Recast: Why is there no cash in your bank account when you're making a profit?

I am taking a quick break for a couple of weeks over the holiday period, and I wanted to share with you some of the listener favourites from the back catalogue.

If you haven't had a chance to listen to this one previously, or you're new here, I hope you enjoy this one!

I will be back with fresh new episodes in a couple of weeks!

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Why is there no cash in my bank account when I know I’m making a profit? 

This is a very common question amongst entrepreneurs. If you avoid learning your numbers and what they mean for your business, you’ll always be confused about where your money is going. 

In this episode, I’m going to explore basic accounting and bookkeeping concepts that will allow you to understand your business financials and how they relate to your profit. I’ll go through 5 reasons why your cash doesn’t match your profit and loss report to build a thorough understanding of your business. 

It can all come down to knowing the difference between a balance sheet and a profit and loss report (PnL). Through experience, I’ve found business owners have been disinterested in their balance sheet and don’t thoroughly understand it. But cash resides in your balance sheet and profit resides in your PnL so it’s very important to understand them both comprehensively. 

You can’t compare profit and cash. I’ll explain how this works, the difference between a balance sheet and a PnL, where to find the numbers, and how to interpret cash, profit, assets, and liabilities.

Grab a pen and write down these 5 reasons so you have a concrete understanding of why your cash will not equal your profit and it’ll no longer scare you every time you open your bank account. 

LINKS: 

Check out my course Bookkeeping it Real here! 

• Website: https://straightupbookkeeping.com.au/ 
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