Cash flow
Why your profit and your bank balance disagree
Nathan Roe · 28 August 2026 · 1 min read
A profitable business can still run out of money. The four ordinary reasons the two numbers drift apart, and how to see it coming.
The most common call I get from a healthy business is not about tax. It is about a bank account that does not match a profit figure that looks fine.
1. Timing
Profit is recorded when the work is invoiced. Cash arrives when the client pays. A strong month of sales can be a weak month of money, and a growing business will always have more owed to it than it did last quarter.
2. Debt repayments
The principal on a loan is not an expense in the profit figure, but it leaves the bank account every month. Businesses with equipment finance often overlook this when reading their own numbers.
3. Stock and work in progress
Money spent on stock or unbilled work sits on the balance sheet rather than against profit. It is real money, and it is not in the bank.
4. Tax and superannuation
These are accrued before they are paid. The money is not the business’s to spend from the day it is earned, even when it is sitting in the account.
What to do about it
Watch cash weekly, not annually. Keep a simple forecast of what comes in and what must go out over the next thirteen weeks. Almost every cash problem is visible there long before it appears in a profit report.