Cash Flow Management - How Cash Flow Can Be More Important than Profit?
October 7th 2020
Complete Bookkeeping & Advisory Services, located on the North Shore Kamloops, is a certified professional bookkeeping service. CBA proudly provides a vast range of exceptional customized bookkeeping services and on-line services to all local clients in Kamloops and throughout British Columbia.
The highly qualified team at Complete Bookkeeping & Advisory Services is dedicated to creating accurate, detailed, and professional bookkeeping solutions that are specifically tailored to each client's financial situations.
With over 30 years of experience in the industry, Complete Bookkeeping & Advisory Services can provide all clients with the highest level of bookkeeping services for all business requirements. From bookkeeping assistance & training to new business start-ups, in addition to full-cycle bookkeeping and cash flow management.
Cash Flow Management – How cash flow can be more important than profit
Cash flow is just what it sounds like: the flow of money between you and your customers or suppliers. It is also how the money that comes in is being invested so you can use it to pay your bills and reinvest for new ideas. Cash flow is also an important measure of how efficient and productive your company is. Cash flow management can determine how efficient your staff is, how well managed your finances are and how well your sales team is doing, which will, in turn, establish your companies profit margins.
Net profit is one of the key metrics used to determine a business’s success. Business performance is based on profitability which can then be funnelled back to business owners. Net profit is calculated as total revenue less total expenses.
While profit is the goal, cash flow can be more important for the simple fact that it keeps the business running efficiently and effectively while maintaining the profitability factor.
Net profit won’t show you the whole picture of how your business is doing financially because net profit doesn't tell you when the inflows and outflows of cash are coming and can not give you a day to day understanding of the overall financial well-being of your establishment.
Many entrepreneurs start their businesses to turn a profit but what they do not realize is that cash flow is what keeps the lights on.
One of the most important things to remember when it comes to cash flow management is to always maintain a healthy balance between your cash and accounts receivable. The most common cash flow problem that companies make is simply spending too much on purchases and not having enough cash coming in to maintain financial balance. This can lead to unnecessary and avoidable problems down the road.
There are many ways to manage your cash flow. If you are comfortable handling the bookkeeping requirements of a company and understand how all the numbers work, that is great. But if you are just getting started or not quite experienced enough with the ins and outs of your company, or just are not comfortable with numbers, it is best to hire a certified professional bookkeeper to take care of this for you.
This is where Complete Bookkeeping & Advisory Services can help. The highly skilled and knowledgeable team at CBA are extremely qualified in developing cash flow management strategies which will ensure your business is operating at its full potential, maximizing productivity and profit.
If you have a business in Kamloops or the surrounding area and would like more information on cash flow management, or are looking for assistance from one of our certified professional bookkeepers in managing your companies cash flow, please visit here and explore how implementing a solid cash flow management plan can increase profit, keep you up-to-date with your businesses financial obligations and deter avoidable frustration and stress.