Getting to know your profits and cashflow is easy if you know how?
Profits and cashflow are two important numbers that you need to follow for your business. The profits will tell you how we you are doing each year; they tell you what you earned and what you bought. The cashflow will tell you what you spent and what you received. The difference is that cash in the cashflow is only recognised when it hits the bank account.
You need both Profits and Cashflow to be successful
Your profits are something you should look for in your accounts. The effects of this will sooner or later hit your bank account. If you make a loss sooner or later your cashflow will start hurting and you will feel this strain on your business. Make a profit and your cashflow will soon start looking healthy and you can look to invest and grow.
Beware lack of cashflow
You need the cashflow as well. One of the main reasons that businesses fail is lack of cashflow. You can have all the sales in the world, but you need the money in the bank to pay the bills.
You need a cashflow forecast to see into the future so you can see when you have bills to pay and check that you have the cash to pay them. If there is a problem, you can sort it out before it hurts your business.
Know Profits and Cashflow
You need both of these to be healthy in your business to grow. You can invest in your business when you are making profits and have cash coming into the account on a regular basis to make sure that you can pay your bills without worrying.
A cashflow can save your world!
The way to do that is to have a cashflow forecast. That is a simple has it sounds. Look at the cash in the bank at the moment. See what is due to be paid in and out in the next few months or year and you can see what the bank account will look like. If there is a problem, you can sort it out sooner rather than later.
Understand the profits
You need to understand the profit and loss accounts that you have for your business. They will help you improve your business if you know how to read them properly. You need to look at the trends in the numbers and look how they relate to each other. For instance, if sales were to increase what else would also change? Do you need to have more staff, a bigger office or can you manage with what you have?
Profits and cashflow are important to keep any eye on. You will need to be able to understand them both if you want to grow.
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