Why Profit & Loss Matters

Profit really does matter in business. Unless a business is making a cash profit it will ultimately fail.

By cash profit, it means cash actually received in the bank account of a business from revenue that generates a profit for that business.

This is very different from accrued profit, which is the revenue that has been billed to a client but they have not yet paid the invoice. Without cash profits, a business will ultimately fail.

A Profit and Loss Statement is a key management tool for any business. A Profit and Loss Statement shows the revenue generated for a set period of time together with expenditure incurred in that same period for producing that revenue and also running the business.

A Profit and Loss Statement shows if a business is profitable and forms part of the annual statutory accounts, which also includes a Balance Sheet. A Balance Sheet is a snapshot in time meaning it is prepared at a particular date is basically a statement of assets and liabilities for a business as at that given date.

The profit and loss position of a business needs to be monitored regularly and carefully managed as the competitive landscape in which it operates and wider economic climate is constantly changing which means that a business that is making profit one day, may not be necessarily doing so the next.


Now the big question to answer is – Is your Business Profit–Friendly?

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Profit in Focus - More Profit in Less Time with Less Stress