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The Given
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We’d love to hear from you. If you’re an established business owner looking to improve profit, cash flow, and clarity, book a time to chat or get in touch via phone or social.
To make sure we’re the right fit, we typically work with businesses that are already trading we don’t take on brand-new start-ups.
![Have you ever had your accountant (or Xero) tell you you’ve made a profit but you’re looking at your bank balance thinking:
“Cool story…so where’s the bloody cash?”
Show me the money!!!!
You’re not alone. It’s one of the most common frustrations we hear from business owners.
The cash usually is typically sitting in a few predictable places.
Here are the main buckets where profit turns into not-cash:
1) Drawings and tax
Let’s address the elephant in the room first.
If you’re not on a PAYE salary and you’ve been taking drawings, some of your cash has likely already left the business and on top of that, tax is still coming (or has been paid) on the profit.
So yes: profit can be real, but the cash has been taken personally or taxed paid to IRD (a cash outflow).
2) Debtors (you’re financing your customers)
This is the big one. A convo we had this week which inspired this lesson.
With accrual accounting, you can invoice a job and show the revenue (and profit) today (or usually the date you invoice it) but you might not get paid for 7, 14, 20+ days.
Worse still, the customer just doesn't pay or drip feeds you!
In the meantime you’ve already paid:
- Wages
- Suppliers/materials
- Subscriptions/direct debits
- Overheads
- Maybe even loan repayments
That gap is why profit does not equal cash.
A simple check:
If every unpaid invoice hit your bank account this week…how different would your business feel?
Most owners would instantly feel more confident because the “missing cash” is sitting with customers.
3) Stock (especially product/e-commerce businesses)
If you hold inventory, it’s very common for cash to be tied up in the next round of stock purchases.
You use working capital to buy stock. You wait for it to arrive. You sell it. You collect cash. You repeat the cycle.
It can feel like you’re always profitable but never liquid, because the cash is cycling through inventory.
4) Debt repayments (the silent cash drain)
A lot of NZ businesses have asset finance, vehicles (Ranger anyone?), term loans, vendor finance, etc.
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