10/05/2026
Your P&L says you made $50,000.
So why isn't there an extra $50,000 sitting in your bank account? 🤔
Because profit and cash are not the same thing.
Your Profit & Loss statement measures revenue and expenses over a period of time. Your bank account shows the cash actually available right now.
The difference can come from things like:
* Customers who haven't paid you yet
* Loan principal payments
* Equipment or other asset purchases
* Owner distributions
* Timing of bills and payments
* Paying down existing liabilities
So if your P&L shows a healthy profit but your bank balance has you scratching your head, that doesn't necessarily mean something is wrong.
They're simply answering two different questions:
P&L: “Did the business make money?”
Bank account: “How much cash do we have right now?”
Understanding the difference is a small financial lesson that can make a big difference in how you understand your business.
Know your numbers. Know your business.