Guide
The numbers say profit. The bank account says otherwise.
Profit is what you earned. Cash is what’s arrived. A business can show a profit every month and still struggle to make payroll. It’s far more common than owners admit.
Why the two drift apart
You’ve done the work but haven’t been paid
Example: you do $60,000 of work a month and customers take 45 days on average to pay. At any moment, about $90,000 of your money is sitting with your customers.
Money goes out before it comes in
Materials, stock and this month’s wages get paid now, for work that gets billed and paid later.
Cash leaves without counting as a cost
Loan repayments, new equipment, owner draws and tax all leave the bank. None of them lowers the profit figure, so the profit stays high while the account runs low.
Growing eats cash
The faster you grow, the more of your money is tied up in work that isn’t paid for yet. A good year can feel like the tightest one.
Check it yourself this week
- Count the days between finishing a job and sending its invoice, for your last ten jobs. The goal is zero.
- Add up last quarter’s loan repayments, equipment, owner draws and tax. That’s profit that left without showing up as a cost.
- On one page, write the dates of your next five big bills next to the dates you expect money in. Any week where out beats in is the week to act on now.
The bank balance on its own misleads in both directions. Field note 01 shows a five-minute fix.
When it’s worth getting help
If the gap keeps coming back, the fix isn’t a better monthly report. A monthly report arrives after the month is over. You need to see cash coming in and going out as it happens, and who owes what.
That live view is usually one of the first things we build. It’s yours to keep, at a fixed price agreed before we start.
Not sure where your cash is going? Before we talk, Joe reads your business from what’s public and sends a one-page read of where it’s most likely leaking. You commit to nothing.