10/05/2026
The cash in your bank account doesn’t equal the profit your business has generated.
Profit reflects your business’s financial performance over a given period, based on revenue recognized and expenses incurred, while your bank balance reflects the actual cash available at a specific point in time.
The two can differ significantly because the timing of revenue recognition, expenses, and actual cash receipts and payments isn’t always the same. A business can be profitable while still having limited cash available if customers have outstanding invoices or significant payments are coming due.
Understanding both profit and cash position gives you a more complete view of your financial position and helps you plan ahead.
At On the Books, we help growing businesses make sense of their financials through cash flow planning, financial reporting, and more. See how we can support your business by visiting https://onthebooks.com/accounting/