Cash is King

Cashflow is vital to the survival of any business. While the profit or "bottom line" often takes the spotlight, cashflow is even more critical for business success. Relationships with suppliers and staff depend on your ability to pay them. Many profitable or asset-rich businesses can fail because they run out of cash.

So what is the difference between cashflow and profit?

Profit is the difference between income and expenses. This can include non-cash items such as depreciation, foreign exchange gains or losses, and amortisation of goodwill. Profit is frequently used as a measure of growth and performance in a business.