Where did my money go?
Business owners quite often don’t track or follow where their cash flows through their business.
To understand your money goes you need to know the difference between cash profit and cash flow. The following diagram will explain the difference;
Your cashflow outlays will have affect your profit but it will not necessarily be dollar for dollar. The payment of expenses or repayments may not have the result of reducing your profit. As can been seen from the illustration
When running a business our goal is to make a profit, but we also don’t like paying tax! Right?
So you need to understand that paying for expenses may not reduce your tax bill but by tracking your cashflow and planning your outlays it will help improve your business because you understand what drives your net cashflow.
Get your free cash flow assessment – Contact Sciacca’s Today