Why Your Record Sales Aren’t Hitting Your Bank Account
Imagine you just finished a huge project for a client. The invoice is sent and the work is done. You feel such a sense of relief and pride, but you check your business bank account and... crickets. If you're killing it in the sales department, where did all the money go?!
This is a very common scenario for so many business owners. We're booked out, busy, and thriving. And we have the numbers to back it up. So why does the bank account tell a different story? The truth is, your business's health is told in two very different ways: profit and cash flow. Understanding the difference is the key to moving past that anxiety and feeling like the empowered CEO you are.
Profit: The Story of Your Business's Success
Think of profit as your business's report card. It's the total score after all the work is done. Simply put, profit is the money you have left over after subtracting all your expenses from your total income over a period of time.
This number is fantastic for telling you if your business model is working. It shows if you're pricing your products or services correctly and if your spending is under control. Profit is a measure of your business's overall health on paper, but it doesn't tell you how much money is actually in your bank account right now.
Cash Flow: The Story of Your Bank Account
Now, think of cash flow as the actual cash entering and leaving your business bank account. It’s what you need to pay your team, cover your software subscriptions, and get more supplies. Cash flow is the money that fuels your business's daily operations.
You can have a business that is very profitable but has poor cash flow if that money is tied up elsewhere—like in outstanding invoices from clients who haven't paid you yet.
The Disconnect That Causes Stress
So why can you feel broke when your books say you're doing great? It usually comes down to one of these common culprits:
Waiting on Invoices: You've completed a huge project and earned a big chunk of money, but your client hasn't paid yet. Since you've spent all the time and money to complete the project already, your bank account will be feeling it until you get paid.
Paying Down Debt: This is a huge one! If you've paid down a significant amount of business debt, like a loan or a credit card balance, you will definitely feel that impact on your cash flow. However, you won't see any of this debt paydown on your profit and loss statement (this transaction hits the balance sheet), so it won't affect your profit.
Overpaying Yourself: Honestly more business owners don't pay themselves enough in my experience. But if you're consistently taking out more money from the business than it can sustain, you'll feel the pinch in your bank account, even if you are profitable on paper. Paying yourself as a business owner won't show up as an expense on your profit and loss statement because it's an equity transaction (again, this one hits the balance sheet), so you won't see the impact on your profit.
Investing in Growth: Maybe you're preparing for a big launch and spent a ton on professional copy, invested in a new masterclass, or hired a new team member. Your profit might look good, but the cash to pay for those things has already left your account.
Tax Savings: As a responsible business owner, you've set aside a portion of your income each month for future tax payments. That money is no longer part of your available cash flow.
Understanding these disconnects is what turns a panicked moment into a strategic insight. It helps you see that you aren’t failing - you just need a clearer picture of your financials.
With a well-organized financial system, you get to have both. Your financial reports tell you the story of your profit, while your cash flow summary gives you the clarity you need to run your business with confidence and calm. It allows you to make informed decisions and stop white-knuckling your big investments.
You focus on your calling—we'll take care of the numbers.
