Profit can still feel tight when cash is not separated
A service expecting about $3 million in yearly revenue can still feel short on money if bank cash is treated as fully available. When customers pay upfront and sub are paid 30 days later, the bank balance includes money that already belongs to future costs. A can look profitable in accounting while still feeling unclear about what cash can safely be used.
The key difference is accounting versus . Each deposit can be mentally split right away into sub costs, taxes, operating expenses, and profit, even though the stays the same.
Key points
- A profitable can still feel cash-strapped when money is not clearly separated.
- Upfront customer payments can make the bank balance look larger than usable cash.
- Accounting profit and spendable cash are not the same thing.
- Splitting each deposit into costs, taxes, expenses, and profit makes decisions clearer.