Being in business in today’s fast-paced marketplace means you need to keep quality outputs balanced with price to keep profits stable. But, that’s not all. Keeping your financial compass calibrated has never been more important for survival. Because you cannot change what you aren’t aware of, and knowing when profits fall – and why, is imperative. Not tracking your numbers is the new financial suicide.
Enter the unsung hero of financial literacy: Profitability Reporting. If you’re not on this train yet, it’s time to board – and NetSuite is your golden ticket.
At Fusion, our CPAs have all been NetSuite-certified, and with many years in the field, we can tell you one thing with certainty: automating your profitability is the best thing ever. Join us as we delve into profitability tracking and why NetSuite stands out for us.
The basics of profitability reporting
Profitability reporting, at its core, is about analyzing key metrics like gross and net profit margins, as well as return on investment. These metrics guide your business through cut-throat competitive business landscapes. Ignoring them is not an option.
Your gross profit margin reveals the efficiency of your production. Net profit margin reflects your overall financial health, while return on investment is a key metric guiding your strategic decisions. Neglecting these numbers not only puts your profits at risk but also the very foundation of your business. This is because the level of competition that we see in the marketplace at the moment is unparalleled, and bringing your A-game is a must.
Setting up profitability reports in NetSuite
Tracking profitability with NetSuite not only streamlines the process but provides invaluable insights to aid growth. Follow these steps to get started.
- Navigate to the Reports tab and select “Financial.”
- From there, choose the “Profitability” category, and you’re on your way.
- Click “New Report” and customize it to suit your business’s unique needs. NetSuite’s intuitive interface allows you to select specific timeframes, business segments, or even individual transactions to get a granular view of your financial landscape.
Our CPAs advise that you make use of custom fields to tailor reports to your specific requirements. It is also advisable to regularly update your data feeds to maintain accuracy.
Analyzing profitability reports
Once you’ve successfully retrieved the report from NetSuite, you can begin drawing necessary inferences to take your business to the next level. When deciphering the data, some of the key metrics to look at would include gross profit margins, net profit margins, and return on investment. A rising gross profit margin may signify effective cost control, while a dwindling net profit margin could signal operational inefficiencies.
Observing the data closely and on a month-to-month basis will help you identify trends. This is of utmost importance when making decisions and it is beneficial to consult this data alongside your CPA who can put it into perspective with industry benchmarks.
NetSuite’s analytics allows you to not only spot these trends but to identify areas of concern and develop strategic responses to sustain growth. It is important to consult with your CPA as soon as you notice concerning trends.
Partnering with a CPA to optimize actionable insights
Whether you use the data to identify popular and lucrative product lines, or to strategically plan for the future, profitability insights play a powerful role in business strategy. However, to navigate this data successfully it is beneficial to partner with a CPA. We have found that our expertise aids clients in accurately interpreting financial intricacies. Our NetSuite-certified team has also found that oftentimes clients do not have all their financial data integrated which places the reliability of their profitability reports at risk. A CPA would help your business identify this and implement full automation to streamline processes and ensure accuracy. Contact us to assist today!
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This blog article is not intended to be the rendering of legal, accounting, tax advice, or other professional services. We base articles on current or proposed tax rules at the time of writing and do not update older posts for tax rule changes. We expressly disclaim all liability regarding actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.
