Profit Isn’t Cash: Here’s Why That Matters

You’ve just reviewed your profit & loss statement. It says your business made $8,000 in profit last month.

So why does your bank account feel like it’s gasping for air?

Welcome to the difference between profit and cash flow: one of the most misunderstood (and dangerous) concepts in small business finance.

If you’ve ever wondered why your books say you’re “profitable” but your wallet says otherwise, this blog is for you. Let’s break it down - no jargon, just real talk, and show you why knowing the difference can save your business.

💸 What Is Profit?

Profit is what’s left over after your business pays its expenses.

On a basic level:

Revenue – Expenses = Profit

Your profit appears on your Profit & Loss Statement (P&L) and is based on what you’ve earned and spent, whether or not the cash has actually moved.

💡 Example: You send a $2,000 invoice to a client this month. That counts as revenue, even if they haven’t paid it yet.

💵 What Is Cash Flow?

Cash flow is the movement of actual money in and out of your bank account. It shows how much cash you have on hand to spend, save, or reinvest.

Cash flow is tracked on your Cash Flow Statement and tells you:

• When money is received from clients

• When money is paid out to suppliers, staff, rent, or tools

💡 You can be profitable on paper, but if your cash flow is negative: you can’t pay your bills, make payroll, or grow.

📊 Profit vs. Cash Flow: What’s the Real Difference?

💬 Think of it this way: Profit is a theory, cash is reality.

🚨 Why This Difference Matters to Small Businesses

1. You Can Be Profitable and Still Go Broke

A business can show $50,000 in profit - but if that money hasn’t actually arrived yet, and you can’t pay rent, you’re in trouble.

This is especially common when:

• Clients pay invoices late

• You’ve made big upfront investments (like inventory or equipment)

• You’re growing quickly but not collecting fast enough

2. Cash Flow Problems Kill More Businesses Than Profitability Issues

It’s estimated that 82% of small business failures are due to poor cash flow management, not lack of profit.

💡 A business that consistently runs out of cash is at risk, even if it's profitable on paper.

3. Lenders & Investors Care More About Cash

Profit looks good in reports, but lenders want to see how much cash you have to repay loans. A strong cash flow history is key if you want to grow using funding.

🧠 What Causes the Gap Between Profit and Cash?

Here are some common culprits:

• Late-paying clients

• High accounts receivable (money owed to you)

• Inventory purchases that don’t count as “expenses” yet

• Loan repayments that don’t appear on your P&L

• Owner draws or dividends that affect cash but not profit

💡 This is why both statements (P&L + Cash Flow) matter. One tells the story, the other tells the timing of that story.

✅ How to Stay on Top of Profit and Cash Flow

Here are some quick tips to manage both like a pro:

1. Review Both Reports Monthly

Don’t rely on just your P&L. Ask your bookkeeper for a cash flow report too.

2. Use Cloud Accounting Tools

QuickBooks Online and Xero let you generate real-time profit and cash flow insights.

3. Get Paid Faster

• Set payment terms that work for you (net-7 or net-15)

• Use invoicing tools with payment links

• Send automated reminders

4. Create a Cash Buffer

Set aside at least one month of operating expenses so you’re not stressed when payments are late or unexpected costs pop up.

5. Work with a Bookkeeper Who Explains the Numbers

At Breakspears Bookkeeping Services LLC, we don’t just send your reports: we walk you through them so you actually know what’s going on in your business.

💬 Final Thoughts: Know Your Numbers, Protect Your Business

Understanding the difference between profit and cash flow isn’t just a nice-to-have, it’s essential if you want to keep your business healthy and stress-free.

Profit shows how well your business performs.
Cash flow shows whether it can survive.

And the businesses that know both? They’re the ones that grow sustainably and confidently.

📌 Want to Know If Your Business Is Really Healthy?

At Breakspears Bookkeeping Services LLC, we help you:
✅ Track profit and cash flow side by side
✅ Get paid faster
✅ Build financial systems that support growth

👉 Explore our flat-rate bookkeeping packages
👉 Book a free discovery call to take control of your numbers—without the overwhelm.

How to Read Financial Statements (Even If You Hate Numbers)

Let’s get one thing out of the way: you do not have to be a math person to run a successful business.

But if you want to keep your business profitable, tax-ready, and growing in the right direction: you do need to understand your financial statements.

We’re not talking spreadsheets filled with jargon or pages of numbers that give you a headache.
We’re talking about simple, clear insights that help you answer questions like:

• “Am I actually making a profit?”

• “Can I afford to hire help?”

• “Why is there money in my account, but I feel broke?”

