When you’re preparing your profit and loss statement, I want you to look to really make sure that you’re actually making an operating profit.
In terms of your layout of your profit and loss statement; every business will look different. But what you want to look at is, if you’ve got cash flow boost or JobKeeper income in any of these past months, you want to make sure that you work out how your profit and loss is doing without those incentives.
I’ll give you a demo on how to see these figures in Xero. If you are currently receiving government grants, we want to mark that in Xero as “non operating income”. So then what happens is, any JobKeeper or cash flow boost (or anything you bring down to the “non operating income” section) will come out of your operating profit up the top. By doing this, it will show you a true reflection of how your business is tracking without any government incentives.
So I do want every business owner to do that so that you know: are you still profitable, and is your profit enough to put food on the table for your family? Especially if you take drawings and don’t pay yourself a salary, so I think it’s important to know that. But that’s also a question on the financial viability of the business at the end of when JobKeeper runs out.
If you’re showing a loss every month without JobKeeper, you’ve got to make some decisions soon because you will run out of JobKeeper, which is scheduled to end at the end of March 2021. This is important for you to know.
Watch the full webinar at https://insp.red/christmascashflowwebinar and plan your Christmas cash flow.
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