It’s one of the most frustrating things in business. Your P&L says you made money — sometimes a lot. But your bank account says otherwise. You’re not alone.

Profit does not mean cash. In fact, you can have record-breaking profit on paper and still not be able to cover payroll.

How? Let’s break it down:

• Your P&L counts income when billed, not when collected.
• It doesn’t show loan payments, equipment purchases, or owner draws.
• It ignores timing — the flow of cash in and out.

That’s why contractors feel broke even when the report says they’re doing well. You paid vendors, covered taxes, bought materials, and you’re still waiting on clients to pay. It’s a mismatch — and if you’re not watching it closely, it’ll eat you alive.

I had a client with $2.1M in revenue and $230K in net profit — but only $11K in the bank. Why? He was waiting on $180K in receivables, had $50K in recent equipment purchases, and took out $60K in draws without realizing it was cutting into operating cash. Once we connected the P&L to his cash flow forecast, it all became clear. He adjusted billing timing, created a reserve account, and began reviewing cash monthly — not just profit.

Profit is what you’re entitled to. Cash is what you actually have.

Want to reconcile your profit with your bank balance?

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