If you’ve been avoiding your financial reports, this post is for you. Let’s break down how to read financial statements for small business owners….even if you hate numbers.

🧾 What Are Financial Statements, Really?

Financial statements are the story of your business told in numbers.

They show how much you’re earning, what you’re spending, and how financially healthy your business really is.

There are three key financial statements every small business owner should review monthly:

1. Profit & Loss Statement (P&L)

2. Balance Sheet

3. Cash Flow Statement

Let’s walk through each one—in plain English.

📊 1. Profit & Loss Statement (P&L)

Also called the income statement, this report shows your business’s income and expenses over a set period (usually monthly, quarterly, or yearly).

💡 What it tells you:

• Are you making a profit or loss?

• What’s driving your revenue?

• Where is your money going?

🧠 Key sections to look at:

• Revenue – total money earned

• Cost of Goods Sold (COGS) – what it costs to provide your product or service

• Gross Profit – revenue minus COGS

• Expenses – operating costs like rent, software, marketing

• Net Profit (or Loss) – what’s left after all expenses

💬 If your net profit is consistently low or negative, it’s a red flag: either you’re spending too much or charging too little.

📄 2. Balance Sheet

Your balance sheet gives you a snapshot of your business’s financial position at a single point in time. Think of it like a selfie of your money.

💡 What it tells you:

• What your business owns (assets)

• What it owes (liabilities)

• What’s left over (equity)

🧠 Key parts:

• Assets – cash, inventory, accounts receivable, equipment

• Liabilities – credit cards, loans, unpaid bills

• Equity – the difference between assets and liabilities

💬 If your liabilities are growing faster than your assets, you might be relying too heavily on credit to keep your business running.

💵 3. Cash Flow Statement

This one is all about timing. You can be profitable on paper but broke in real life if your cash flow is off.

💡 What it tells you:

• Where cash is coming from (sales, loans, investments)

• Where cash is going (expenses, salaries, taxes)

• Whether you’re gaining or losing actual cash

🧠 Watch for:

• Consistent negative cash flow (means you’re spending more than you bring in)

• Big swings that could signal payment delays or seasonal dips

• Whether cash in your account matches what your profit & loss says

💬 Cash is king. If you run out of cash, even if your business is profitable: you can’t pay bills, staff, or yourself.

🧠 How to Actually Use These Reports (Without Getting Overwhelmed)

Reading your statements is only helpful if you know what to do with them. Here's a simple monthly routine:

1. Skim your P&L

   • Is your revenue trending up?

   • Any unexpected spikes or drops in expenses?

2. Look at your Balance Sheet

   • Is your cash decreasing while debt increases?

   • Any old unpaid invoices piling up?

3. Check your Cash Flow Statement

   • Are you burning through more cash than you’re bringing in?

4. Ask yourself:

   • Can I afford to reinvest, hire, or expand?

   • Should I cut costs or raise prices?

💡 At Breakspears Bookkeeping Services, LLC, we not only provide these reports: we explain them in plain, actionable terms so you can make confident decisions.

🙋‍♀️ What If You Still Don’t Understand Your Reports?

That’s okay. Most small business owners don’t learn this stuff in school, or even when starting out.

But now you know:

• These reports aren’t scary

• They don’t require financial genius

• They’re essential to building a business that lasts

You don’t need to master them, you just need to look at them regularly and know who to ask when something doesn’t make sense.

🧾 Final Thoughts: You Can Hate Numbers and Still Understand Your Finances

If you’ve ever said, “I’m just not a numbers person,” you’re not alone. But ignoring your financial statements won’t make the problems go away.

Understanding how to read financial statements for small business gives you the power to make smart decisions, grow sustainably, and sleep better at night knowing exactly where your money’s going.

📌 Want Help Making Sense of Your Financials?

At Breakspears Bookkeeping Services LLC, we don’t just keep your books: we help you understand them.

We provide:
✅ Easy-to-read monthly reports
✅ Friendly breakdowns (no jargon)
✅ Personalized advice to help you grow

👉 Explore our bookkeeping packages
👉 Book a free intro call and let’s demystify your numbers together.

Top Financial Tools Entrepreneurs Swear By in 2025

Running a small business in 2025 means wearing a lot of hats, and if you’re like most entrepreneurs, the finance hat often feels the heaviest.

From tracking expenses to getting paid faster to staying tax-ready year-round, the right tools can save you hours of stress and thousands of dollars. But with so many apps and platforms out there, how do you know which ones are actually worth your time?

We’ve done the digging for you. Here are the best financial software tools for small businesses in 2025 the ones real entrepreneurs (and bookkeepers like us) swear by to keep their money under control and their sanity intact.

