You had a profitable month — so why does your bank account still feel empty?

This is one of the most common disconnects in small business finances.
Profit and cash flow are not the same thing — and understanding the difference can save you from some frustrating surprises.

Profit: What’s Left on Paper

Profit is your revenue minus expenses.
It’s what your income statement shows — but it doesn’t always match what’s happening in your bank account.

You can have profit without cash if:

• You sent invoices, but the clients haven’t paid yet
• You bought assets (like a truck or equipment) that don’t show as expenses
• You paid down a loan, which doesn’t affect your profit, but hits your cash

Cash Flow: What’s Actually Moving

Cash flow tracks real money in and out — what hits the account and what leaves it.
It includes things profit doesn’t always show:

• Loan repayments
• GST/HST remittances
• Owner draws or dividends
• Timing of when you actually get paid

You could be “profitable” but still broke — especially if your receivables are high or your payments are slow.

Why It Matters

If you’re only looking at profit, you’re missing the full picture.
Profit tells you how the business is performing.
Cash flow tells you if it can survive.

You need both.

Quick Tip:
Want to stay on top of your cash? Watch two things:

1. Accounts Receivable – who owes you and how late they are
2. Cash Flow Forecast – what’s coming in and going out over the next 4–6 weeks

Bottom line:
Profit is a number. Cash flow is reality.
Know the difference — and run your business on both.

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