It is all very well meeting the accounting obligations to maintain proper books of accounts showing a true and fair view. as required by Company law or the Inland Revenue.

Internal reporting of the results is essential to keep owners informed of the state of the profit (or loss) or cash flow of the business.

‘Cash is King’ and although a company may be making a profit, it may fail due to cash running out. Projecting whether this is likely to happen in the future is essential so that steps can be taken to arrange a bank overdraft or loan or ensure that customers pay on time or in advance.

Often, levels of sales (turnover) is used as the main measure of success.  However, for all businesses, the measure of profit after tax is essential, otherwise the owners will not have a successful business and the return from investment of time and resources will be lost.

The adage “Turnover is Vanity – Profit is Sanity” rings true.