Understanding business finance

Read your numbers with confidence: profit and loss, cash flow, budgets, pricing and when to look for funding.

Who it is for: Owners who are not accountants and want to understand their reports, manage cash and make better pricing and spending decisions.

Beginner · 8 articles · about 62 minutes

What you will learn

  • Read a profit and loss statement and explain what drives profit
  • Forecast and manage cash so you are never caught short
  • Build a simple budget and track it each month
  • Price for a healthy margin rather than guessing
  • Know which funding options suit which situations

Articles in this path

  • Accounting fundamentals – The handful of accounting ideas every owner needs: the accounting equation, cash versus accrual, the chart of accounts, reconciliation, and why clean books are the foundation of every other financial decision.
  • Profit and loss statements – How to read a profit and loss statement line by line, what gross margin and net margin are telling you, and how to use the P&L each month to find where the business is leaking money.
  • Cash flow management – Why profitable businesses run out of money, how the cash conversion cycle works, and the weekly habits that keep enough cash in the bank to pay staff, suppliers and the ATO on time.
  • Budgeting and forecasting – How to build an annual budget you will actually use, keep a rolling forecast that reflects what is really happening, and use the gap between the two to make better decisions each month.
  • Pricing and profit margins – The difference between markup and margin, three ways to set prices, how break-even works, and why a small price increase does more for profit than a large increase in sales.
  • Understanding profitability – Revenue is not profit. The difference between gross, operating and net profit, how margins and break-even work, why profitable businesses still run out of cash, and the levers that lift profit.
  • Financial reporting – The three core financial statements, the management reports that sit alongside them, and how to build a monthly reporting pack that takes an hour to produce and actually drives decisions.
  • Funding and business finance – The main ways Australian small businesses fund themselves, when debt makes more sense than equity, how lenders assess you, and how to prepare so that finance is arranged on your terms rather than in a crisis.

Next path: Building your first sales process