Your Bank Balance might be lying to you
Why your Bank Balance isn’t the same as your profit.
It’s easy to assume your bank balance tells the whole story of your business’s health — whether it’s high and giving you confidence or low and causing concern —but here’s why that number is only part of the picture.
Your bank balance is a moment in time, not the full picture.
Understanding your profit can change the way you run — and feel about —your business.
Do either of these scenarios sound familiar?
Scenario 1: The “High Bank Balance” Trap
You check your account and see $50,000 sitting there. It feels like business is thriving and you’re finally ready to pull the trigger on that big purchase you’ve been considering! You’ve earned this! Finally - it’s all paying off!
Fast forward to a few weeks later; you’re sitting on the beach and an email pops up from a supplier about an unpaid bill… Next, a withdrawal notice for payroll remittances, and a voicemail from the CRA about a missed GST instalment.
A little digging and some frantic math later, you realize that $50,000 wasn’t the green light you thought it was.
In fact, you’ve overspent and find yourself in a cash crunch you didn’t see coming.
Scenario 2: The “Low Bank Balance” Panic
Your account shows just $3,000, and panic sets in. You worry you won’t cover next week’s expenses, and wonder whether you’re cut out for this entrepreneur thing.
After a few days of beating yourself up and questioning each and every decision, a $15,000 client payment (that you’d forgetten about) lands in your account, and your accountant confirms a tax refund thanks to prepaid instalments.
Turns out that your position is much stronger than that bank balance suggests, and that you might have a knack for this small business thing after all!
Without accurate records, you might delay important purchases or miss growth opportunities out of fear.
While these situations feel completely different — one overly optimistic, the other overly cautious — they share the same root issue: misunderstanding your bank balance as profit.
Without accurate bookkeeping to account for both what’s coming in and what’s going out, it’s easy to make decisions based on incomplete or misleading information.
A bank statement shows a moment in time, not the full financial picture. This is why business owners can often feel confused when they have cash in the bank but end up scrambling at tax time, or when they feel like the business is doing great but are still waiting on each payment to clear the bank.
Good bookkeeping connects the dots.
By tracking your income, expenses, liabilities, and upcoming receivables, bookkeeping helps you see and plan for your real profit—not just the cash in your account. With that clarity, you can make smarter decisions about spending, saving, and growing your business.
If you’d like to feel more in control of your numbers—and finally understand what they’re really telling you—book a consult with us. We’ll walk you through your finances in plain language, answer your questions, and help you build a clearer path forward.
