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Business Advisory

The fifth cause of poor cashflow – gross profit margins are too low

Posted by: Glenn Sharp on

Discover how optimising your gross profit margins can positively influence cashflow and bolster financial stability for your business. Uncover actionable tactics to elevate profitability and maximise returns on sales.

Understanding Gross Profit Margins

Your gross profit margin represents the residual amount from total sales revenue after deducting variable costs. Calculate your gross profit margin to assess profitability accurately.

Implementing Profit-Boosting Strategies

Explore effective tactics tailored to your business, such as reducing stock shrinkage and theft, minimising discounting, and managing obsolete stock for retailers. Contractors can focus on reducing rework and wastage, ensuring accurate billing, and enhancing team productivity.

Calculating Potential Profit Increases

Evaluate the potential impact of margin improvements on profitability. Even slight increases in gross profit margins can yield significant profit gains, offsetting any associated increase in overhead costs.

gross profit margins concept

Tailored Strategies for Your Business

Collaborate with professionals to identify and implement the most suitable strategies for lifting margins within your industry and business context. Develop a personalised plan to enhance profitability and cashflow sustainably. Ewen explains the importance of getting the right strategy for your gross profit margin here.

Utilising Cashflow & Profit Improvement Tools

Leverage resources like the Cashflow & Profit Improvement Calculator to quantify the financial impact of implementing margin-boosting strategies. Gain insights into potential returns on investment and prioritise actions accordingly.

Call to Action

Schedule a consultation with us to explore strategies for improving your gross profit margins and boosting cashflow. Let us assist you in developing a tailored plan to increase profitability and fortify your financial position.

Don’t allow low margins to impede your cashflow and working capital. Take proactive steps and contact Sharp Accounting to optimise profitability and ensure the long-term prosperity of your business.

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