Cash Flow vs. Profit: Where should you Focus more?

Somebody has rightly mentioned that cash is the king and without the green (i.e. Cash) a business cannot function smoothly. Some time we get confused between the terms i.e. Cash flow Vs. Profit. Cash is necessary for daily operations i.e. For paying employee’s salary, incurring the operational costs, purchasing inventory and paying the taxes. Positive cash flow indicates that a company’s liquid assets are increasing which enable any company to settle down the debts, return the money to shareholders and create a provision to meet the future contingencies. At the same time profit is the surplus after all expenses are deducted from revenue. Improve profit reflects the overall picture of a business growth and on the basis of which tax is calculated.

Let’s talk about an example, where ABC Ltd. Who sold the equipments to the XYZ Ltd. In this scenario, ABC Ltd. Book a sale in its profit & loss account and XYZ book as a debtor in balance sheet. ABC Ltd. Also books a significant profit out of this transaction. In case XYZ Ltd. Doesn’t able to release the money to ABC Ltd. Its cash flow will hit badly and there is a possibility ABC Ltd. Would not be able to incur the operating expense. In more precise words the cash flow for business is the inflow and outflow of money.

Many startups, small business or even the large organisation those who wants to get prepare financial statements professionally sometimes find it very difficult to engage a professional firm along with the right skill sets. Though it is an old believe that accounting process should be done within the organisation. The choice of accounting treatment will have a significant impact on the ability to manage the cash flow as well as how much tax has to pay by a company. These choices have a direct impact on the Cash flow Vs. Profit of the operation of the business.

Now the question arises how to resolve this raised concerns, answer to the same is outsourcing the accounting work to Rayvat.

By outsourcing the accounting works’ allows the company to focus on core areas i.e. Sales. This also helps to manage the core functions of the business. By outsourcing the accounting work of professional firm business can reap the benefits of the focused use of financial, human and management resources to be more efficient and effective delivery of services. Outsourcing also gives an opportunity to access the higher value talents and skill sets. If your business is a startup or a small medium company, don’t have access to skilled employees, connect with us immediately to explore the best option.

It has been observed that outsourcing firm becomes the best friend for company in the long run. Rayvat’s globally skilled team is competitive and suitable for any business process operations. The key benefit of accounts outsourcing to us is that they are specializing in accounting, bookkeeping, cash flow preparation, taxation and payroll services for clients across the globe.

At Rayvat we can understand the concerns of small companies to large organisation with respect to accounting compliance. Our virtual accounting firm hires the best accountants with CA, ACCA, CPA qualification that works along with the clients closely and always exceeds the client expectation. We also help in providing the access to clients with respect to monitoring the financial & required MIS on a real time basis.

For more details, kindly connect with us on email id: accounts@rayvat.com  with respect to  your outsourcing service requirement related to project specific or you can speak to us in person by connecting on the mentioned number (US): +1 (888) 863-5255.