Where Is My Money Going? Understanding Profit vs. Actual Cash in Your Small Business
Have you ever had one of those months where you look at your numbers and think, "Wow, we crushed it," only to realize... you can't pay yourself? You're not alone.
We talk to business owners every week who are looking at a solid month on paper — $40k, $50k, sometimes way more — but they're stressed, scraping for payroll, or putting off that equipment upgrade again. And they all ask the same thing:
"Where is my money going?"
It's a great question. And the answer starts with this: profit doesn't mean cash. Not even close.
Profit vs Available Cash: Why They're Not the Same
Many business owners confuse profit with cash. Profit is what shows up on your P&L after expenses, but cash flow includes everything else: loan payments, equipment purchases, owner draws, and more. Without understanding exactly where your money is going, profit becomes a misleading number.
To run your business with clarity, you need more than just a high profit line. You need to really understand what your money is doing every month.
You're Looking at the Wrong Report
Most owners know how to read a Profit and Loss (P&L) statement. But the P&L only tells half the story. It shows your income and expenses, sure. But it doesn't tell you where your actual cash went.
If you're only looking at your P&L to understand your money, you're flying with one eye closed.
Want to know where your money actually is? You need to look at your balance sheet. That's where you'll see your cash, your debts, your draws, your loans, your assets — all the stuff that doesn't show up in your P&L.
Where the Money Really Goes
There are a few places that tend to get overlooked when looking at finances. Here's where money disappears, and most people don’t realize it:
Owner Draws: You should definitely be paying yourself. You’re an amazing business owner! But guess what? That doesn’t hit your P&L.
Loan Payments: Paying down debt is always a great thing. However, only the interest shows up as an expense. The principal is considered part of your cash flow.
Equipment or Big Purchases: You bought a new laptop or a truck. That’s an asset. It doesn’t hit your P&L until later when depreciation expense is associated with it.
Fraud or Duplicates: We find this all the time. A double charge from a vendor. A subscription you didn’t mean to renew. Your Amex has an extra $87 that no one noticed. We catch it because we look. Every month.
What You Actually Need
You don’t need just "bookkeeping." You need clarity and a proactive eye on what your money is doing.
You need someone to say, "Here’s what changed. Here’s what we caught. And here’s what you should think about before next month."
We call it a touchpoint service. That means monthly conversations. Real talk. Real-time info. Not three months behind and a pile of emails.
And it’s not about shaming. It’s about getting you out of the fog and back in control. Whether you’re pulling in $10k a month or $7 million a year, the problem is the same: money disappears when no one's watching.
You're Not Broken. You're Just Underwater.
The truth? This stuff is hard because it's not what you do. You're not an accountant. You're a business owner, and you're probably great at it.
But you deserve to understand your numbers. You deserve to know exactly where your money is going. And you deserve a partner who doesn’t make you feel stupid for asking.
FAQ: Profit vs. Cash Flow
Q: Why does my business show a profit but I have no money?
A: Profit doesn't include things like loan repayments, equipment purchases, or money you draw personally, all of which affect your cash flow.
Q: What financial reports should I be reviewing?
A: Both your Profit and Loss statement (P&L) and your Balance Sheet. Together, they show where your money is and where it went.
Q: Can bookkeeping help with cash flow issues?
A: Absolutely — the right bookkeeping team does more than categorize expenses. We highlight trends, spot problems early, and help you understand your numbers so you can plan ahead.
