To the uninformed, a business’s finances can appear healthy if it’s meeting all its obligations. However, as with physical health, finances can appear superficially healthy while underlying issues go unnoticed. In reality, there is more to having healthy finances than simply being in the black each month. Let’s look at 7 signs your small- or medium-sized business (SME) is on the path to stellar financial health:
1) Consistent Revenue Growth
The keyword here is “consistent.” Spikes in revenue are great, but if they happen unpredictably, they could be masking your business’s true financial state. If your business enjoys steady year-over-year revenue growth, that is a possible sign that your fundamentals are sound, given current market conditions.
Failing to understand the value of consistency in revenue growth can cause a failure to reinvest early revenue into money-making operations, causing cash flow issues down the line. With inconsistent revenue growth, you might find it difficult to score safe SME business bankingloans, limiting your ability to seize market opportunities.
2) Good Liquidity
Investors and business banking providers often look at liquidity as an indicator of financial resilience. If your business has a lot of cash in the bank relative to its size and monthly expenses, you’ll have a much easier time securing small business banking loans and attracting high-value investors.
3) Steady Increase in New Customers
For most businesses, repeat customers are the primary source of the majority of revenues. However, it’s worth remembering that all loyal customers were new, once. If your business is able to consistently acquire new customers, it may indicate a long period of growth in the medium or long term. Getting new customers can also show that your business’s marketing and overall reputation are in good shape, which is great news for your business’s brand equity and long-term success.
4) Good Amount of Repeat Business
As mentioned earlier, most of your revenue is likely to come from loyal customers. According to a 2023 paper by Zippia, increasing customer retention by just 5 percent can result in a 25 to 95 % increase in profits, with 65 % of sales originating from returning customers. If your customer retention is poor, it can result in a much higher average cost per sale and negatively impact your cash flow and profits.
To encourage repeat business, it’s important to pay attention to the customer experience you deliver, especially for payments.Maya Business offers the kind of business banking Philippines’ startups and SMEs need to secure loyal customers. Once you’ve created a Maya Business Manager account, you can use exclusive payment solutions like Maya Checkout and Maya Terminal to allow customers to pay through whichever method they prefer.
5) Low Debt Ratios
As a rule of thumb, your business should not owe more than it’s worth. Generally speaking, it’s best to maintain a 2:1 balance or lower on debt-to-assets and debt-to-equity ratios. That being said, it should be emphasized that not all loans are bad. Without loans, it can be difficult to start a new business or cover operational shortfalls. Fortunately, you can rely on Maya Business for safe and easy funding.
Aside from secure online business banking through your Maya Business Deposit account, getting a Maya Business Manager account also lets you qualify for a Maya Flexi Loan. With quick approval times and convenient access through Maya Business Deposit, Maya Flexi Loan is fast becoming a staple solution for small business banking online.
6) Easily Manageable Overhead Expenses
If you’re not struggling to pay the bills each month, you’re probably in a much better financial position than many other businesses out there. If you’re in this situation, it’s probably time to reinvest some of your earnings into expanding your business and further securing your financial position.
7) Good Inventory Turnover Rates
Inventory management can make a huge difference in determining your financial health. Poor inventory turnover rates can indicate ineffective use of capital and resources, as unsold stock ties up funds that could be used elsewhere. On the other hand, if you’re able to immediately sell what you buy or produce, that minimizes the costs and hassles of inventory management, reducing your business risk and ensuring better financial health.
Keep Your Business in Good Health with Maya Business
With its Maya Business Deposit and Maya Flexi Loan products, Maya Business is offering Philippine-based startups and SMEs adaptable, tech-enabled solutions for business banking online. Create a Maya Business Manager account today to experience Maya’s secure banking and payment solutions.
Signing up for a Maya Business Manager account will also give you access to the Maya 1-2-3 Grow bundle. This unique product bundle gives you a 1% MDR discount on QR Ph transactions completed with Maya Business solutions. You’ll save PHP 14,600 in fees for every PHP 1 million in QR Ph sales for 3 months after signing up for the promo. What’s more, when you set Maya Business Deposit as your settlement account, you’ll earn 2.5% per annum interest on your deposit account—up to 25 times more than what traditional banks offer. That translates to PHP 25,000 in interest per year on a PHP 1 million deposit. Within just 3 months, you’ll also be given a Maya Flexi Loan offer of up to PHP 2 million, affording you extra funds to ensure your small business’s financial health. Sign up for a Maya Business Manager account today for banking and payment solutions as well as unique growth opportunities via the Maya 1-2-3 Grow bundle.
