When Net Income Isn’t “Money in the Bank”
Understanding the difference between Net Income and Cash Flow
We once worked with a client who thought their income statement showed how much cash went into their bank account. To them, net income meant money in the bank.
I had to explain that wasn’t the case. The income statement shows if you made or lost money over a period, it’s a snapshot of performance. But cash flow is different. It shows your money in motion: where it came from, where it went, and what’s actually left.
Once they saw the difference, everything clicked. From that day on, they only wanted to look at the cash flow report because it finally made sense to them.
A simple shift in understanding changed how they saw their whole business.
