The Difference between Cash Flow and Sales Revenue
Small business owners have enough on their plates – they certainly do not have time to become accountants. However, having a basic understanding of the numbers behind your business can lead your company to success. Data provides insights that help answer basic questions, like “Can I take on a new expense?” or “How much will I need to increase sales?” In addition, you can turn those questions into actions to improve your business.
Sales revenue and cash flow are the two most fundamental numbers you should analyze because they explain the total amount of money you receive and where that money goes.Knowing these figures can help you measure the success of your small business and make informed decisions. ProTech provides a suite of business solutions that enable business owners to easily measure project success and provide accurate reports.
What is Sales Revenue?
Sales revenue is the income a business realized from the sale of its products or services and reports on its income statement. Revenue is the income generated by a business before subtracting any expenses. Set inyour mind that revenue does not essentially mean cash received.
Operating revenue is the income a business earned from core operations. Non-operating revenue is the income a business earned from sources like investments or sales of assets. Sales revenue not only helps in analyzing the company’s financial health but also demonstrate the performance of sales and marketing efforts.
ProTech provides through its products, Profusion ERP system® and biloba accounting system®, unique reports that enable companies to analyze financial condition and show sales, revenues and income returns.
What is Cash Flow?
Business cash flow is a measurement of money both flowing into and out of a business in a period and reports on its cash flow statement. If you have positive cash flow, your business has more cash coming into your business so you can pay for your expenses. When you have a negative cash flow, you do not have enough money to pay for expenses or payments. Having a negative cash flow does not essentially mean loss.
The idea of having “sufficient money to meet your financial commitments” called working capital. It helps in analyzing your business’s financial health. You can also improve your cash flow by increasing sales, higher prices, lowering operational costs, payable and small business loans.
What is the Different(Revenue vs Cash Flow)?
When comparing both sales revenue and cash flow, remember sales revenue is the amount remaining after deducting all operational business costs, while cash flow is the measurement of money coming in and out of your business. With that said, the key differentiating factor between the two is time. Revenue tells you how sound your business financials are. Briefly, it means how successful your business is, but does not demonstrate if you have the money to get through the long-term.
After reading through this article, we hope you know the difference between sales revenue and cash flow and can responsibly manage your small business’s accounting to ensure sustainability and growth for your small business. Contact us to help you manage your business!