Let’s bust one of the most common — and dangerous — myths contractors believe: “If I made a profit, I must have cash in the bank.”

Unfortunately, that’s not how it works.

Profit and cash are two completely different things. Profit is an accounting figure — what’s left after subtracting expenses from revenue. But that doesn’t mean those dollars are in your bank account. That profit could be sitting in unpaid invoices, locked up in inventory, or already spent on debt payments or capital expenses.

It’s like this: your Profit & Loss statement is a scoreboard. But your bank balance? That’s how much gas is left in the tank. And guess what? A lot of contractors are running on fumes without even realizing it.

You may look at your year-end financials and see $150K in profit. But then wonder why you’re barely making payroll or can’t afford to pay yourself consistently. It’s because your cash flow doesn’t match your profit — and that’s a serious warning sign.

I once worked with a general contractor who proudly showed me his P&L: “We made $280K last year!” I asked him how much was in his operating account. “Twelve grand,” he said. He wasn’t mismanaging — he just didn’t realize how much of his cash was tied up in slow-paying clients, retainage, and overstocked materials. We implemented changes to his billing terms, set up progress payment enforcement, and started tracking where every dollar was getting stuck. Within 90 days, his cash caught up with his profit — and he finally felt in control.

This is fixable. But only if you stop assuming profit means cash.

Pick up your free copy of my new book, “The 7 Minute Conversation-How to Hear the Story Your Small Business Financial Statements Are Telling You-CONTRACTOR EDITION”.  Go to www.7MinuteConversationBook.com

Ready to find out where your cash and profits are really going? Book your free 15-minute Profit and Cash Flow Call with me. No pressure. Just real clarity. I’ll help you see where your money’s hiding — and what to do about it. Schedule at www.CashFlowCallWithLarry.com