she brings a results-driven mindset to every project. Brittany specializes in crafting compelling content and optimizing user experiences that convert. When she’s not reviewing content, she’s exploring the latest marketing trends or championing small business success.
Debt-to-Equity Ratio
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