💻 1. QuickBooks Online (Best All-In-One Accounting Software)

QuickBooks continues to lead the pack, and for good reason. It’s robust, reliable, and built for businesses of all sizes.

✅ Why entrepreneurs love it:

• Automatic bank feeds and transaction categorization

• Customizable invoicing

• Real-time profit & loss and cash flow reports

• Seamless integration with tools like Stripe, PayPal, and Gusto

💡 At Breakspears Bookkeeping Services, LLC, we specialize in QuickBooks Online and help our clients understand their numbers without the jargon.

📲 2. Relay (Best Banking Platform for Cash Flow Control)

Relay isn’t just a business bank, it’s a cash flow management tool in disguise.

✅ Why entrepreneurs swear by it:

• Multiple checking accounts for budgeting and expense tracking

• Easy-to-use dashboard for cash flow visibility

• Works beautifully with QuickBooks Online

💡 Relay makes it easy to follow Profit First or bucket-style budgeting: ideal for solopreneurs and creative business owners.

💳 3. Melio (Best for Paying Vendors & Bills for Free)

Melio lets you pay bills using a credit card, even if your vendors only take checks or ACH.

✅ Why it stands out:

• Schedule payments in advance (great for cash flow planning)

• No subscription fee

• Easily syncs with QBO

💡 Perfect for side hustlers and service-based businesses looking to extend cash availability.

📈 4. Xero (Great Alternative to QuickBooks)

If you’re not into QBO’s pricing model or interface, Xero is a powerful, clean alternative.

✅ Loved for:

• Beautiful UX

• Robust integrations

• Strong mobile features

• Affordable monthly pricing

💡 Used more commonly outside the U.S., but gaining traction among startups and consultants.

💼 5. Wave (Best Free Accounting Software for Solo Entrepreneurs)

If you’re just starting out or running a side hustle, Wave is a fantastic, no-cost option.

✅ Why it’s great:

• Completely free for accounting, invoicing, and receipt scanning

• Simple and intuitive

• Ideal for businesses with basic needs

💡 Keep in mind: it lacks some advanced features like robust reporting and scalability.

📊 6. Float (Best for Cash Flow Forecasting)

Float is a forecasting tool that syncs with your accounting software and gives visual insights into your future cash flow.

✅ What makes it stand out:

• Projects income and expenses over time

• Helps you see how decisions will impact your financial future

• Customizable scenario planning

💡 Perfect for seasonal businesses or anyone looking to plan ahead confidently.

👥 7. Gusto (Best for Payroll & Contractor Payments)

Hiring help? Gusto makes paying team members and contractors easy and compliant.

✅ Why it’s a must-have:

• Automated payroll and tax filings

• Onboarding and benefits integration

• Contractor payment tracking and 1099 generation

💡 Combines seamlessly with QBO and Xero for a smooth payroll-to-bookkeeping workflow.

🧾 8. Dext (Best for Receipt Management and Bookkeeping Support)

Tired of stuffing receipts in a shoebox? Dext lets you upload, scan, and auto-categorize receipts and bills—effortlessly.

✅ Why business owners use it:

• Snap receipts on your phone, upload to your books

• OCR reads and fills in data

• Saves hours of manual entry

💡 Especially helpful for businesses with lots of transactions or reimbursements.

⚡ 9. FreshBooks (Best for Service-Based Invoicing)

Freelancers and consultants love FreshBooks for its simple, clean interface and invoice-first design.

✅ Key features:

• Easy time tracking + billing

• Recurring invoices + client portals

• Insightful dashboard with expense reports

💡 Not quite as comprehensive as QBO, but a solid option for solo service providers.

🧠 How to Choose the Best Financial Software for Your Business in 2025

Ask yourself:

• Do I need basic bookkeeping or robust reporting?

• Do I want to do it all myself or hire a bookkeeper?

• Am I focused on saving money, saving time, or both?

Start small. Scale up. The beauty of financial software in 2025 is that you can mix and match based on your needs, budget, and goals.

💬 Final Thoughts: Make Your Money Tools Work for You

Choosing the best financial software for small businesses in 2025 is about more than just features: it’s about finding a tool (or toolkit) that makes your finances feel less overwhelming.

Whether you're a solo entrepreneur, creative professional, or growing small business, tools like QuickBooks Online, Relay, and Float can give you the clarity and control you need to grow with confidence.

And if all of this still feels a bit much? That’s what we’re here for.

📌 Need Help Setting Up Your Financial Software?

At Breakspears Bookkeeping Services, LLC, we help small business owners get started with the right tools, set them up properly, and actually understand the numbers behind their success.
👉 Explore our remote bookkeeping packages or book a free call today.

