Are you familiar with cash flow and what it means for your small or large business?
Cash flow is the total amount of cash brought in by a company, minus the cash being used for the expenses of the company. This gives you an instant snap shot of the cash that is available. Cash flow is very different from profit. On a Profit and Loss Statement the bottom line displays the profit that you made in a certain time period. However, the profit percentage or dollar amount may not accurately reflect the cash that you have.
Profit does not equal cash on the Profit and Loss Statement because of many different accounting variables. For instance, if you have a mortgage or car payment that the business is paying for the part that is tracked on the Profit and Loss Statement is the interest part of the payment. The principle part of the payment is considered an asset. The total amount of the cash leaving the business does not live on the Profit and Loss Statement.
A very good document to keep updated is a cash flow statement. The monies going in and out in every possible way are recorded on this statement. So what you ACTUALLY have in cash will show up there and will reflect the amount of cash you have on hand. This statement is considered essential to having an accurate picture of the financial stability of your small or large business.
Some things to take note of…
– Cash flow may be hard to quantify, understand or control, but it is really the heart and soul of any business.
– Numerico PC’s accounting team knows and understands these documents and what they mean to you. – Gary and his team will advise you and educate you on what you should be looking for and how to manage the cash in and out of your account.
– They will point out areas where your expenses may be higher than your industry’s standard and give you advice on how to manage and reduce these expenses.
– The team will take your historical cash flow statements into consideration so they can understand where your money is going.
– If you are not already, they will help you track your daily, monthly, and yearly expense to create a budget for your expenditures.
“Customer satisfaction, employee satisfaction and cash flow are the three most important indicators for a business.” – Jack Welch
