Why does cash NOT equal my net income (profit)?

Let's dive into the crucial difference between Cash and Net Income—two terms that might sound similar but tell very different stories about your business!

💵 Cash: This is the king of liquidity. It’s the actual money available in your business—whether in the bank, in hand, or as cash equivalents. It’s what you use to pay bills, buy supplies, and handle emergencies. Cash flow is all about monitoring this lifeblood; without enough cash, even profitable businesses can falter.

💲 Net Income: Think of this as the scorecard of profitability. It's what remains after all your expenses, costs, and taxes are subtracted from your total revenues. A positive net income is a good sign—it means you're earning more than you spend. But remember, it’s calculated on an accrual basis and includes non-cash items, which can be misleading if not observed with cash flow. 

👉 Why should you care? Understanding the distinction can help you manage your finances smartly, ensuring you don't just look profitable on paper while your actual cash reserves dwindle.

Stay financially savvy and keep your business thriving on all fronts! Need help? Reach out today!