Profit up, cash down

PROFIT MASTERY PRESENTS
The Profit Move
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THE NUMBER

42%
of small businesses pay the credit card off in full each month

58%
did two years ago

When you stop clearing the card, the balance left on it is financing your business. Not a line of credit you negotiated. Not a loan you signed for. A balance that grew a little at a time.

While it grows, it is a source of cash. The month you pay it down, it turns into a use of cash.

That is why it belongs next to receivables and inventory. Those three decide whether your profit ever becomes money in the account.

Source: Intuit QuickBooks Small Business Insights, July 2026. About 5,000 small businesses across the US, Canada, the UK and Australia.

▍WORTH KNOWING

Optimism slipped in August.

Four weeks ago we noted that the NFIB Small Business Optimism Index had reached an 11-month high. It has since given up 1.1 points to 98.7, still a shade above the 52-year average of 98. The August reading landed September 8.

The Uncertainty Index fell 2 points to 89, which is a long way above its historical average of 68.

NFIB puts the softening down to weaker sales, supply chain disruption and inflation.

That is a mood measured across thousands of businesses, not a fact about yours. Pull your own last four weeks before you borrow anybody else's outlook.

Source: NFIB Small Business Economic Trends, August 2026, released September 8.

▍THIS WEEK'S MOVE

Ten minutes, and you already pulled half of it last week.

You found which balance sheet line ate your cash. Now put a number on the whole thing.

Open last year's P&L and the two balance sheets you already have. Fill in six lines.

Net profit
Plus depreciation
Less the increase in receivables
Less the increase in inventory
Plus the increase in payables and credit cards
Equals operating cash flow

Here is that worksheet filled in, using Colin's own numbers.

Same business, same year. A $100,000 profit produced $50,000 of operating cash.

Now set your operating cash flow next to your net profit.

That gap is the answer we owed you. It is every dollar of profit that turned into something other than money in the bank.

Depreciation is the one that runs the other way. It lowered your profit and took no cash, so you add it back.

▍THIS WEEK'S ARTICLE

A million in sales. A hundred thousand in profit. Then you open the bank account, and you started the year at $80,000 and finished at $70,000.

The profit was real. The cash still went backward.

Colin opens Saturday's piece there and walks it down section by section. What the core business produced, what the equipment purchase took, and what went back to the bank and to the owner.

That closes the set, after part one on the P&L and part two on the balance sheet. Read together, they answer three different questions. Whether you made money, whether you can survive, and where the money actually went.

Next, Colin moves from reading the statements to the tools for managing cash.

Read the article

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▍UPCOMING

Price for Profit, Not Just to Win the Job
Friday, September 25, 10:00 to 11:00am ET, virtual. $39, free for PM Pro. Register

Office Hours for PM Pro
Friday, October 9, 10:00am ET, two hours. Members only.

PMU Virtual Bootcamp
December 1 to 17, Tuesdays and Thursdays, 2:00 to 4:00pm ET. Six sessions, twelve hours. From $495, free for PM Pro.

Operating cash flow needs two things. Profitability and working capital management.

Working capital takes quarters to move. Price moves on your next invoice. One hour, September 25, $39. Free for PM Pro members, along with everything else on that list.

Colin ends Saturday's piece on a question. What were the three biggest uses of cash in your business last year? Hit reply and tell us. We read every reply.

Thanks,
The Profit Mastery Team

Know your numbers. Command your cash. Scale with confidence.

The Profit Move is education, not personalized financial or investment advice.