One of the mosts frustrating conversations we have with business owners goes like this:

“The accounts say we’re profitable, but there’s never any cash in the bank.”

This isn’t unusual.

In fact, it’s one of the most common financial problems facing growing UK businesses.

And it doesn’t mean the business is failing.

It means the business owner is looking at the wrong numbers.

Profit and Cash Are Not the Same Thing

Profit is an accounting measure.

Cash is reality.

You can be profitable and still run out of money.

Why?

Because profit includes:

• Invoices you haven’t been paid yet

• Costs spread over time

• Accounting adjustments that don’t affect the bank

Cash only cares about one thing:

what has actually gone in and out of your bank account.

Until business owners understand this difference, they feel like they’re constantly working hard with nothing to show for it.

The Most Common Reasons Cash Disappears

Here’s what we typically see behind the scenes.

1. Customers Pay Slowly

Sales look great on paper, but invoices are unpaid.

Profit shows up immediately. Cash doesn’t.

2. VAT and Tax Are Sitting in the Bank

Money looks available, but part of it belongs to HMRC.

When the bill lands, the bank balance collapses.

3. Stock and WIP Tie Up Cash

Growing businesses reinvest into stock, materials or projects.

Profit looks healthy. Cash gets trapped.

4. Loan Repayments Don’t Hit Profit

Capital repayments reduce cash but don’t show in profit figures.

This catches business owners out repeatedly.

5. Drawings Grow Faster Than Reality

As confidence grows, so do personal withdrawals.

Often before the cash position can support it.

None of these are mistakes.

They’re symptoms of growth without visibility.

Why Annual Accounts Don’t Help Here

Statutory accounts are backward-looking.

They’re designed for compliance, not control.

By the time annual accounts tell you there’s a problem:

• The cash is already gone

• Decisions have already been made

• Stress has already arrived

This is why regular, high-quality bookkeeping matters more than most people realise.

Control Starts With Regular, Accurate Bookkeeping

Businesses gain control when:

• Bookkeeping is done frequently, not months later

• Bank balances are reconciled properly

• VAT is separated from operating cash

• Management reports are reviewed regularly

This is where many businesses struggle.

Not because they don’t care, but because:

• Bookkeeping is rushed

• Reports arrive too late

• Numbers aren’t explained clearly

Without visibility, decisions are guesswork.

Cash Flow Is a Management Tool, Not a Forecast Guess

Cash flow forecasting doesn’t need to be complex.

At its simplest, business owners need to know:

• What cash is coming in

• What cash is going out

• When pressure points will hit

When this is reviewed monthly, or even weekly:

• Panic disappears

• Decisions slow down

• Growth becomes intentional

Cash flow clarity gives business owners breathing room.

Why This Matters for Growth and Exit Value

Buyers don’t just look at profit.

They look at cash control.

Businesses with:

• Clear numbers

• Reliable reporting

• Predictable cash flow

Are:

• Easier to scale

• Less risky

• More valuable at exit

Control always comes before growth.

Growth always comes before exit.

Final Thought

If your business is profitable but cash feels tight, the issue isn’t effort or ambition.

It’s visibility.

When business owners gain control of their numbers through great bookkeeping and regular reporting, cash stops being a mystery and starts becoming a tool.

And everything gets easier from there.