{"id":2638,"date":"2022-08-04T08:56:47","date_gmt":"2022-08-03T22:56:47","guid":{"rendered":"https:\/\/www.asapfinance.com.au\/?p=2638"},"modified":"2022-08-04T08:58:17","modified_gmt":"2022-08-03T22:58:17","slug":"keeping-your-business-cash-liquid-the-difference-between-cashflow-and-profit","status":"publish","type":"post","link":"https:\/\/www.asapfinance.com.au\/es\/en\/keeping-your-business-cash-liquid-the-difference-between-cashflow-and-profit\/","title":{"rendered":"Keeping your business cash liquid \u2013 the difference between cashflow and profit"},"content":{"rendered":"<p>The foundational goal of any business is to make a profit. As a business owner, that\u2019s one of your key financial aims \u2013 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?<\/p>\n<p><strong>How do profit and cashflow differ?<\/strong><\/p>\n<p>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.<\/p>\n<p>Let\u2019s take a look at the differences:<\/p>\n<ul>\n<li><strong>What is profit?<\/strong>\u00a0\u2013 Profit is the surplus that\u2019s left from your income once you\u2019ve paid your expenses, supplier bills and tax etc. It&#8217;s driven by creating a profit margin and generating value from your products and\/or services.<\/li>\n<li><strong>What is cashflow?<\/strong>\u00a0\u2013 Cashflow is the ongoing process of ensuring that the business has the available cash (or \u2018liquid\u2019 cash) needed to operate. This provides the money needed to trade, to pay suppliers, to cover wages or to buy raw materials etc.<\/li>\n<\/ul>\n<p><strong>Why is positive cashflow so important?<\/strong><\/p>\n<p>\u2018Cash is king!\u2019 may be a clich\u00e9 these days, but it\u2019s a maxim which underpins any successful business model. Yes, it\u2019s great to make a profit at year-end, but if you don\u2019t look after your cashflow then the business may not survive as long as the end of the year.<\/p>\n<p>What\u2019s needed is good cashflow management to enhance your financial health. And without a careful eye on your cash numbers, things can quickly go awry.<\/p>\n<p>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&#8217;s day-to-day operations over the course of the period.<\/p>\n<p><strong>Talk to us about improving your cashflow management<\/strong><\/p>\n<p>Good cashflow management is all about being in control of your cash inflows (income you\u2019re generating) and your cash outflows (what you\u2019re spending). To achieve \u2018positive cashflow\u2019 you need to proactively work to keep your inflows higher than your outflows.<\/p>\n<p>As your adviser, we\u2019ll help you set up detailed cashflow reporting and forecasting, so you can keep the business in that ideal positive cashflow position. And we\u2019ll also look at key steps for keeping your revenues high, margins profitable and meeting your financial targets.<\/p>\n<p>Get in touch to talk through your cashflow management.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The foundational goal of any business is to make a profit. As a business owner, that\u2019s one of your key financial aims [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":2642,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[],"translation":{"provider":"WPGlobus","version":"2.10.4","language":"es","enabled_languages":["en","es","de","fr","ru"],"languages":{"en":{"title":true,"content":true,"excerpt":false},"es":{"title":false,"content":false,"excerpt":false},"de":{"title":false,"content":false,"excerpt":false},"fr":{"title":false,"content":false,"excerpt":false},"ru":{"title":false,"content":false,"excerpt":false}}},"jetpack_featured_media_url":"https:\/\/www.asapfinance.com.au\/wp-content\/uploads\/2022\/08\/3rQ6P8ZKnMxzXHc1JeX9SS-pexels-pixabay-260024.jpg","_links":{"self":[{"href":"https:\/\/www.asapfinance.com.au\/es\/wp-json\/wp\/v2\/posts\/2638"}],"collection":[{"href":"https:\/\/www.asapfinance.com.au\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.asapfinance.com.au\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.asapfinance.com.au\/es\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.asapfinance.com.au\/es\/wp-json\/wp\/v2\/comments?post=2638"}],"version-history":[{"count":3,"href":"https:\/\/www.asapfinance.com.au\/es\/wp-json\/wp\/v2\/posts\/2638\/revisions"}],"predecessor-version":[{"id":2641,"href":"https:\/\/www.asapfinance.com.au\/es\/wp-json\/wp\/v2\/posts\/2638\/revisions\/2641"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.asapfinance.com.au\/es\/wp-json\/wp\/v2\/media\/2642"}],"wp:attachment":[{"href":"https:\/\/www.asapfinance.com.au\/es\/wp-json\/wp\/v2\/media?parent=2638"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.asapfinance.com.au\/es\/wp-json\/wp\/v2\/categories?post=2638"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.asapfinance.com.au\/es\/wp-json\/wp\/v2\/tags?post=2638"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}