Profit is NOT cash

Your profit and loss statement tells you how your company has performed during the financial period. It also includes NON CASH items, aka expenses or income not spent or received yet.

You can therefore make a profit and NOT have any cash!

To have better cash flow management, you have to speed up your working capital cycle. How?

- Minimising stocks
- Getting debtors to pay up quickly and more regularly

Examples of NON CASH items -
a. Depreciation
b. Accrued charges
c. Accrued income
d. Translation gains/losses of foreign currencies
e. Profit/Loss on disposal of fixed assets