article thumbnail

A business owner’s guide to understanding and working with the profit and loss statement [Part 2/4]

Creative CFP

The profit and loss statement (or P&L in accounting jargon) is arguably the central management statement for most SMEs, recording the majority of operational activities over any period of time, usually monthly. For revenue, ensure that you have a streamlined process for your invoicing and payment platforms.

article thumbnail

How to mitigate insolvency risk

Future CFO

Declining profitability: For example, are your sales lower or your cost of goods sold higher? Poor interest coverage ratio: This shows operating profits may not be able to cover interest expenses. Are they taking longer to settle invoices or make deliveries? Weakened balance sheet. Operating margins: Are they becoming thinner?

Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Trending Sources

article thumbnail

Interpreting the Cash Flow Statement – a Quick Guide

CFO Share

Is cash from operations generated by one-time occurrences, such as a large invoice payment, or by systemic processes, such as overall business growth? On the other hand, venture capital backed businesses expect negative cash from operations since they have external financing and prioritize growth over profitability.

article thumbnail

Understanding and achieving a healthy cash flow [Part 4/4]

Creative CFP

The cash flow statement in context The profit and loss statement, discussed in an earlier blog, provides information on the revenue and expenses over a certain period of time. A business requires cash to be able to pay its suppliers, vendors and employees, but it also needs cash to be able to invest back into itself in order to grow.

article thumbnail

How do I clean up my financial statements?

CFO Share

Do your profits and cash flows make no sense? The leading causes include: Poor monthly bookkeeping processes, including invoicing, billing, coding, and accruals. Routine transaction processing such as invoicing, bill entry, and coding are the foundation for more sophisticated accounting accruals. Invest in robust processes.

article thumbnail

Cash Flow Management Tips for Your Business this 2024

The Finance Weekly

Cash Flow Management Tips to Apply to Your Business Problem 1: Misreading Cash Flow and Profit Cash flow is about tracking how money moves in and out of a business. Profit, however, is what's left over after you take away all the costs from what you earn. Invoices - Send clear and accurate bills quickly.

article thumbnail

Top 8 AI Uses in Finance Embraced by FP&A Leaders

The Finance Weekly

Allegedly, their AI-driven efforts have saved them from potential fraud losses exceeding a billion dollars. Automate Cash Collection Machine learning models are used to predict when customers will pay their invoices. This helps FP&A leaders make informed choices that maximize profits and contribute to financial success.