The liability side of your Balance Sheet contains some really important information.
As a business owner, you need to be on top of this.
So, take a look at your latest Balance Sheet.
First of all, check if your Total Assets are greater than Total Liabilities. This means, you own more than you owe (that's good).
Next, check if your Current Assets are greater than Current Liabilities.
This is one of the really important ones.
It tells if you are solvent.
That means, you can pay your bills when they’re due.
If your Current Liabilities are greater than your Current Assets, you’re in trouble. You’ll be struggling to pay your bills.
(You’ll already know this, but these items on the Balance Sheet show it in black and white).
Next, check out your Current Liabilities in more detail. Go through them one by one.
These include your suppliers, showing as Trade Creditors.
Check how much you owe the Tax Office, for GST, PAYG, etc.
Also check how much you owe for super.
Finance commitments, such as leases and chattel mortgage obligations will also be shown.
The reason it’s so important to know how much you owe is this: You must be able to cover these obligations.
If you think you’re heading for trouble, take corrective action immediately!
Give us a call to discuss.
Peter & Kate