Turnover

How turnover works

Revenue is recognised under the accounting policy that applies to the business. Timing can differ from when invoices are issued or cash is collected. VAT collected for HMRC is generally not the business’s revenue.

Practical UK business example

A wholesaler makes £500,000 of qualifying sales during its year but incurs £470,000 of costs. Its turnover is not its £30,000 profit.

Illustrative example only; not a finance quotation or a client case study.

Why it matters

It indicates trading scale and can be relevant to lender criteria, but should be read alongside margin, cash collection and obligations.

Limitations and common misconceptions

High turnover does not establish profitability or affordability. Compare matching periods and understand whether quoted figures are net of VAT and include non-trading income.

Discuss business borrowing to discuss how the structure relates to your business.