“Why Do My Profits Look Good on Paper, But I’m Still Struggling with Cash Flow?”

It’s a question that makes plenty of business owners stop and scratch their heads. The profit-and-loss report says the business is turning a profit, but the bank account’s telling a whole different story.

So what gives?

The short answer: profit and cash flow aren’t the same thing.

The Long Answer: Where the Money Slips Away

Let’s break it down.

1. Accounts Receivable (Money Owed to You)
   You may have booked $50,000 in sales this month, but if your customers haven’t paid yet, that money isn’t in your pocket. On paper, it looks like profit. In real life, it’s just an IOU until the payment clears.

2. Accounts Payable (Money You Owe Others)
   On the flip side, you might delay paying your vendors, which props up your cash balance for a while. But those bills are still sitting there, waiting.

3. Inventory
   Money tied up in unsold stock isn’t cash in the bank. It’s cash on a shelf, collecting dust until someone buys it.

4. Loan Payments
   The principal portion of a loan doesn’t show up on your P&L, but it sure leaves your bank account each month. That’s why you can look profitable and still feel broke.

5. Owner Draws
   Every dollar you pull out of the business for personal use reduces cash—even if the business is technically showing a profit.

Why This Matters for Financial Professionals Too

If you’re a CPA, tax preparer, or payroll provider, you’ve likely had clients who come to you in this exact bind:

• “I don’t get it—my accountant says I made money, but I can’t pay my bills.”

When the books are sloppy, this confusion only gets worse. Clean, accurate bookkeeping bridges that gap between paper profit and real cash, so both you and your clients can see the truth clearly.

So What’s the Fix?

1. Stay on Top of Bookkeeping
   Accurate, up-to-date books are the only way to spot these cash flow choke points before they choke you.

2. Track Cash Flow, Not Just Profit
   Cash flow reports and forecasts show you what’s really happening with the money in and out of your business.

3. Tighten Collections
   Don’t let customers drag their feet. Cash in the door matters more than sales on paper.

4. Plan for Payments
   Keep a schedule of upcoming bills, payroll, and loan payments. Surprises in business usually ain’t the good kind.

The Bottom Line

Profit is theory. Cash is reality. If your books are a mess, you’ll never know which one to believe.

That’s where I come in. I help business owners clean up their books, get caught up, and keep everything current so they can finally make sense of their numbers. And for financial professionals, that means you get clean, reliable data to work from—no more guesswork, no more fire drills at tax time.

If you’ve been wondering why your profits don’t match your cash, it’s time to take a harder look at the books. I can help.

Let’s talk.