What’s the difference between Profit and Loss and Cashflow?

Suppose you sell ten thousand pounds worth of goods to Marks and Spencer which you have produced and you have paid out five thousand pounds on materials and labour and a further three thousand pounds on rent, rates, insurance etc you have technically made a profit of two thousand pounds.

But if you’ve not yet received the payment from Marks and Spencer but you’ve had to pay for all the materials, labour, rent, rates etc your cashflow will show a negative of eight thousand pounds.

So the same transaction shows a profit and loss figure positive of two thousand pounds but the cashflow figure shows a negative of eight thousand pounds.