In many countries, it is very common for companies to cease their activities as early as the first few years of activity. Lack of organization is often one of the determining factors for this poor performance. Many entrepreneurs still underestimate the importance of basic procedures that are nonetheless essential to the sustainability of the business. Knowing how to make a really efficient expense spreadsheet, for example, is a challenge for many managers.
This lack of planning comes at a high price, as it prevents the entrepreneur from having a clear vision of the economic situation of his business, compromising the decision making. To avoid this problem, it is important to have contents that help you better understand the situation of your company and its status in the market.
Keep reading and find out how to make an efficient expense spreadsheet, an important resource for the financial record of your company.
Carry out an analysis before creating your expense spreadsheet
The first step in creating an expense spreadsheet is to understand the current financial situation of your company.
Has the company taken out loans? Has the market growth rate fallen? Are the earnings projections for the coming years encouraging?
These are some of the important questions that must be answered, as they help the entrepreneur understand how the financial processes of his business work.
Determine your revenues
This isn’t a simple study of accounts payable and accounts receivable, but rather an analysis that shows the main sources of your business’s income over the short, medium and long term.
This field in your expense spreadsheet should take into account your earnings forecast so that you can see, in a clear manner, your company’s ability to honor its commitments and make investments.
Specify your expenses
In defining your expenses, you have a chance to reevaluate them. Spending on one product that offers few profits can hurt your business in the near future. At the same time, operational costs can be reconsidered in order to save your financial resources.
This is exactly where many Brazilian companies fail. By not understanding where they are spending their money, business leaders lose the opportunity to gain efficiency and generate savings.
Create a cash flow projection
A fundamental task in guaranteeing the financial stability of your business is establishing a cash flow projection that can help you avoid financial problems.
This way you’ll gain time to renegotiate your debts or make strategic decisions to cut spending before your business can’t meet its obligations. Considering the high mortality rate for Brazilian companies, we can obviously see that many business leaders are caught by surprise because they don’t have a detailed and efficient idea of their cash flow to create their expense spreadsheets.
Understand: Expense spreadsheet is not synonymous with Excel
All of these tips for composing an expense spreadsheet are not a recipe for creating a file in Excel. These are just tips that should not be overlooked in an important financial study.
But it is worth emphasizing that the entrepreneur cannot waste time when it comes to managing his financial processes. That is why the use of software that automatically controls information is becoming more and more common – and recommended. MyABCM, for example, offers innovative, reliable and accessible solutions for a wide variety of business sectors.
Avoid attitudes that may compromise the spreadsheet
Before carrying out any task, acquiring the knowledge needed to fulfill it correctly is important for it to be well done. In addition, it is also interesting to be informed on the main potential mistakes, so that guarantees can be made to prevent them from happening.
The following is a list of practices that should be avoided in the preparation of an efficient expense spreadsheet.
Lack of responsibility in recording information
Even if the company has the best tools and its managers have expertise in the most diverse cost control practices, if this is not done in a responsible way, it simply will not yield any result.
Above all, the team needs to understand the importance of keeping a complete and up-to-date record of all expenses and revenues of the company.
Lack of attention to small expenses
Although an organized record of all costs and revenues is vital to a good financial organization, it is easy to find institutions that fail to take note of small expenses, disregarding their importance.
What these companies do not take into consideration is that the accumulation of small expenses tends to become a big one. There is even the possibility that they may become a budget gap, and without proper record, identifying the source of the damage would be a complicated task.
Therefore, even the lowest costs, such as the money used to pay the taxi, for example, need to be included in the expense spreadsheet.
Do not separate the company’s capital from other resources
Another serious problem that may seriously compromise a company’s accounting is a bad organization of its finances.
It is not uncommon to see cases where the enterprise’s capital is mixed with the shareholders’ equity and is used to maintain the standard of living, or situations in which the business’ expenses are paid off with the private resources of their owners.
While these practices do not appear to be problematic at first glance, they may distort the fixed costs of the company, which in the future may jeopardize its cash flow.
To avoid this kind of problem, just record the financial data of the company in its own expense spreadsheet. It is also important to avoid that your capital’s resources are used for purposes beyond their original function.
Incorrectly record purchases on credit
Future debt payment must be recorded in the company’s monthly costs, even if it is scheduled for a distant date. The lack of this information may cause it to be forgotten until the due date arrives, and this may become problematic if the company has not previously put the resources aside.
Considering the large amount of information an efficient expense spreadsheet needs to collect, relying solely on programs like Excel does not seem to be a viable option. Although the system has applications that are useful for some scenarios, controlling a company’s expenses requires a more complete solution that provides features that make cost management easier, making it more practical and efficient.
Software developed exclusively for your business, designed to effectively meet your demands for productivity and security, tends to significantly improve the financial control processes, which translates into greater profitability for the company.
Now that you know how to make an efficient expense spreadsheet, are you thinking of looking for software to create it? In this case it is important to learn more about the criteria for making a conscious choice, such as the need of technical support. Read this article and understand why.