Your company made a profit… but where is the money?
Publication Date: 01/08/2026
6 reasons that explain where the money might be
3 warning signs
6 indicators you should monitor
A simple example:
Imagine a company with the following results:
Revenue: €100,000
Expenses: €70,000
Profit: €30,000
At first glance, you might assume that the company has an additional €30,000 available in its bank account.
But now imagine that, of the €100,000 invoiced, €15,000 has not yet been collected from customers.
At the same time, the company has invested €10,000 in equipment and still has €5,000 in taxes and other commitments to pay.
In other words, the company may have reported a €30,000 profit without actually having €30,000 available to spend.
So, where is the money?
The money may be “tied up” in different areas of the company’s operations.
1. Customers
Sales that have already been recognised in the accounts but have not yet been collected.
2. Investments
Money used to purchase equipment, vehicles or other assets required for the company’s operations.
3. Taxes
Amounts that temporarily remain within the company but will subsequently have to be paid to the tax authorities.
4. Suppliers
Commitments already undertaken by the company that still need to be paid.
5. Financing
Loans or other financial obligations that represent cash outflows.
6. Inventory
Money invested in stock that has not yet been converted into sales.
This is why looking at profit alone is not enough to understand the company’s true financial position.
3 warning signs to watch out for
1. The company is invoicing more, but customers are taking longer to pay
An increase in revenue is positive.
However, if customers take too long to pay, the company may face cash flow difficulties even while reporting positive results.
2. The company is profitable but constantly needs to rely on credit
When a company reports positive results but regularly needs financing to meet its commitments, there may be an issue with the management of its cash flow cycle.
3. Tax or supplier payments are always a concern
If the company reaches periods with a high concentration of payments without sufficient liquidity, it is important to anticipate these needs and plan its cash flow accordingly.
What can you do?
Good financial management means monitoring not only how much the company earns, but also when it gets paid and when it has to pay.
There are 6 simple indicators that can make all the difference:
1. Average customer collection period
Helps you understand how long, on average, it takes the company to turn its sales into available cash.
2. Average supplier payment period
Helps monitor the timeframes within which the company must meet its obligations to suppliers.
3. Outstanding customer balances
Shows how much has already been invoiced but remains unpaid.
4. Taxes and other future commitments
Helps anticipate cash outflows that will need to occur in the coming months.
5. Available cash balance
Helps monitor how much cash the company actually has available to meet its day-to-day needs.
6. Forecast financing needs
Helps anticipate periods when external financing may be required.
In summary
Profit matters. Cash flow does too.
A company can be profitable and still face financial difficulties if it is unable to convert its results into available cash at the right time.
That is why accounting should be more than a snapshot of the past:
it should be a tool that supports management and better decision-making.
Monitoring results is important.
Anticipating cash flow needs can be crucial.
How can we help?
Regular analysis of accounting information makes it possible to identify cash flow needs in advance and support more informed management decisions.
We can help you:
monitor your company’s financial performance;
analyse customer and supplier balances;
identify future commitments;
support your company’s financial planning.
Talk to us to find out which indicators are most relevant to your business.