Income Statement Strengthen Business Line of Credit
Financial crisis is one big challenge for entrepreneurs or businesses. Risk for this situation must be considered when starting business. Take possible solutions for any risk you may encounter so business won’t collapse .That is where planning is involved. It is a must to consider any financial problems and how to solve them.
Monitor your business
In business there is so-called profit and loss monitoring or income statement. This is where you monitor your business profitability at a specific period of time. Income statement is very efficient to have a successful business. Why? Because this serves as a monitor of your business. Revenues and expenses like taxes and payments are seen here. This is a track analysis. There are pros and cons of income statements;
- Glimpse of Revenue Information – use as an examination tool of revenue and expenses of a company.
- Tracker of Company Performance – your company’s overall bottom line can be seen on your income statement so you can monitor if your business is doing good or not.
- Investor Analysis Guide – you can check if your business is healthy because you can see your net earnings.
- Forecasting tool – future plan for business may vary from your income statement.
- Tax reporting – income statement lessen tasks in tax related jobs of a company.
- Lending tool for financing – income statement is one requirement in applying for loans. Business line of credit refers to this as a guide before approving a credit line.
- Cash flows – income statement records have an overview of your cash flows.
- Consume Time – preparing income statements may require time to make although technology now can be an advantage.
- Attacking Tool for Competitor – income statement may be used by competitors against you in a negative way. Some ill-intentioned individuals used this for competition purposes.
- Data Leakage – there is some information about the company in an income statement that may harm your privacy.
- Inconsistent – income statement may affect your future plan for the business if it is recorded inconsistently. Even a single error may affect your company’s fund in the future.
- Misrepresentation of Companies Value – some errors of income statement damage company’s values or reputation. This may lead to negative opinions for possible investors like banks or loan agencies. Business line of credit considered income statements as proof of business existence. Those records may vary your business credibility for loans or finance credit applications.
For small or large businesses an income statement is your success tool. Take note that it is important to have your record every time you do business even in a little way. This serves as a performance tracker for your business. It is important to have a consistent and concrete record of your business if you aim for a successful business.
Income determines business status. Entrepreneurs and businessmen always aim for return of investment or ROI as early as possible, so keeping a track record of business is indeed a must. Be consistent with it and reap your part. Have a blessed business.