Finance health check

1. Do you have adequate software and processes to manage your financial record keeping and reporting?

We don't have a formal financial record keeping system. We use a manual system and/or digital spreadsheets. We use a basic version of financial and accounting software (e.g. MYOB, Xero, QuickBooks). We use an advanced version of financial and accounting software , such as MYOB, Xero, QuickBooks (not integrated). We use an integrated sales, inventory and reporting financial package with cloud capability.

2. Do you regularly use the services of a financial adviser, accountant or bookkeeper to help you meet your tax obligations?

We don't use any professional financial support. We only use a professional for annual tax returns. We only use a professional for basic tax and reporting obligations. We regularly get comprehensive advice on BAS, PAYG, GST, payroll, STP and deductions. We regularly receive comprehensive management advice on financial obligations, reporting and performance.

3. How do you use a budget in your business?

I don't know what a budget is We don't use a budget. We use a basic budget but do not use it as a management tool. We generate a budget and use it as a management tool. We use our budget extensively as a management tool and update it regularly.

4. Do you regularly prepare monthly financial reports or statements to manage your business’s performance?

We don't produce regular financial statements. Our reports are limited to ATO reporting obligations and checking bank statements. We prepare a basic monthly profit and loss (P&L) report. We produce a comprehensive P&L report and cash flow statements. We produce a comprehensive P&L report and cash flow statements with additional budget versus actuals analysis.

5. Does your business have a monthly or regular cash-flow forecast?

I don't know what a cash-flow forecast is. We don't produce a regular cash-flow forecast. Our cash-flow assessment is limited to checking bank statements. We regularly generate basic cash-flow forecast to identify cash inflow and outflow. We regularly generate a comprehensive cash-flow forecast, including all cash inflows and outflows with trend analysis.

6. Do you calculate and analyse financial performance ratios regularly?

I don't know what a ratio analysis is. We don’t do any ratio analysis. We do limited basic annual analysis on gross profit, net profit and return on equity. We undertake comprehensive ratio analysis, including profit, leverage, liquidity and asset turnover. We calculate multiple ratios monthly or more regularly and use them to maximise business performance.

7. Do you complete trend analysis regularly on financial performance ratios against internal and external benchmarks?

I don't know what trend analysis is. We don't do any trend analysis. We do some trend analysis on a range of ratios. We do monthly internal trend analysis on a range of ratios. We do comprehensive monthly internal and external benchmarking trend analysis on a range of ratios.

8. Do you have documented debtor (people who owe you money) management policies and procedures, including plans for how you'll recover debt?

I don't know what a debtor is. We don't have a documented debtor policy. We have a documented debtor policy but it's not formally used. We use a documented debtor policy to manage debtors. We regularly analyse debtors to manage money owed through accounts receivable days (i.e. cash flow).

9. Do you have documented creditor (people you owe money to) management policies and procedures that are regularly followed by staff?

I haven't created any financial forecasts for my business. We don't have a documented creditor policy. We have a documented creditor policy but it's not formally used. We use a documented creditor policy to manage creditors. We regularly analyse creditors to manage money owed through accounts payable days (i.e. cash flow).

10. Do you have a good credit rating and strong relationships with your creditors and potential funding providers?

I don't know what a credit rating is. Our business has a bad credit rating. We have a limited engagement with creditors. We have a good credit rating but don't have regular contact with creditors. We have a strong relationship with creditors and regularly communicate with them.

11. Do you have enough working capital and other cash reserves to support ongoing operations?

We regularly struggle to pay operational expenses and financial obligations such as interest, lease and loan repayments. We occasionally struggle to pay operational expenses. We can meet financial obligations but do not generate income for an owner's salary. We cover all business expenses including an owner's salary. We cover all business expenses including an owner's salary and generate good profit margins to provide funds for future investment.

12. What is the gross profit margin (%) performance for your business?

I don't know what a gross profit margin is. I don't calculate gross profit margins. Our gross profit margins are negative. Our gross profit margins are positive. Our gross profit margins measure favourably against the ATO benchmarks for other businesses in my industry.

13. What is the net profit margin (%) performance for your business?

I don't know what a net profit margin is. I don't calculate net profit margins. Our net profit margins are negative. Our net profit margins are positive. Our net profit margins measure favourably against the ATO benchmarks for other businesses in my industry.

14. What is the operating expense margin for your business?

I don't know what an operating expense margin is. I don't calculate an operating expense margin. Our operating expense margin is negative. Our operating expense margin is positive. Our operating expense margin measures favourably against the ATO benchmarks for other businesses in my industry.

15. What is the current ratio (or working capital ratio) performance for your business?

I don't know what a current ratio is. I don't calculate our current ratio. Our current ratio is less than 1. Our current ratio is greater than 1. Our current ratio is significantly greater than 1.