Business: What does she mean?

By YOUR reasoning, walmart, circuit city, enron, etc... ALL had positive cash flow because they get paid before they supply. Cashflow is money in versus money out. It has NOTHING to do with when you get paid. so circuit city could go bankrupt because they BOUGHT things long before they sold them, even though they got paid BEFORE the customers used the product. And the same could happen to amazon, and STARTED TO!, even though they are strictly IM. Earlier, people were SURE amazon would go BANKRUPT! They probably would have if they hadn't changed their business model.

Steve

OK, HERE it is! The INTENT to PROFIT is MARKUP!

If you pay $5, and want 100% profit, your profit over a month might be:

-5-5-5-5-5-5-5-5+10-5+10=-25 You made 100% on TWO sales, and have $160 in receivables. OK, oin the END you will make PLENTY of profit, IF you're lucky, but you don't have much cash flow!

Let's say you want 10% profit, and you charge 10% net 30, with a 20% markup.

-5+5.5-5+5.5-5+5.5-5+5.5-5+5.5-5+5.5-5+5.5=$3.5 profit! AND, if someone pays you LATER, you make an additional 10%. OK, you don't make as much profit, but you have good cash flow. The loww markup means peoplle are more likely to be able to pay, and the discount means they are more likely to pay early.

and THAT is the difference between cashflow and profit.

What did you think it meant? If they were the same, people wouldn't refer to them as two things, and the statement you quoted wouldn't make sense.

HECK, some people take out loans, and talk about them producing cashflow. They cost MORE! A business may LEASE a computer, and it may end up costing them TWICE as much over time. If it costs $200/month, they only need to make $201/month to have a positive cash flow. If you paid $2000 CASH, you would have to make $2000 JUST to break EVEN!

Steve

GOD complex?

OK, WHERE are the other opinions here? affiliatemarketinggroove said the same thing I did!

And if there is only one truth, than that truth is right. if THAT weren't true, what would be the point?

Profit is the money you make over your cost. Since you can't REALLY determine your overall profit until the end of the period, people usually consider profit on a per item basis.

Cash flow is cash FLOW(emphasis, ok?) It is the RATE at which cash comes in. EVEN on a cash only basis there may be loans and some sort of claw back, so your actual profit may be different from the profit you planned. Of course, MOST businesses have some sort of receivables(A schedule and tracking of money coming in) and payables(A schedule and tracking of money going out). If you have more money going out than coming in, you can be said to have NEGATIVE cash flow, EVEN if your profit is sky high.

There have ACTUALLY been businesses in the middle of BIG deals that went bankrupt simply because they paid the money for the deal and hadn't seen the income from the deal yet. I once had a chance to make a fortune, I could EVEN have a 30%+ profit. I didn't bother to do it because the turn around wasn't fast enough. The cash flow would have been NEGATIVE for a time! ALSO, with 3 weeks turn around, they could have found another supplier, or decided to not buy anymore, etc.... My 30% profit would decline. If it were on the first order, it would have been a 100% LOSS, and I would have to find another buyer or sell to a company buying surplus, or maybe figure a way to factor it. http://en.wikipedia.org/wiki/Factoring_(finance)

Of course, if you deal with credit, you DO have AR and AP. Processors may take a while to pay you(AR), and may have chargebacks and refunds(AP). AND there are OTHER costs like advertising(AP). Maybe people may pay YOU for advertising(AR). Technically, that is what affiliate payments are.

Still, I have to wonder why you are so upset. Heck, you may have posted lots of places I never even bothered to look, so you can't really think I am trying to follow you or something. Frankly, I didn't even look at your name.

Steve