"We're profitable, so why is the bank account almost empty?"

I hear a version of this question more than almost anything else. And it's not a trick — profit and cash are genuinely two different numbers, and most founders were never taught the difference.

Profit is what's left after expenses on paper. Cash is what's actually sitting in the account right now. A big invoice you sent last month counts as revenue today, but if the client hasn't paid yet, that revenue isn't cash you can spend. Meanwhile a bill you're required to pay this week still leaves your account even if it belongs to a slower month on paper.

You can be profitable and still run out of cash. You can also be technically "unprofitable" on paper for reasons that have nothing to do with how the business is actually doing.

The founders who sleep the best are the ones who track both, separately, every month — not just the one number their accounting software puts on the dashboard.