There are a number of reason’s why your bank balance doesn’t match your profit.
The obvious one is that by the time the accounts are completed the bank account will have changed but there are reasons why the bank balance the balance sheet doesn’t equal the profit on the profit and loss report.
Some of the profit might still be sitting in the balance sheet as receivable invoices and anything you spent money on that wasn’t deductible will reduce your bank account but not your profit – eg. Drawings over and above your shareholder salary, loan principle reductions, asset purchases less allowable depreciation.
So, if you are making a profit but your cash balance is trending downwards it’s super important to prepare a forecast. Our forecasting model takes your budgeted income and expenses and your current financial position and then forecasts how the balance sheet will look going forward. We can adjust for different levels of sales, different loan repayment amounts, drawings etc to see what needs to happen to maintain a healthy cashflow while keeping up with your tax obligations. This is a great tool to assist you in regaining control over your business.Do you feel like your flying blind and need more control?