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Cash and Profit

The importance of understanding how money is coming into your business and how much you have left over after paying expenses is essential to the smooth running of your business. Working with a business coach will help you improve your financial understanding and work towards running a profitable business.

Contact Marco Soares

01444 456922

Understanding business cash and profit

Improving your bottom line

Turnover growth is really important but it has to be balanced by stable or improved profit margins. Understanding your margins and knowing what levers you have at your disposal to improve these is one of the most important areas of running your business.

Managing cash flow

As your business grows it will almost certainly require more cash to fuel its growth. Understanding and optimising your cash cycle, anticipating funding requirements and good credit control processes are essential elements of creating a top performing growth business.

Effective reporting

Don’t make decisions in a vacuum. Make sure you have the right management information in a sensible format that you and your team can understand and act on easily.

Financial understanding

You don’t have to be an accountant to run your business effectively, but you do need to know which numbers are important, how to analyse them, and how to balance turnover, growth, profitability and cash flow.

How we can help you improve your time management

Bottom line improvement

  • Implement a bespoke 5 phase profit plan to improve gross and net margins.
  • Identify, monitor and manage the key activities and drivers of profitability in your business
  • Understand your margins very clearly in terms of revenue streams, customer groups and product/service lines.

Cash flow management

  • Anticipate cash flow challenges in advance through effective cash flow forecasting.
  • Improve your cash position by helping you understand your cash cycle and implement strategies to reduce this
  • Tighten up credit control

Effective reporting

  • Clarify what reporting you need, how frequently, and why.
  • Anticipate and manage key numbers in real time by implementing Key Performance Indicators (KPI’s)
  • Create budgets and forecasts that map out your profit and turnover goals.

Financial understanding

  • Understand your financial statements (balance sheet, Profit and loss and cash flow statement)
  • Calculate your break even and how this changes as margins and overheads.
  • Improve your general understanding of relevant concepts and ratios.

Learn how business coaching can improve your cash and profit

FAQ

What is the relationship between cash flow and profit?

Profit is the surplus after all expenses are deducted from revenue whereas cash flow is the amount of available cash within a business at any given time.

What is the formula for cash flow?

Free Cash Flow = Net income + Depreciation/Amortization – Change in Working Capital – Capital Expenditure. 

Operating Cash Flow = Operating Income + Depreciation – Taxes + Change in Working Capital.

What is profit in a business?

Profit is when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

What is a good net profit percentage?

Your net profit percentage goals should be a minimum of 15 to 20 percent.