Finance Terms for a Fledging Business in 2021

Bookkeeping is essential to the running of a small business. It’s only by keeping a record of your business that you’ll have a fair idea of how well you’re doing and take preventive measures when the situation calls for it. Whether or not you’ve got an accountant managing your finances, you must have at least a basic understanding.

Here are the financial terms every business owner should know in 2021.

Assets

In a nutshell, an asset is anything valuable you own in a business. It could be tangible or intangible and include items like:

• Sales records
• Payment invoices
• Consumer trends
• Inventory tracking

The above assets may be long or short-term, depending on how long they’ll serve your business. Machinery, for instance, might serve you for a longer period, whereas inventory may come and go.

To run a successful business, you should have a basic understanding of your finances. Learn the accounting terms that keep your business in running order.

Liability

Unlike an asset, which you own, a liability is something you owe. For instance, you’re liable to pay your bills every month just as you’re liable to make mortgage payments for your salon or any other business.

Like assets, liabilities can be short-term (short-term loans or accounts payable) and long-term like the mortgage payments that you’ll probably have to make for decades on end.

Balance Sheet

If you didn’t read the above definitions, we suggest you go through them at least once. Otherwise, you’ll have a hard time wrapping your head around the idea that a balance sheet shows the net worth of a business after subtracting liabilities from assets.

It’s different from income statements, which only show how much money you’ve been making. A balance sheet actually shows:

• How much do you owe in long-term and short-term debt?
• How many long-term and short-term assets do you own?
• Are the scales tipping in favor of your debts or assets?

Cash Flow

When you’ve got more money coming into your business than going out, you have a positive cash flow. When you’ve got more money going out than coming into your business, you have a negative cash flow.

To run a successful business, you should have a basic understanding of your finances. Learn the accounting terms that keep your business in running order.

Quick payments are the lifeblood of a business because they play a key role in bringing about positive cash flow. Once you strike the right balance between seeking early payments and maintaining a positive rapport with your clients, your cash flow is on the up and up, and so is your business.

ScanPay: A Solution for Bigger and Better Cash Flow

ScanPay is more than your average mobile payment app. The mobile POS system enables you to accept contactless payments and transfers the money into your bank account within 48 hours, thus improving your cash flow.