Calculating the exact profit or loss realised for the month isn’t what should be gambled with.Here are few tips to guide you before calculating your profit for the month.
1. Ensure your financial records are up to date. You wouldn’t want to use an incomplete records to analyse your business performance.
2. Review the postings in your records: There is every tendency to make mistakes when posting transactions.
3. Reconcile your bank statements: You need to take a closer look at your bank statements because there are instances:
a). where transfers were treated once but debited twice.
b). Where transfers declined but the account was debited.
c). Where cheques issued out have not been presented.
d). Where transfers were made but not captured in the records.
e). You need to calculate the bank charges.
f). You need to confirm the interest on loan charged.
g). If you operate an invoice discounting facility with the bank, you need to reconcile the invoices discounted with the value received. You don’t have to be debited for invoices you didn’t discount.
h). If you run a facility with the bank, you need confirm the charges and the principal debited.
4. Do prorate the annual rent to get the monthly rent and include it as part of the expenses for the month.
5. Got assets? Then you need to calculate the depreciation for each assets monthly. The value of the assets is reducing, there is need to calculate depreciation which is part of your expenses for the month.
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6. Do have a loan facility running? You need to include all interest due for that month as part of your expenses whether paid or unpaid as part of your expenses.
7. Even if you haven’t paid salary at the end of the month, it should be included as part of the expenses for that month.
8. Do you have expired products, missing products, damaged products or returned goods? The value of the products should affect the cost of sales and the closing stock.
9. Do you have POS terminals for your business?You need to request for the POS settlement statement from your banker and reconcile the POS sales with the value credited in the bank account accordingly. You will get to know the POS charges and include it as part of the cost of sales since it is directly associated to sales.
10. If you operate an accrual basis for record keeping, then include the credit sales that occurred that month as part of your sales for the month.
11. Also include all unpaid expenses incurred within the month as part of the expenses that occurred in that particular month.
The business which look ahead have an indepth understanding of their figures.
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