How to Use Bookkeeping to Measure Business Performance

February 20, 2024
5
minutes to read
by
Warren More
Table of Contents

In the ever-evolving business landscape, staying competitive and profitable demands more than just intuition. It requires a deep understanding of your company's financial health and the ability to make data-driven decisions. Enter bookkeeping - the unsung hero of business success. In this blog post, we'll explore the critical role bookkeeping plays in measuring and improving your business performance. We'll introduce you to Thriday, your trusted partner in automating double-entry bookkeeping.

How Bookkeeping Tracks Business Performance 

Bookkeeping is like the financial diary of your business. It involves systematically recording, organising, and tracking all financial transactions, including income, expenses, assets, and liabilities. Maintaining an accurate record of these transactions gives you access to a real-time snapshot of your business's financial situation. 

In Australia, where small businesses make up a significant portion of the economy, understanding your financial position is crucial. According to the Australian Small Business and Family Enterprise Ombudsman, as of June 2021, there were over 3.4 million small businesses in Australia, contributing to 35% of the country's GDP and employing almost 44% of the total workforce.

How to Set Business Key Performance Indicators (KPIs)

Key Performance Indicators, or KPIs, are the compass that guides your business toward its goals. They are measurable values that reflect how effectively a company achieves its objectives. Setting the right KPIs is essential. For instance, a retail business may track sales revenue, while a manufacturing company may focus on production efficiency.

In Australia, knowing your industry's benchmarks is vital. For example, according to the Australian Bureau of Statistics, the retail industry's KPIs may differ from those of the construction sector due to variations in revenue models and operating costs.

How to Measure Business Performance

Once you've defined your KPIs, it's time to measure your business performance. This is where bookkeeping becomes invaluable. Accurate financial records provide the data needed to calculate and assess your KPIs regularly. 

Financial ratios, such as the current ratio (current assets divided by current liabilities), can help you gauge your liquidity and ability to meet short-term obligations. In Australia, understanding these ratios within the context of your industry can provide deeper insights into your financial health.

Why Bookkeeping Matters as You Scale

As your business expands, so do its complexities. Scaling can strain your financial resources and introduce new risks. Accurate bookkeeping becomes even more critical during this phase. It helps you manage cash flow, allocate resources efficiently, and make informed decisions about expansion.

In Australia, small businesses often face unique scaling challenges, including navigating complex tax regulations, accessing funding, and managing increased competition. Effective bookkeeping can ease this transition.

How Thriday Automates Double Entry Bookkeeping

Thriday is your go-to solution for automating double-entry bookkeeping. Double-entry bookkeeping is a robust method that ensures every financial transaction has two entries - a debit and a credit. Thriday's software streamlines this process, reducing the risk of errors and saving you valuable time. 

The benefits of Thriday include real-time data access, automated report generation, and integration with your existing financial systems. With Thriday, you can focus on growing your business while the software handles the numbers. 

Ready to simplify your bookkeeping with Thriday? Join for free today and experience hassle-free financial management.

Key Takeaways

In the dynamic world of business, bookkeeping serves as your financial compass, guiding you toward success. You can take control of your business finances by understanding the importance of accurate record-keeping, setting meaningful KPIs, and leveraging the power of bookkeeping software like Thriday.

With over 3.4 million small businesses contributing significantly to Australia's economy, staying competitive is paramount. Embrace the tools and knowledge available to you, and embark on a financial empowerment journey. Sign up for Thriday's bookkeeping services today, and let your business thrive in the data-driven era.

DISCLAIMER: Team Thrive Pty Ltd ABN 15 637 676 496 (Thriday) is an authorised representative (No.1297601) of Regional Australia Bank ABN 21 087 650 360 AFSL 241167 (Regional Australia Bank). Regional Australia Bank is the issuer of the transaction account and debit card available through Thriday. Any information provided by Thriday is general in nature and does not take into account your personal situation. You should consider whether Thriday is appropriate for you. Team Thrive No 2 Pty Ltd ABN 26 677 263 606 (Thriday Accounting) is a Registered Tax Agent (No.26262416).

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