Let’s talk cash flow statements. When is the last time you looked at one for your company? If you’re cringing right now because you just can’t remember, it’s time to change that. Your cash flow statement, or statement of cash flows, shows you where your money is going. The money coming in, the money going out. It’s vital to know where the company’s money is going, and where it’s coming from.
Your cash flow statement is based on cash basis accounting rather than accrual, which means you will record every time money is exchanged. Always keep in mind that your cash flow is not the same as your profit and vice versa. The relationship between the two will vary from business to business, and fluctuations will occur due to the type of business. For ex
When working in your books, you need to know exactly what the numbers mean. Often times people know the general meaning of a term like, “profit” but don’t actually know how it’s different from “revenue” or how the two affect each other.
Your profit is how much money your business has made from the sales of your goods and services or from things like fees or interest during a specific time period. For example, you could look at your profit from April to see how much money you made during those 30 days. If you sent out invoices for a total of $35,000 from April 1 - 30, then your profit
Many people believe that having everything right at our fingertips at a moment’s notice is a bad thing. However, when it comes to your accounting records, it is the best thing. Real-time accounting allows you to access and check your records at any time from any device, 24 hours a day, day or night.
Accounting is an essential component of every business regardless of size. It’s important to keep in mind the basic do’s and don’t’s of accounting that not everyone may know, but should! These are common and often unnoticed mistakes that can lead to future problems.
Cash Flow vs. Profit
Don’t assume that profit also means there’s cash flow. What’s the difference? Cash flow is the inflow and outflow of money while profit is the extra money left over after expenses are deducted. It would be nice to assume that profit leads to cash flow, but that could give you a distorted view of how well (or not) your business is doing.
Bad Bookkeeping Records and Communication
Not taking your bookkeeping seriously nor