Why Your P&L & Bank Balance Don't Match: The Gap Explained

Ever checked your Profit & Loss statement, saw a solid profit on paper, then logged into your bank account and thought…

“Where on earth is all the money?”

Or maybe you don’t have a P&L statement—just a gut feeling that the numbers aren’t adding up.

Maybe your accountant told you,

“You made $X in profit this year and owe $Y in taxes.” …except that $Y is more than what you actually have in the bank.

I remember early on in business when I was frustrated by this and asked: “Why don’t my P&L and bank account balance match up?”

You finally feel like you’re making progress—your P&L shows profit, you’re growing, but the actual cash just isn’t there.

And that’s because cash doesn’t flow the way profit does.

The sooner you understand how and why that works, the sooner you’ll have peace about your financial health.

2 weeks ago, I wrote an article on purchasing your “wish list” items to build the business of your dreams.

And while it is incredible to design the business of your dreams, rather than react to the state of your bank account balance, there are some nuances.

I’ll share an example of designing the business you want:

You build your budget as described in the linked article just above, and you know your crew would be more efficient if you upgraded your equipment.

So, you add the cost of that equipment to your budget and your budget adjusts your labor rate and markups to cover the new expense.

All cool.

You buy the upgraded equipment and now have that new cost pulling cash from your bank account.

Now… here is the real test.

You have to sell work, (and enough of it) at the new rates.

If you aren’t able to sell the work, you won’t be able to cover the cost.

And if you find yourself in this position, it can be frustrating.

Because it feels like you did all the right things…

• you built a budget
• made sure all your expenses are in that budget
• pat yourself on the back
• but then are strapped for cash flow

Let me highlight a few ways in which this can happen:

• Pay cash for a new piece of equipment in full
• Buy a bunch of bulk materials on early buy
• Buy or build a shop, or other asset purchase

So the big idea I want to leave you with, is sure you can add a new expense to your budget, see that it “only” impacts your rates by $X, and feel like “that’s a no-brainer, let’s do it.”

But the real test is: Can you weather the impact to your cash flow?

I give a specific example from that list above.

Let’s say you add a new $80k truck to your budget, just to see what it does to your rates.

You see that if you plan on keeping that truck for 7 years, it only raises your hourly rate by $2/hr. Because the budget will spread the cost of the truck out over whatever span of time you enter. I entered 7 years in my hypothetical example above.

But, you aren’t going to pay for it out over 7 years. In fact, you had a good year, wanted the tax write off, so you bought the truck on a 3-year loan, but wrote the entire thing off right away for the tax advantages.

Now you’re paying the truck off over 3 years, but your budget is spreading that cost out over the span of life you entered when you added the truck to your budget. The 7 years in my example.

My budget is saying: I paid $80k for the truck, keep it for 7 years, and sell it for $20k after those 7 years, it depreciated $60k during those 7 years I owned it.

Divide that $60k over 7 years, and my budget is recovering $8,571 /year for the next 7 years.

But I’m paying that full $80k in 3 years. $26,666 per year.

$18,095 per year more cash going out the door than my budget is recovering per year.

Now what your P&L says depends on how you handled that capital expense, and how you depreciate/expense it. There’s a number of possible scenarios, but I won’t bore you with all of them. (Get a good accountant in your corner. One that you can speak to plainly and that can explain things to you in English you understand)

The main idea I want you to take away from this is to see how bank account balance, your SynkedUP budget, and your P&L will not necessarily “agree” and match.

They are different tools that show different numbers for different reasons.

And that is exactly how your P&L or budget can look good, but your cash flow is like “Whaaaaat!??”

One little tip I’ll share that I’ve helped other SynkedUP users with in the “truck buying” example above:

If you want your SynkedUP budget to recover that expense at the same rate as cashflow, enter it into the monthly payments section, not the “owned equipment” section, and just enter your monthly payment amount.

That way your SynkedUP budget will recover the cost at the same rate as cash going out the door.

Now mind you, you might discover that your hourly rate goes up by $3.50 instead of $2. 😜 But at least you’re reckoning with the reality of the impact that added expense has.

So before you make the leap on investments:

1. Project your cashflow before a big purchase

Before you drop cash on equipment, map out when money is coming in and going out—not just profit, but actual bank balance changes. (A good accountant can help you do this. It is super empowering to see cashflow projections.)

2. Price work with confidence – and stick to it

Once you adjust your pricing, own it. Don’t cave just to close a deal—that’s how you end up cash-poor, even when you’re profitable.

3. Track job costs in real time

If you’re not tracking time & materials to every job, you’ll never see the leaks until it’s too late. The sooner you spot overages, the sooner you can course-correct before it kills your cash flow.

If this sounds familiar, and you’re tired of the bank account surprises, it’s time to start tracking and planning with a budget—make decisions based on facts. Not just because I “want” that new thing to add to my iron addiction.

That’s exactly why we built SynkedUP.

With SynkedUP, you can:

✅ Track every cost and expense as it happens

✅ See exactly where your cash flow stands

✅ Get ahead of problems before they hit your bank account

Want to see how it works for your business?

Schedule a call here with one of our product experts.

No more guessing. No more “where did the money go?” moments.

Just clarity, control, and confidence in your business.

Cheers,

Weston Zimmerman

founder & CEO @ SynkedUP