Profit on Paper… But Where’s the Cash?

Ever sat in your accountant’s office for your year-end review and heard: “Good news — you made a healthy profit this year!”
Only to leave scratching your head, wondering why your bank account tells a very different story?

You’re not alone. This is one of the most common frustrations we hear from business owners — especially Tradies running small teams.

Why profit doesn’t equal cash in the bank

So why doesn’t your bank balance match the “profit” your accountant is talking about? A few common reasons are:

You’ve bought new assets during the year

You’ve been paying off loans

You’ve taken money out of the business to “pay yourself back”

You bought a whole lot of stock at year end but haven’t sold it yet

Your list of people who owe you money has tripled over the last year

In other words — you’re basically spending money in your balance sheet, not your profit and loss. And here’s the kicker: your tax is calculated off the profit and loss, not the balance sheet. So, while your cash disappears, the “profit” (and the tax bill) is still sitting there.

The ripple effects

When this happens, the fallout can be huge:

Stress at work and at home

Constant confusion — if the numbers say profit, why doesn’t it feel like it?

A surprise tax bill that means:

Raiding funds set aside for other things

Borrowing money or dipping into overdraft

Paying IRD interest or late penalties

Falling into a cycle where you never feel in charge of your cash

It’s disheartening. You end up feeling like you’re working hard just to keep the tax man happy, with nothing to show for it.

How to break the cycle

That’s where our Pulse Smart Money programme comes in.

We use the Profit First system — a simple, practical way to manage your cash so every dollar has a job. Instead of waiting months for your accountant to tell you how you did, you’ll be able to see it yourself, every week.

Here’s what changes: