Top Inflows and Outflows by Vendor: why is it valuable?
Sunrise users can track their top cash inflows and and top cash outflows by vendor. Understanding these two data points leads to greater insights into your business's operations. Lets take a look at both of them in turn.
Top Inflows and Top Outflows
Are Inflows and Outflows simply Revenue and Expenses?
In short, not 100%. While revenue and expenses are included, some inflows and outflows contain transactions that are not typically included in revenue and operations expenses. For example, a tax return can be labeled as a cash inflow, but most businesses do not consider a tax return as revenue. Likewise paying corporate taxes is typically not considered an operational expenses.
Top Inflows Example
While it's true that not all inflows are revenue, the vast majority of the transactions captured in Inflows are likely revenue.
So why is this graph significant? The answer depends of course not only on whether your business is in a product or service industry, but also your business's size and growth stage. Some businesses can be sustained (and even thrive) on revenues from one or two large or long-term customers/clients. However, the majority of our clients tend to rely on a broad number of customers.
The Value of Returning Customers
Your customers who provide recurring revenues for their business to grow are likely to frequent these charts. As you grow your business, recognizing increasing the total number of customers you have may provide a safety net against market forces that would impact your business. If you’re part of that fortunate niche of companies that can constantly thrive with only a handful of customers, congratulations, we invite you to check out our other new cash flow features! But if you’re part of the majority of businesses that constantly need new and increasing number of customers to survive consider the following:
Assuming the majority of inflows are revenue, are my top inflows indicating new customers each month or is it the same people/organizations month after month?
Assuming the majority of inflows are revenue, does there exist a wide discrepancy inflow between my number 1 and number 2 or number 2 and three customers each month?
Assuming the majority of inflows are revenue, are those inflows increasing or decreasing month over month?
If you’re selling to the same people or organizations month after month, if one or two customers seems to be driving most of your revenue, or if those revenues are not increasing month over month, it might be time to conduct some market research, talk to your customers, identify their needs, research new product offerings, or reevaluate your marketing efforts.
Having a summary of your top inflows helps you understand at a glance, what questions to ask next to improve the health of your business.
Top Outflows by Vendors
With some exception, the vast majority of those outflows are likely expenses that impact your bottom line. It is useful to know where your money is going. By definition, operation expenses and the cost of goods sold (COGS) are the expenses necessarily incurred to run your business.
This graph provides a quick summary to help you make sure that the highest incurred expenses are going to the most important parts of your business. Are you spending as much on team lunches as marketing efforts? Is some unimportant expense delaying your ability to build up inventory?
If you are not sure, take a look at your top outflows this month and ask yourself, "If my top 3 outflows always went to these vendors every month, would this help or hurt the growth of my business over time?"
Loan Payments as a portion of Outflows
Sunrise can now identify small business loan payments as a portion of cash outflows. Remember, not all out flows are expenses and in this case only the interest portion of the loan payment will appear on your profit and loss statement. This means that as users make payments to existing small business loans, Sunrise will automatically filter them out so you understand what portion of outflows are going towards those monthly payments. Tracking loan payments can help you ensure regular payments on small business loans thus ensuring a better credit rating over time.