In order to make informed business decisions, such as seeking financing, you need to be able to understand your financial performance — especially since the COVID-19 pandemic has altered the way many small businesses operate.
Navigating your financial metrics doesn’t mean you have to sit crunching numbers on a calculator, however.
When you use technology, like accounting software, you can automate data processing and instead spend your time looking at the actual insights the data provides, says Ben Richmond, a chartered accountant and U.S. country manager at Xero, a cloud-based accounting software platform provider. With the right tools, you can take more control of your business and have more confidence, he says.
Here are four metrics that are essential to understand when managing your business finances.
1. Cash flow
Cash flow, or the amount of money coming into and going out of your business, is one of the most important