Getting clear on profit and cashflow. How good books can change your business.

One of the most common things we hear from business owners is this: “I’m making money, so why does it still feel tight?”

Most of the time, it isn’t that the business is failing. It’s that the business is profitable on paper but squeezed for cash – because profit and cashflow measure different things.

Profit shows viability. Cashflow determines survivability.

What profit tells you

Profit is the gap between revenue and expenses over a period of time. It’s what shows up on your Profit & Loss statement, and it’s an important indicator that your pricing and cost structure work.

But profit is an accounting number. It doesn’t tell you whether money is available when you need it.

What cashflow tells you

Cashflow is timing. It’s the movement of money into and out of your bank account – when invoices get paid, when payroll clears, when rent hits, when suppliers need to be paid, when taxes are due.

You can do great work, send invoices, and record revenue this month… and still not see the cash for 30, 60, or 90 days. In the meantime, expenses don’t wait. That gap is exactly where business owners feel pressure.

Why profitable businesses still feel tight

This is usually caused by timing and working capital, not a lack of demand. A few common examples:

• You’re carrying a large receivables balance (clients pay late).

• You’re paying upfront for inventory, materials, or labor before money comes in.

• Taxes weren’t set aside, so estimated payments create a sudden crunch.

• Debt payments and subscriptions steadily pull cash even in ‘good’ months.

The point is simple: profit doesn’t solve timing problems. Cash planning does.

A simple example

Let’s say you make $10,000 in sales this month and have $7,000 in expenses. On paper, that’s $3,000 profit.

But if $6,000 of that revenue hasn’t been collected yet, and your expenses already cleared the bank, your cash position can still be tight – even though the month was profitable. That’s not unusual. It just needs visibility.

How we can help

At GoodBookkeeping.com, we help small business owners get clear on both profit and cashflow – so there are no surprises.

When your books are accurate and up to date, you can see what you actually have available, what’s coming in, what’s going out, and what needs to be set aside (especially for taxes). That clarity makes decisions easier: hiring, growth spending, pricing changes, even just sleeping at night.

Because peace of mind doesn’t come from ‘looking profitable’. It comes from knowing you can cover the bills this month – and next month – without guessing.