Profitability v Cash Flow: Understanding Your Business Numbers

Many small business owners say they’re producing a profit on their Profit & Loss Statement but still have no cash available to them at the end of the month.

How is this the case?

The answer lies in business cash flow. However, the problem is that many small businesses don’t produce a Cash Flow Statement or Forecast to properly understand what their cash flow really is.

Such statements and forecasts are incredibly useful tools to analyse small business performance. Remember, cash is king!

So, what is cash flow?

Quite simply, the cash flow of your business is the money that is flowing into and out of it over a set time frame.

Key areas that can make a difference to this include:

  • Debt repayments
  • Accounts receivable
  • Accounts payable
  • Inventory turnover
  • Asset purchases

Positive cash flow means more money is flowing into your business as opposed to out of it.

If this is the case, it’s a good indicator you’ll be more likely to meet business expenses in the day-to-day in order to keep operating.

That said, without a strong, positive cash flow, your business may struggle to meet its necessary expenses in the short term—even if it is a profitable business!

Your profits, of course, are determined by the amount of money left when your expenses are paid from your sales revenue.

At C3MG Consulting, we can prepare detailed Cash Flow Statements or Forecasts that arm you with information about your cash flow so you can make more informed decisions to steer your business to sustainable success and growth.

We can also prepare Profit & Loss Statements highlighting your business profitability.

Crucially, we will guide you through these documents, what they mean and collaborate with you as to the steps you can take to improve the performance of your business long-term.

So, don’t get caught out by poor cash flow. Schedule an appointment with C3MG Consulting to discover how we can partner with you to take your business to the next level.

So, take your business to the next level.

Take your first steps towards enjoying sustainable growth and success with a valued business partner by your side.

Schedule an Appointment