In the same way that a warm Spring doesn’t necessarily lead to a hot Summer; good cash flow today doesn’t necessarily mean future profitability.
Therefore starting Q2 of 2015 with a healthy cashflow would seem a very sunny place to be, however, understanding the difference between cash-flow and profit is an equally important part in the equation of running a successful and sustainable business.
A business’ cash flow can be considerably higher than bottom-line profit, or considerably lower. Cash flow can be negative when you earn a profit, and cash flow can be positive when you have a loss. For many businesses there is no natural correlation between profit and cash flow.
For entrepreneurs and business owners who keep a good eye on cashflow, it is also very much worth taking advice on the business’ profit position as it is entirely possible for a company to have a positive cash flow yet still be unprofitable.
Understanding the company’s profitability position enables the business owner to have an accurate indication of the company’s entire financial condition, not just it’s cash position.
A good accountant will be able to provide advice and guidance on your businesses cash flow and profit status. Here at Keen Dicey Grover we know that taking the time to fully understand your business is fundamental.
We also know that the time spent working through the complexities of the relationship between cash flow and profitability should be our time not yours. This gives us the ability to provide you with relevant financial information in order to support your financial status, growth and longevity.
By ensuring our clients feel informed and confident in their financial status, we provide the freedom for them to concentrate on running and growing their business – not worrying about it.
Keen Dicey Grover.
We care… we really care.