Your business has poor financial health if you have a high staff turnover, a low current ratio, inadequate financial records, and if you are unable to pay your debts.
Financial health is vitally important for any company. Doing your best to improve certain aspects of the business helps your company stay profitable.
What’s the financial health of your company like? If any of the signs mentioned below describe your business, it looks like you’re in trouble.
Low current ratio
Simply take the total number of your assets and divide it by the number of liabilities. Between 1.5 and 3 is great. Everything that does not fall in this range means that you are not on the right track.
High staff turnover
Every time you find a new staff member, you have to spend resources on training. If people are constantly leaving your company, it looks like you are not able to provide the members of your staff with the types of rewards they are looking for. Moreover, the overall atmosphere in the office might not be great – and that’s another thing that signalizes that something is wrong with your business.
Inability to pay your debts
Measure your debt-to-assets and debt-to-equity ratios. As with a lot of ratios, the lower it is – the better. But if you find it challenging to pay the debts and feel like you are close to the tipping point between acceptable and unacceptable debt, there is a need for change.
Inadequate financial records
You can’t underestimate the importance of financial records. This is exactly what will help you monitor the business’s financial health and make informed decisions regarding the future of the company.
Of course, the records have to be kept up to date. For example, any invoices and payments have to be entering your financial system every week. Doing weekly and monthly cash flow forecasts is also essential.
How to Improve Your Company’s Financial Health?
Whether your main aim is to improve the financial health of your business or to maintain it on a good level, having a separate team that is responsible for providing financial reporting and business planning is crucial.
A chief financial officer is the main person who is responsible for the company’s financial accounting and reporting.
A financial controller is someone who prepares financial reports for the management and supervises the bookkeeper.
Bookkeepers, in their turn, are responsible for recording all financial data relevant to your business.
The great news is that you don’t have to physically bring a new person or team to the office in our today’s world. All these experts can help your business remotely which makes the whole process more flexible and cost-effective.
CFO Strategies LLC is a team of certified professionals with diverse financial experience across plenty of industries.
Whether you are looking for experts that are going to be able to provide their services on a part-time basis or someone who will become a full-time member of the team but virtually, CFO Strategies LLC has the right solution for you.
The best part? All services will be tailored to the needs of your company.