Are Profitability and Cash Flow the Same Thing? 

Profitability and cash flow are not at all the same thing, although obviously they are related areas in business operations and financing. Your cash flow budget can provide some very accurate insights into financial forecasting, whereas profitability is strictly an indicator of having greater revenues than expenses.

Here are some of the other major differences between cash flow and profitability.

Cash flow statements

There are three sections to cash flow statements, including one for cash generation, one for cash outlays, and one for debt transactions. Taken together, these three general areas accurately depict how a company earns money, what its expenses are, and what its investments entail. This is much more than a simple profitability figure can convey about any given business, so it is much more revealing in terms of how well the business is doing.

Creating a cash flow budget

The significance of creating an effective cash flow budget can hardly be overstated, since it needs to be reviewed and updated regularly, and it can be effectively used to meet a company’s financial goals. By planning out all investments, expenses, and incoming revenues, it should be possible to establish realistic business objectives, and to constantly be striving toward meeting those objectives.

Understanding your business

Your business might well show a positive bottom line and be profitable, but you might still never have any cash available for normal operations. That’s why it’s so important to be able to evaluate and understand cash flow budget documents, so that you can have a good handle on what your debts are, and where your liquid assets are. 

Is your business cash flow what it should be? 

Maintaining positive cash flow can be a real trick for many small businesses, but it’s an essential part of staying competitive and successful in today’s marketplace.

If your business could use some financing to cover cash flow gaps, contact Commercial Capital Lending to explore some financing opportunities.


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