A profit and loss statement is an important document for a business that acts as a financial statement. Also shortened to P&L statement, and similar to income statements, this document reports on the costs, expenses and revenues accrued over a selected time frame. It can act as a helpful indicator of the financial health of a business, enabling strategy teams to plan for the future.
Regardless of name, profit and loss statements are a good report of whether a company can make any profit, based on the revenue that comes in, and the costs and expenses that go out.
The profit and loss statement will be one of a series of documents that businesses release over the course of a year, normally after each quarter and often as part of a year’s work. The others include the balance sheet and a cash flow statement. The balance sheet gives a rundown of the business’ complete assets, debts and equity, while the cash flow statements gives a summary of where the cash coming into the business is from, and where the money going out of the business is going.
These three documents can be compared against other years and quarters to create forecasts, strategies and more for the financial wellbeing of the company.
Most profit and loss statements are produced using a form and format that most businesses will use. The first entry on the statement will be the revenue which is the money brought in by the business’ operations.
The expenses and operating costs that have been paid for by the business are then subtracted from the revenue which leaves the net income. This is what is often referred to as the profit – the profit that the company has made over the period that the profit and loss statement covers. These numbers, especially when compared with previous years and quarters, can give interesting metrics and can be used to calculate other figures to give a fuller picture of the business’ results.
Many profit and loss statements follow a similar format, and often use the same template for their document. You can find a number of templates online which you can use with permission, and these templates should make the process easier and more straightforward.
In very general terms, you’ll need to subtract the overall amount of all of your expenditure, costs and expenses from the revenue you’ve made through the stated period. This will give you the profit you’ve made over the year or through the quarter.
Generally, each profit and loss statement has three lines of values which represent different parts of the company’s financial make up.
The first line, or the top line, is for your business’ revenue – how much the business made.
The second line is for your business’ expenses – how much your business spent in costs and expenditure.
The final line, known as the bottom line, is the profit your business has made. This is the revenue, minus the costs and expenditure.
Profit and loss statements can seem complex and sometimes daunting, but in reality, they are simply a report on everything your business has earnt, everything it has spent and the resulting profit.
You can find entries for the money you have made on the top line, and you can find the amount your business has spent in the expenses line. The most important part of the entire P&L document however, is the bottom line – the profit. This number will be the best indicator of how well your business is doing financially, and how much you need to do to improve its condition.
Invoice finance allows you to release cash quickly from your unpaid invoices.
As your lender, we can release up to 90% of your invoices within 24 hours. On payment of the invoice from your customers, we will then release the final amount minus any fees and charges. There are different types of invoice financing options available to businesses depending on the situation and the level of control they require in collecting unpaid invoices.
We are an invoice financing company who offer a solution whereby payments are collected on your behalf managed by our team of expert credit controllers so you can focus on running your business. Our Confidential Invoice Discounting solution is offered to businesses who want to maintain their own credit control processes, therefore this remains strictly confidential so your customers are unaware of our involvement.
09:28, July 18, 2021
Very supportive in setting up the facility
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14:42, June 24, 2021
I cannot comment on the service it would be beneficial for small if you provided a flowchart showing the required documentation, i spend a fair bit of time with a very helpful manager to get all the paperwork together
14:27, June 18, 2021
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