The Difference between Sales Revenue and Cash Flow

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THE DIFFERENCE BETWEEN SALES REVENUE CASH FLOW
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For every small business, keeping up the
financial well-being depends on having healthy
revenue and cash flow. In order to attain
business goals and stay financially sound, small
businesses must scrutinize their operating
performance and current financial position
regularly.
Among these, 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. If these
figures are on the fritz, it means your business
performance is in trouble. Knowing these figures
can help you measure the success of your small
business and make informed decisions.
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Sales Revenue
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 companys financial
health but also demonstrate the performance of
sales and marketing efforts.
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. Sales and Revenue are often used
interchangeably in accounting. Bear in mind that
revenue does not essentially mean cash received.
When a retail store received cash from a
customer, its retailers sales revenue.
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Business Cash Flow
Business cash flow is a measurement of money both
flowing into and moving out of a business in a
particular 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 is called
working capital. It helps in analyzing your
businesss financial health. You can also improve
your cash flow by increasing sales, higher
prices, lowering operational costs, efficient
collection of accounts payable and small business
loans.
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Sales Revenue vs. Cash Flow
The Bottom Line
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. In a nutshell, it means
how successful your business is, but doesnt
demonstrate if you have the money to get through
the long-term.
After reading through this article, we hope you
now know the difference between sales revenue and
cash flow and can responsibly manage your small
businesss accounting to ensure sustainability
and growth for your small business.
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