One of the most common things we hear from business owners is:
“Things feel fine — there’s money in the account.”

And sometimes that’s true.
But often, it’s not.

Cash in the bank is comforting, but it can be deeply misleading. We see profitable-looking businesses quietly drifting into trouble simply because they’re making decisions based on available cash, not actual performance.

Here’s why.

Cash Flow Is Timing — Not Profit

Cash flow tells you when money moves. Profit tells you whether you’re actually making money.

You can have:

• A strong bank balance from a busy month
• Large deposits from customers who paid early
• GST collected that isn’t yours
• Invoices paid for work you haven’t finished yet

None of that guarantees profitability.

We often see owners increase spending, hire help, or relax pricing — all because the account balance feels healthy. Then tax time hits, slower months arrive, or payables catch up, and suddenly the math doesn’t work anymore.

GST Is Not a Win

This one deserves its own callout.

GST collected boosts your bank balance, but it’s not revenue. It’s a liability you’re holding temporarily. When decisions are made off a gross balance instead of net cash, it creates a false sense of security — and often a painful remittance later.

The illusion disappears fast when a five-figure GST payment comes due.

Growth Can Mask Problems

Ironically, growth often hides cash issues.

More sales mean:

• Higher upfront costs
• Larger payroll
• More inventory
• More tax exposure

If margins are thin or pricing hasn’t kept up with costs, growth can actually drain cash — even while revenue climbs. Without proper tracking, owners assume the business is “doing well” right up until it isn’t.

What We Look At Instead

At Castle, we care far less about how the bank balance feels and far more about:

• Net profit trends
• True operating margins
• GST payable vs. collected
• Accounts receivable aging
• Month-over-month comparisons

When those are healthy, the cash usually follows. When they’re not, the bank balance is often the last place to show it.

The Takeaway

Cash is important — but it’s not the truth.
It’s just the snapshot.

Profitability, structure, and visibility are what actually keep a business stable long-term. If you’re only checking your bank app to judge performance, you’re flying blind — even if the ride feels smooth for now.

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