10/07/2026
Accrual records an expense when you USE it.
Cash records it when you PAY for it.
Same money, two very different pictures.
Say you order $12,000 of filler in March and it lasts you about three months.
Accrual shows you $4,000 in March, $4,000 in April, $4,000 in May. Nice and smooth.
What actually happened is $12,000 left your account in March. Nothing in April. Nothing in May.
So in March, your P&L says you were profitable. Your bank account says you were scrambling. Both are technically correct. Only one of them explains why payroll felt tight.
This is why so many owners tell me they’re profitable on paper but never have any cash. You’re not crazy. You’re reading a report built to smooth things out, then living in a month that didn’t get smoothed out at all.
Accrual isn’t wrong. It’s useful for seeing whether your services actually make money over time. It’s just not the report that tells you if you can make it to the 15th.
The question that runs your practice is simpler than that.
Did the money that came in this month cover the money that went out?
Every month should stand on its own two feet. And when one can’t, that’s not a failure.
That’s a lever.
It’s information you can act on before it becomes a problem.
Cash is the truth. Everything else is a story.