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Net Business Income Management

Simple Alliance, Kenya Limited

Maximising Business Income

To make the best out of your business’ income, you need to effectively deal with a number of issues affecting your revenue. Your successful management of these issues will allow you to have a clear view of your revenue figures. Business accounting calls for accuracy. An accurate net business income figure is a good starting point. You will then be able to properly plan for your income properly. To achieve these ends, you need to:

  • Clearly differentiate the related terms of income and profits
  • Suitably price your merchandise
  • Diversify your income sources
  • Receive payments for your sales quickly

Differentiating Profit from Income

Income is sometimes confused with profit. The fact is however those profits derive from income after subtracting expenses. For accurate planning of your revenue, you need to clearly distinguish these two related terms. Your income statements will be exact.   

Proper Pricing

While setting the selling prices of your services and products, you need to factor in all input elements. People sometimes exclude certain inconspicuous costs such as the business owner’s time when arriving at selling prices. The end result is that one disenfranchises themselves by not rewarding their efforts. You need to take note of this error and eliminate it from your pricing procedures. This way, you will properly regulate your income.     

Diversifying Revenue Sources

If you operate a business whose income gushes in at a certain time of the year and then steeply declines or altogether dies away, you could benefit by adopting diversification. You could introduce new services or products that have a bearing on your existing business. This income opportunity may be very resourceful. The ensuing additional income will prop up your income streams during low seasons. Your business will consequently have more or less stable income.

Receiving Sales Funds Quickly

The trickiest part of the sales transaction is the point where the buyer is expected to hand you the cash. In order to regulate income flows into your business, you need to set up suitable mechanisms for ensuring that you get the cash soon after making the sale. A firm follow-up program through phone calls, emails, or even letters could do the trick. Sticking to this scheme could ensure that you do not suffer serious income problems owing to defaulting customers. This strategy could indeed be the difference between profit and loss.    

Major Income Dilemmas

Depending on the type of your business, you may encounter certain revenue gridlocks. In such situations, you might find it difficult to maximise your income. Such impasses could arise if you:

  • Are unwisely extending credit
  • Derive your income from a single customer
  • Earn your income from an insurer
  • Earn seasonal income

Giving Out Credit

So as to maintain income integrity for your business, you need to employ due caution when extending credit. Obviously, some debtors fall into the troublesome category. You do not want to entangle yourself with such types.      

Insurer is Your Income Source 

This is a potentially risky situation. What with the bottlenecks that usually characterise the lodging of claims? The associated lengthy waiting times are not healthy for your business. To evade such ugly scenes, you could adopt diversification.    

Seasonal Income

Revenue inflows that peak at certain times only to ebb away could introduce difficulties in your income management efforts. To counter such situations, you could seek out and launch new business lines alongside your main one. The arising income could ease income deficiencies during off-peak times.     

Single Customer Income

The wise ones advise us not to ‘put all our eggs in one basket’. If one client is your only source of income, you need to beware of the risks and take appropriate action. Aggressive marketing could earn you another customer. Diversification could do the trick. These initiatives offer you increased income security.

Income is an important element within your business. Equally important is the requirement that your revenue streams should be reliable. The income figures need to be accurate. This will facilitate precise business accounting. Such conditions seek income stability and security. To ensure such situations, you need to be careful when extending credit. Your pricing needs to be logical. Due care could make the difference between profit and loss. Ensure that your income sources are suitably diversified. A suitable income opportunity is one which complement s your business model. Follow up on customers to pay up quickly.       

Copyright (C) 2016, Simple Alliance Kenya Limited

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