You look at your profit & loss report and the numbers look great. Revenue is up, expenses are under control, and you're showing a healthy net income. So why does your bank account feel empty?

This is one of the most common frustrations I hear from small business owners, and the answer almost always comes down to timing. Profit is recorded when a sale happens. Cash moves when money actually changes hands. Those two events can be weeks — or months — apart.

The usual culprits

• Invoices sent but not yet collected. Your P&L records the revenue the moment you invoice. Your bank account doesn't see it until the client pays — sometimes 30, 60, or 90 days later.
• Inventory purchased upfront. You spent cash to stock inventory before a single sale. The expense hasn't hit your P&L yet, but the money is gone.
• Loan repayments. Principal payments on a loan don't show as expenses on your P&L. They reduce your cash but don't reduce your profit.
• Prepaid annual expenses. An annual software subscription or insurance premium hits your account all at once but gets spread across 12 months on your P&L.

What actually fixes it

The fix starts with a cash flow statement — a report your bookkeeper should be producing alongside your P&L every single month. While your P&L tells you if the business is profitable, the cash flow statement tells you if the business is liquid. Both matter. Neither is complete without the other.

Once you can see where cash is going and when, you can plan around it instead of being surprised by it. You can time large purchases, pace your invoicing, and build a reserve before you need one — not after.

If your current bookkeeper isn't giving you a cash flow statement every month, ask for one. If you're not working with a bookkeeper yet, this is one of the clearest signs that you should be.

A simple exercise for this week

Open your bank account and look at your current balance. Then open your P&L in QBO and look at your net income for the last 30 days. If those two numbers feel disconnected — if the profit looks healthy but the balance feels tight — that gap has a name and a cause. Write down your three biggest outstanding invoices and when they're due. That's your cash flow problem in plain view.

Next week, we'll talk about how to use that information to build a simple 90-day cash forecast — no spreadsheet degree required.

Thanks for reading The Félag Letter. If this was useful, forward it to a business owner who needs it. — Buddha

QuickBooks Online has dozens of reports — and most business owners look at exactly zero of them on a regular basis. That's not a judgment. It's just the reality of running a small business where your attention is pulled in fifteen directions at once.

But if you're only going to look at one report regularly, make it your Profit & Loss by Month. This single view will tell you more about the health of your business than almost anything else in QBO.

How to pull it

In QuickBooks Online: go to Reports in the left sidebar → search for or select Profit and Loss → change the date range to This Year → set the columns to display By Month → run the report.

You now have a side-by-side comparison of every month so far this year. Income, cost of goods, gross profit, operating expenses, and net income — all in one view.

What you're actually looking for

• Revenue trends. Is income growing month over month? Flat? Declining? A trend is only visible when you can see multiple months at once.
• Expense creep. Are any categories growing faster than revenue? Subscriptions, contractor costs, and marketing spend are common culprits. They add up slowly enough that you miss them month to month but see them clearly year to date.
• Outlier months. A month that looks dramatically different from the others usually has a story — a large one-time expense, a delayed invoice, a slow season. Knowing the story helps you plan for it next year.
• Seasonality patterns. Once you have a full year of data, you can see exactly which months are strong and which are lean. This changes how you time hiring, purchases, and cash reserves.

Make it a habit

The review itself takes about five minutes. Block 15 minutes on the first Monday of each month — five to pull and read the report, ten to make one note about what you saw and what, if anything, you want to do about it.

Done consistently for a year, this habit will change how you run your business. Not because the report is magic, but because looking at your numbers regularly makes you a different kind of decision-maker — one who acts on data instead of instinct.

One thing to do right now

If you have QBO open, pull this report before you close the tab. Just look at it. You don't need to analyze everything — just notice which month stands out most, good or bad, and ask yourself why. That one question is worth more than most business books.

Next week: the second report every owner should know — and why most people confuse it with the P&L.

Thanks for reading The Félag Letter. Reply to any issue with a question and I'll answer it in a future edition. — Buddha