Finance & Cash Flow
You do not need to be an accountant. You do need to know five or six numbers.
Many founders know their sales and little else. Others are given a thick report each month and read none of it. This session picks the few numbers that tell an owner the most about the health of the business, shows how each is worked out from records they already have, and explains what a change in each one usually means. Participants calculate them for their own business, on the day.
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Sales is the number everybody knows. It is not the one that decides survival.
A business can show rising sales while it loses money on each sale, or show a profit on paper while the bank balance runs down. Owners who watch only sales are the last to see either problem. The numbers that matter are not complicated, but they have to be looked at regularly and understood.
This is not an accounting course. It is a short, practical tour of the figures an owner needs in order to ask good questions, whether to oneself, to a bookkeeper or to a chartered accountant. Definitions can vary slightly between businesses and between accountants, so participants are encouraged to agree on their own definitions and use them consistently.
What the session covers
35 topics across 7 areas. Seven numbers and one habit.
Revenue and What It HidesThe top line, in context.5
- What counts as revenue and what does not
- Sales made versus money collected
- Tax collected on behalf of the government, which is not your revenue
- Looking at revenue by product, customer and month
- Why growth in sales is not the same as growth in the business
Gross MarginWhat is left after the direct cost of what you sold.5
An illustration (made-up, round numbers): a product sells for 100 rupees and costs 60 rupees directly to make or buy. The gross margin is 40 rupees, or 40 per cent. If the direct cost rises to 70 rupees and the price stays the same, the margin falls to 30 per cent, a quarter of the profit pool gone from one change.
- Which costs belong to the product or service itself
- How to calculate gross margin, as an amount and a percentage
- Why it is the first thing to check when pricing or costs change
- Margin by product or service: the surprises that appear
- What a falling margin is usually trying to say
Net ProfitWhat is left after everything else.5
- Rent, salaries, utilities, interest and other running costs
- Fixed costs versus costs that rise and fall with sales
- Net profit as an amount and as a percentage of revenue
- Why owner's pay needs to be counted somewhere
- Why profit and cash are different things
Accounting treatment, such as depreciation, is for your chartered accountant. The session shows how to read the result.
Cash Balance and Cash MovementThe number that pays the bills.5
- Money in the bank today, and money you can actually use
- Cash in versus cash out over a month
- Why a profitable month can still end with less cash
- How many weeks of expenses the current balance would cover
- A first look at a simple cash forecast
Receivables and PayablesWho owes whom, and for how long.5
- A simple list of what customers owe you and how old each amount is
- The average number of days customers take to pay
- What you owe suppliers, and when it is due
- Why slow collection quietly consumes growth
- The gap between the days you wait and the days you take
Break-evenHow much you must sell just to cover costs.5
An illustration (made-up, round numbers): fixed costs of 60,000 rupees a month and a margin of 40 rupees per unit mean about 1,500 units a month are needed to cover costs. Participants then repeat the calculation with their own figures.
- Fixed costs and the margin earned on each sale
- A simple break-even calculation, step by step
- Which assumptions it relies on, and where they could be wrong
- Using it to test a price change, a new hire or a new rent
- Why break-even on paper is lower than break-even in reality
Reading Numbers Over TimeOne month is a snapshot. Several months are a story.5
- Comparing the same month across years where seasons matter
- Spotting trends before they become problems
- Setting ranges that are normal for your business
- Choosing which three or four numbers to track every month
- When to stop and ask an accountant
There is no universal good figure. What is healthy depends on the kind of business, so the benchmark that matters is your own history.
What participants leave with
- A worksheet that calculates each metric from their own records
- Their own numbers for at least one recent month
- Their own break-even figure, with assumptions written down
- A shortlist of the metrics they will track monthly
- Questions about their numbers for their chartered accountant
What this session is not
- An accounting or bookkeeping course
- Tax, audit or investment advice
- A set of benchmark figures that every business should hit
- A promise that knowing the numbers makes a business profitable
Who teaches it
- Chartered accountants and finance practitioners who work with small businesses
- Business analysts who report numbers to owners
- Owners who track their own numbers and will say what they actually use
How the session runs
Two to three hours, in a small group, with a calculator or laptop. Each metric is explained with a short, labelled, made-up example, and participants then work it out for their own business from figures they know roughly, such as last month's sales, costs and bank balance. Estimates are fine; the aim is to learn the method. The session gives general education and does not replace individual accounting, tax or legal advice.
What your students leave with
- The meaning of revenue, gross margin, net profit and cash, and why they differ
- Their own gross margin and net profit worked out for a recent period
- A clear view of receivables: who owes them, how much and for how long
- A break-even figure for their business, with the assumptions written down
- A habit of looking at trends over months, not one month in isolation
- A list of questions about their numbers to take to their chartered accountant
Scheduled sessions
Nothing scheduled yet
Sessions are arranged with a college once a date is agreed. Ask us and we will find the right person for it.
A student rather than a college? See what is coming up, or ask your placement team to host this.
A few numbers, understood, are worth more than a thick report ignored.
Tell us who your students are and what stage they are at. Sessions are free for participants.