The business shows a profit. Where did the cash go?

When the income statement is positive but the bank balance falls, identify whether the cause is unsettled sales, inventory, operating payment timing, investment or financing. Each calls for a different follow-up.

Build a bridge from the reported result to bank cash. Adjust non-cash expenses and operating balance changes, then add investing and financing movements. This follows the distinction between profit and cash explained in the SEC financial-statement guide.

Use an income statement and opening and closing balance schedules for the same entity, currency and cutoff. Reconcile the included bank accounts and assign any unexplained balance to its preparation owner.

The bridge below explains September 2026. The separate 13-week forecast starts on 5 October and answers what cash may do next. Its future balances cannot reconcile the September bank movement.

Example report · Demonstration data · September profit-to-cash bridge.

The bridge uses 1–30 September 2026 for profit, balance movements and bank cash. It starts with the report's $25,200 operating result. The assumed $42,000 fixed operating expenses include $2,500 depreciation; interest and tax expenses and payments are zero in this example.

After non-cash and working-capital adjustments, operating cash flow is -$15,300. Equipment uses $8,000 and financing adds $10,000 net. The total change is -$13,300, taking bank cash from $100,000 to $86,700.

Check the same operating cash flow directly: $235,400 customer receipts - $115,610 inventory supplier payments - $135,090 other operating payments = -$15,300. Use this as a cross-check of the bridge, with each cash payment counted once.

Inventory increases by $42,000 and customer and platform receivables increase by $18,000. More value remains in stock and unsettled sales at month-end. Higher supplier payables and operating accruals offset part of that increase but leave bills to pay later.

Check payout status against the bank. In Shopify, Deposited means the payout has been sent to the bank; it can still be absent from the statement. Trace amounts in transit before recording them as received bank cash.

Assign an unexplained difference to the reconciliation owner and keep affected figures provisional. Once the bridge ties to bank cash, choose the action that addresses the verified movement and record the next receipt or payment date.

The September bridge ties the positive operating result to cash absorbed by operations, equipment spending and net financing inflow. Start the follow-up with stock commitments and unsettled sales, then check the remaining payment dates.

Use verified opening bank cash to start the forward plan. Carry outstanding receipts, supplier bills and funding payments into it, with a source, owner and expected date for each.

• Record the period, accounts and starting profit measure.
• Reconcile the bridge to opening and closing bank cash and identify every open difference.
• Separate non-cash adjustments, operating balance movements, investment and funding.
• Name the movement to investigate, its source record and its owner.
• Set the next collection or payment date to check and the decision that depends on it.

The accounting owner prepares the income statement, balance schedules and bank reconciliations. The brand supplies stock, equipment, funding and owner-transaction records. Assign assembly of the cash bridge and the forward implications to the finance preparation owner.

The reviewer checks cutoff, classification and non-cash adjustments. The authorised brand decision maker approves changes to orders, investment or funding; the operational or payment owner executes them and reports changed dates.

For the initial finance audit, state the period, the profit measure and the change in bank cash you want explained. Identify which balance schedules are ready and which remain unreconciled.

The first check is whether the result, operating balances and other cash movements tie to the bank. Once explained, use the cash-planning page to connect outstanding items to the next payment decisions.