Profit versus Cash

We’ve touched upon this before but we think it is worthwhile revisiting this in light of the ‘clarity’ focus that we had as our headline in December; and the introduction of some of the new software we have now have access to.

What is profit?
Profit is simply your sales less all costs.

What is cash?
This is NOT what is left sat in the bank. You must start here, but then factor in those amounts still due to be received and those amounts due to be paid out. There is far less certainty around these amounts!

I can see the difference but surely there isn’t that much to worry about?
Whilst in time you’d hope the two become the same figure; factor in the idea that your customers pay you sporadically and that you might even give them 30 days credit, whereas your suppliers may demand immediate payment. Now we start to see some of the potential problems not immediately evident from profit alone.

Doing something about it
Time continues to be the barrier for most as is the cost of improving cash flow and this is where a mixture of the correct software and a degree of accountability can fix both.

We have software here that will predict future cash flow based on historic cash flow EVERY 5 minutes; and this feeds directly into Xero.

Alongside this we can devise a cash-flow based strategy and hold you accountable against this which some clients are already today benefiting from and are thousands of pounds better off each month.

You might also be able to do this on your own and if so what is stopping you?

Mark Fairley

"Tennick Accountants have been invaluable in making sure that businesses such as ourselves have access to knowledge, support and expertise which not only guides them through tough times but also helps them establish a stronger business."

Mark Fairley – Owner of Request A Guest

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