Cash Flow vs. Profit
Profit, also known as net income , refers to the money left over in a business once all expenses have been deducted from revenue. It is the profit of a company in which taxes are calculated. Operating profit, gross profit, and net profit are the types of earnings a business will generate.
These earnings bring money into the business, but they might not increase cash flow right away. If a customer pays on credit, a business has made revenue, but they do not actually have the cash at that point in time. The cash impact of a sale may not hit the business account until much later, causing issues in cash flow management and the company’s overall financial position.
To get a handle on your business’s cash flow and profits, owners can use a cash flow projection to determine their future inflows and outflows of money.