Cash Flow vs. Profit - What is the Difference? | Cash Flow Tips from CPA

Cash flow is NOT the same thing as profit.

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Cash flow is NOT the same thing as profit. Getting this wrong can be the reason your business fails.

Because over 90% of businesses fail because they run out of cash, not profit.

Cash flow is simply the flow of CASH, aka MONEY, paper, bread, cheddar, and so on - in and out of your business.

A positive cash flow means that your company is adding more cash to your account than its losing.

A negative cash flow means that your company is burning more cash from your account than its adding.

Profit is the financial gain or loss between the amount of money you EARNED and the amount of expenses INCURRED.

These two words, earned and incurred, is the biggest difference between cash flow and profit.

Outline:

What is Cash Flow?: (1:18)
Difference between Cash Flow and Profit?: (2:05)
How is Cash Flow Calculated: (3:42)
What is a Cash Flow Statement: (4:20)
How to Look at P&L to Understand Cash?: (5:20)
Tips to Improve Cash Flow : (6:50)
Recap: (7:40)

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