Profit and Cash flow
There are those things called Profit and Cash flow and for you to understand the difference is extremely important for your business. To know the actual state of your company you have to look at both Profit and Cash flow and act on that information all the time. First you need to understand the meaning of both cash flow and profit.
Profit is the result of your product/service/idea sales minus the expenses which are paid/have to be paid for the produce of your product.
The actual cash received and actual cash used in the process of your business deeds and their difference form the cash flow. The certain amount of cash that your company receives and the exact amount of cash your company pays out. Using the thorough analysis on that information will give you the knowledge of you company’s current state, letting you know if it will be able to pay its expenses.
Accrual-basis accounting operation and why should we use it? Calculating your profit daily will give you the information on the consistency of your income from your business operations. Without this accrual-basis accounting, you could not accurately point out whether your profit is increasing, decreasing or being steady. This way of accounting is tracking the transactions, sales and expenses, recording the exact way the money come and go out of the company. In other words, your company’s profit is recorded when the product you offer is sold and your company’s cash flow is recorded when the money are actually received. And so if the actual cash is not received, on paper you are having profit, but in reality, you are having nothing.
Now that you know what your cash flow and profit are is time to take measures and work on the improvement of your company’s financial state. There are few simpler steps you can take in order to increase your actual profit and decrease the negative cash flow.
Come up with a plan. Renovation and ideas should always be welcome in your business. Do your best to constantly check the market and preferable products, keep a close eye on your rivals and think of a better solution for your service. Do your best to plan out your company improvement project. Do a complete pre-planning, To-Do list and schedule with time management strategy.
Try and control the day cash flow comes in and gets out of your company. Struggling to pay expenses without having the money usually leads to loans and thus more expenses.
Cut unnecessary costs, and by that, we do not mean to make your employees angry. Salaries cut should be your last and least wanted a resort. Cut expenses with things like electricity savings, if it is needed to, use cheaper inventory supplies. Start with the small stuff that will not affect the workflow and productivity.
Improve your employee monitoring. We have previously talked about an improper attitude towards work from employees and the way to change it. The way to increase the productivity without making everybody uneasy, unhappy, and angry and on the verge of quitting their jobs is quite simple. Make better control of the working environment and process. Employee productivity tracking will help you increase your project success rate if you use that information the right way. Use that acquired data to better manage the tasks and projects you are onto.
When you want to increase your profit, time and ideas are your best friends. Project time management software usage will help you organize your ideas and turn them into stable income sources.