The P&L calculates how profitable you are, it’s actually that simple. What it also does is summarises all of the financial activity within your business during different periods.
Put simply the Profit & Loss shows you:
How your sales are tracking
How much you are spending on the things you need to buy in order to make the sales (Cost of Sales)
How profitable that is before you spend on overheads and other expenses (gross profit)
How much you’re spending on those other operational items (Expenses)
How much profit you have made after you take these away from your revenue as well (net profit).
Sales and both types of Profit are two key things you need to track to know that your business is healthy. But they won’t always equate to having cash in the bank. Raising an invoice and paying an invoice are 2 very different things unfortunately. It goes without saying that cost control is also really important of course.
The impact of having your Profit and Loss predicted
The beauty of Predict is that it will spot operational trends before you can, and will magnify potential issues in overspending or underperforming on sales before you could so that you can take action today.
Try a different view
Some of you may like to look at the whole picture of your business predicted and play with different outcomes here in the financials section.
You have the entire prediction functionality available to you here, just as you would in the Home section. The benefit of reviewing changes you are making in the Profit & Loss, by toggling prediction lines on and off, or creating new predictions to explore different outcomes, is that you can see the impact on profitability as you do it.
Note: You don’t have the predicted cash view here, so we would recommend that you flick between the P&L and Balance Sheet as you go, but it’s a great entire view of your business’ operations and something to try.