These 12 financial resources and financial planning tools will help business owners to better manage their corporate finances and profit planning, and they’re all free.
Improve your business’s corporate finance with these 12 free financial resources and profit tools, and get your business on the right path to better financial management and bigger profits:
Financial statement analysis resources
To understand and value of your business you must look at its financial position. Here are four financial resources to help you assess how well your business is doing:
1. Balance sheet tool
Download your ‘How To’ balance sheet resource here. The step-by-step financial reporting tool will guide your through how to create your balance sheet and what you need to include in it.
A business’s financial position is defined by its assets and liabilities, and includes the shareholder equity. This information is presented in the balance sheet. The balance sheet is comprised of two parts that are based on the equation below:
Assets = Liabilities + Shareholders\ Equity
Assets and liabilities are divided into short- and long-term obligations and the assets must equal the liabilities plus owners' equity. Assets are the monetary value of anything that the business owns, while liabilities are the creditors’ claims against the business’s assets.
The balance sheet allows you to determine the liquidity of a business. Liquidity means the ability to pay the business’s debts on time.
2. Income statement tool
For an in depth income statement resource that will walk you through understanding your income statement then click here on the free income statement tool.
What is an income statement
The income statement is a combination of the revenues, expenses, and profit or loss of a business. The income statement is important because it indicates the profitability of your business during a specific time interval. This period of time that the statement covers is chosen by the business and can vary in length.
Related: How to calculate the lifetime value of a customer
The income statement has several important roles:
- The business owner or shareholders can see how the business has performed and if it has made an acceptable return
- It helps identify whether the profit earned by the business is
- Allows for comparison with other similar businesses, competitors and the industry as a whole
- Indicates whether the business is able to generate sufficient profits to remain viable
- Lays out information so that the directors of a company can satisfy their legal requirements to report on the financial record of the business
3. Free fixed asset register checklist
Download the creating an asset register checklist that will help you to prepare an asset register for your business.
The asset register
The fixed asset register is a list of the fixed assets owned by a business. This register indicates the value of assets, date of acquisition and any other details essential for computing the depreciation. Fixed assets include land, buildings, vehicles, machinery and certain equipment (eg. Laptops) and other items used in the business which are not for sale in the ordinary course of operations.
The asset register serves as a reference for business purposes and asset tracking. It is also used to calculate the depreciation on assets and is therefore updates regularly. It also serves as a document that encompasses a complete listing of all assets in one location. This will ensure that you always have access to a register of your assets as well as the value of them.
4. Format of cash flow statement
This 12-month cash flow resource will help you to format your cash flow statement. As you compile your cash flow statement, keep in mind that you need to provide information based on cash generated or utilised by operating activities, investing activities and financing activities.
The cash flow statement
The statement of cash flows is part of the financial statements created by a business, and describes the cash flows into and out of the business. It focuses particularly on the types of activities that both create and utilise cash.
It is not considered as critical as the balance sheet and income statement, but the cash flow statement is important in discerning trends in the business’s performance that may not readily be apparent in the other financial statements.
Cash flow is determined by looking at three components:
- Operations: Measuring the cash inflows and outflows caused by core business operations. Operations reflect how much cash is generated from a business’s products or services, usually changes made in cash, accounts receivable, inventory, depreciation and accounts payable are shown in cash from operations.
- Financing: These include changes in debt, dividends or loans that are accounted for in cash from financing. Changes in cash from financing are ‘cash in’ when capital is raised, and are ‘cash out’ when dividends are paid.
- Investing: These are changes in equipment, assets or investments relate to cash from investing. When a company removes an asset, the transaction is considered ‘cash in’ for calculating cash from investing.
During the course of running and growing your business, you will need access to both short-term and long-term cash savings to pay salaries, suppliers, or even to save for a future project or large payment. Standard Bank provides a range of flexible Savings and Investment solutions, with competitive interest rates, to help you meet your business’s savings and investment needs.
Profit planning tools
Financial planning tools
Ratios are very useful when analysing financial statements. By calculating a ratio you can compare it to the same ratio calculated over a specific period, this will allow you to see if your business is performing in line with your expectations. Ratios also allow you to flag potential problems and to deal with these sooner rather than later.
Related: Practising the skill of management
Here are a few profit planning tools which will assist in examining different areas of your business’s performance:
1. Increasing profit margin checklist
The profit margin is an accounting measure designed to estimate the financial health of a business or industry.
The profit margin is a measure of the amount of profit accruing to a business from the sale of a product. It also gives an indication of efficiency by capturing the amount of surplus generated per unit of the product or service sold.
In order to generate a sizeable profit margin, a business must operate efficiently enough to recover not only the costs of the product or service sold, operating expenses, and the costs of debt, but also to provide compensation for its business owners in exchange for their acceptance of risk.
Download your profit margin checklist and start improving your bottom line.
2. Break-even analysis resource
The break-even analysis is an analysis of a product or company's sales required to neither lose money nor make a profit, but simply to cover costs. A business needs to at least break even to make the expense of producing a product worth it.
As a result, break-even analysis is an important element in evaluating the risk of an activity. Breakeven analysis calculates the relationship between the fixed costs, variable costs, and profit of the product.
There are several types of costs to consider when conducting a breakeven analysis:
- Fixed costs: These are costs that remain the same regardless of how many items you sell. All start-up costs, such as rent, insurance and computers, are considered fixed costs.
- Variable costs: These are recurring costs that you absorb with each unit you sell.
To assist your business in calculating its break-even analysis, refer this handy financial planning resource.
3. Profit formula
The net profit margin formula is used to calculate how much of a company's revenues are kept as net income, generally expressed as a percentage. Both net income and revenues can be found on a company's income statement.
For a small-business owner, one of the best ways of seeing whether your business is profitable is to look at its net profit margin. Net profit margin is a measure of profitability that indicates how much of every rand of your business' sales translates into profit.
Calculate your profit with this profit planning tool.
Financial management resources
Managing financial resources is about getting the most from the resources you have available. It involves implementing resource management procedures and controls and can include managing costs and maximising opportunities.
Here are four financial management tools to help you to manage costs, improve cash flow and implement financial systems:
1. Calculate the gross margin
Gross margin is simply net sales less the cost of goods sold. The gross margin indicates the amount that an entity earns from the sale of its products and services, before the deduction of any selling or admin expenses.
Here is a handy spreadsheet to help you calculate your gross margin, break-even point on sales and transaction.
2. Credit management and collections
Business growth is often determined by how well you manage your financials. Good financial risk management strategies involve vigilant collections, constant monitoring and continued financial reviews.
This financial management resource will guide you through how to improve your credit management and decrease your collection time.
3. Cash flow management
Cash flow management allows you to delay spending of cash as long as possible, for example accounts payable, while also encouraging the prompt collection of money that is outstanding
This step-by-step cash flow management resource will take you through how to complete an accurate cash flow projection and a cash cycle analysis for your business
4. Financial management checklist
Financial management in a business involves the management and recording of the flow of money. This includes all money coming into the business (income) and all money flowing out (expenditure).
This financial management checklist includes basic elements for an organisation to work towards building good management practices.
Corporate financial planning
Most business owners don’t have financial backgrounds, and this can lead to many common financial mistakes. Avoid these mistakes by forearming yourself with the best business advice in this 6 point resource that pinpoints these early warning signs and what you need to be doing with your finances.