The balance of income and expenses

Control of finances is important in any aspect of life, but especially for the company, it can be one of the main determinants of success or failure. Having control of the inflows and outflows of money, as well as everything that makes up the assets of the company is important to calculate the health of the company, therefore, it is important to periodically carry out a balance of income and expenses.

What is the balance of income and expenses?

The income and expenses balance is a accounting document which is used as a tool to measure the general state of a company. This balance sheet is very useful to check the financial situation of the company at a glance.

The document in which income and expenses will be reflected is a model that can be made by the employer or the administrator, but in each period it must reflect the same data.

When should it be done?

The balance of income and expenses of the company must be carried out periodically, the most advisable thing is do it month by month, and each quarter make a balance that reflects the activity of the three months previous. From the four quarters on, an annual income and expenses balance will be made.

The periodicity in carrying out balance sheets is the best guarantee of financial control in the company.

What data should the balance of income and expenses contain?

In the balance, all the money inflows and outflows for each month must be indicated, among the inflows you can find: sales, credit, loans... money output must be taken into account: fixed expenses, such as rents, variables, such as electricity, production materials, payroll, as well as "Unforeseen". Each of the parties must also have a section on "Extras".

What conclusions should we obtain from a balance?

The fact that a balance sheet reflects losses for a month does not mean that the company is failing, it may be due to the appearance of unforeseen events, or it may reflect a time of low sales.

The balance month by month, however, can give many data about the economy of the company, and among them:

• Show the seasons with the highest and lowest number of income. In this way, campaigns can be proposed to increase sales in seasons when sales are down.
• Reflect the times in which the Variable expends. Solutions to these expenses can be sought, for example, for times when the light increases due to winter, look for heating systems that use more sustainable systems.
• If the balance reflects losses For more than a month, before the company goes bankrupt, strategies can be changed or the company restructured to make it work.

¿Where to get models of balance of income and expenses?

Preparing a balance of income and expenses is not very complicated, but there are many online pages that offer complete models that can be downloaded, some of them are: WalletBalance; Templates Thousand; or Softonic.