The #1 Tool Every Small Business Needs to Control Cash Flow

Let’s talk about the thing that can make or break your business - cash flow.

You might be making great sales. Clients might love you. But if the money coming in doesn’t match the timing of the money going out? That’s when even the best businesses can hit a wall.

Cash flow problems are one of the biggest reasons small businesses struggle, especially in the first few years. But what if managing your cash flow didn’t have to be stressful or complicated?

The secret? Using the right tool.
And we’re not talking about a spreadsheet that collects digital dust.

So, what’s the number one tool we recommend at Breakspears Bookkeeping Services, LLC for managing cash flow?

Let’s break it down.

Why Cash Flow Is the Lifeline of Your Business

Cash flow is all about timing. It’s the money flowing in from clients or customers, and the money flowing out for expenses like rent, subscriptions, software, contractors, and supplies.

You need enough cash on hand at the right time to pay bills, reinvest, and grow. Without visibility into your cash flow, you’re essentially flying blind.

💡 Even profitable businesses can go under due to poor cash flow management.

That’s why choosing the right cash flow management tool for small businesses is essential.

The #1 Tool: QuickBooks Online (QBO)

There are plenty of cash flow management tools on the market, but none combine real-time accuracy, ease of use, and scalability like QuickBooks Online.

Here’s why we consider QBO the best cash flow management tool for small businesses:

✅ 1. Real-Time Bank Feeds

QBO syncs directly with your business bank account. That means:

• You see your income and expenses in real time

• Your bank balance is always up-to-date

• No manual data entry or guesswork

💡 This visibility is critical for understanding your available cash at any moment - not just your bank balance, but what’s owed, what’s coming in, and what’s going out.

✅ 2. Automated Cash Flow Projections

QuickBooks Online includes built-in tools to project your cash flow 30 or 90 days ahead. This gives you insight into:

• Whether you’ll have enough to cover payroll or rent

• When to follow up on overdue invoices

• If you can afford to invest in growth

It’s like having a financial crystal ball, without the guesswork.

✅ 3. Invoicing + Payment Tracking in One Place

Waiting too long to get paid? That’s a cash flow killer.

With QBO, you can:

• Create branded invoices in minutes

• Accept payments online (via ACH or card)

• Track who’s paid…..and who hasn’t

• Set automatic reminders to follow up on late payments

💡 The faster you get paid, the healthier your cash flow.

✅ 4. Expense Tracking & Categorization

Keeping track of your spending is key to managing cash flow. QBO helps you:

• Automatically categorize recurring expenses

• Tag and track tax-deductible purchases

• Get alerts when spending spikes in a category

No more wondering where your money went.

✅ 5. Customizable Reports for Smarter Decisions

You can’t manage what you don’t measure.

QuickBooks offers real-time financial reports including:

• Cash flow statements

• Profit & Loss

• Accounts receivable aging

• Expense trends

At Breakspears Bookkeeping Services, LLC, we help clients review these reports monthly to spot red flags, cash flow issues, and growth opportunities early.

Other Tools That Pair Well With QBO

While QuickBooks Online is our top choice, there are a few add-ons and integrations that take your cash flow management to the next level:

• Relay (for cash flow-focused banking)

• Melio (for scheduling payments to vendors)

• Fathom or Float (for deeper forecasting if needed)

But for most freelancers and small businesses, QBO alone is powerful enough to get you organized and ahead of the game.

How to Get Started with Cash Flow Management

Ready to take control of your cash?

Here’s what we suggest:

1. Open a separate business bank account (if you haven’t already)

2. Subscribe to QuickBooks Online and connect your bank

3. Set up your chart of accounts to track income & expenses

4. Create your first invoice and track payments

5. Run a monthly cash flow report to review your financial health

💡 Bonus tip: Work with a QuickBooks ProAdvisor (like us!) to get it set up right the first time.

Final Thoughts: Take the Stress Out of Cash Flow

Cash flow doesn’t have to be scary.
With the right cash flow management tools for small businesses, you can stop reacting to money problems - and start making empowered, confident decisions.

At Breakspears Bookkeeping Services LLC, we help small business owners, creatives, and side hustlers gain control of their finances with simple, flat-fee remote bookkeeping support. Whether you're just starting out or scaling up, we can help you:

• Set up QuickBooks Online correctly

• Understand your cash flow

• Stay tax-ready every single month

💡 Need Help Managing Your Business Finances?

Let’s get your books in order and your cash flow under control.
👉 Check out our affordable bookkeeping packages or book a free intro call today.