Bookkeeping is a fundamental part of the financial process for any business. Without it, your accounting software has no data to work with. Keep reading for some tips to maximise your bookkeeping. Read More…
The foundational goal of any business is to make a profit. As a business owner, that’s one of your key financial aims – to make enough sales, at a big enough margin, to generate profit from your enterprise. But how does profit differ from cashflow? And why is cash king?
How do profit and cashflow differ?
To really understand the difference between generating profit and managing cashflow, we need to look at what both these terms mean. You might think that delving into the accounts is a job for your adviser, but being in control of your profit and cashflow is an invaluable business skill.
Let’s take a look at the differences:
Why is positive cashflow so important?
‘Cash is king!’ may be a cliche these days, but it’s a maxim which underpins any successful business model. Yes, it’s great to make a profit at year-end, but if you don’t look after your cashflow then the business may not survive as long as the end of the year.
What’s needed is good cashflow management to enhance your financial health. And without a careful eye on your cash numbers, things can quickly go awry.
A business can generate high revenues and big profits, but still be cashflow poor. In other words, it can have profits at the end of the period, but have very little liquid cash to fund it's day-to-day operations over the course of the period.
Talk to us about improving your cashflow management
Good cashflow management is all about being in control of your cash inflows (income you’re generating) and your cash outflows (what you’re spending). To achieve ‘positive cashflow’ you need to proactively work to keep your inflows higher than your outflows.
At WDF Accounting + Advisory, we can help you set up detailed cashflow reporting and forecasting, so you can keep the business in that ideal positive cashflow position. We can also assist with looking at key steps for keeping your revenues high, margins profitable and meeting your financial targets.
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WDF Accounting and Advisory | Accountants Wagga | Your partners in business
Providing carefully tailored accounting solutions in business advisory, tax compliance, bookkeeping, Self-Managed Super funds, and more.
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