Profit does not tell you how much cash you can spend today. A store can sell products at a healthy margin while paying for stock before the related customer money reaches its bank. That timing can turn a busy month into a cash problem.
The Australian government’s cash-flow guidance is a useful starting point for separating money coming in and going out. Your accountant’s profit report and your bank statement are both useful. They measure different things.
A profitable month with less money in the bank
In this worked example, a store records $10,000 of sales, $5,000 of product cost for the goods sold, and $3,000 of operating expenses. Its simplified profit is $2,000. This excludes taxes, depreciation, financing and other adjustments.
Now look at cash. Only $7,000 of the sales is collected during the month. The store pays $6,000 for stock, including $1,000 that remains unsold. It also pays the $3,000 of operating expenses during the month.
| Cash movement | Amount |
|---|---|
| Cash at the start | $4,000 |
| Customer money collected | +$7,000 |
| Stock payments made | −$6,000 |
| Operating payments made | −$3,000 |
| Cash at the end | $2,000 |
Profit is positive $2,000. Cash falls by $2,000. The $3,000 not yet collected and $1,000 of extra stock explain the $4,000 difference between profit and cash movement in this simplified example. No mystery fee is needed.
Separate sold stock from purchased stock
Product cost in a profit report usually follows the products sold under the accounting method used. A cash ledger follows the payment date. Buying 500 units does not mean that all 500 units were sold this month.
This matters before a holiday promotion. A supplier may require a deposit or full payment before the goods arrive. A profitable price does not fund that payment by itself. Build a dated stock-payment plan, including any freight, duties and packaging that you actually pay.
The bundle and stock calculator helps check how many complete bundles current stock supports. It does not tell you when a supplier invoice is payable or when your payout will arrive. Keep those dates in the cash plan.
Reconcile the payout separately
Shopify’s payout documentation distinguishes payout scheduling from the money reaching a bank. Refunds, adjustments, reserves and bank processing can also affect the transfer. Use the actual schedule and transaction details for your account.
Start with settled sales in the processor report. Subtract the fees and adjustments shown there. Match the resulting payouts to bank deposits. Do not count both the customer sale and its later payout as two cash receipts. If money remains pending, put it on the expected date, not in today’s available balance.
Make a short cash plan you can update
Use one row per week. Record opening cash, expected collections, stock and supplier payments, operating payments, tax or debt payments where relevant, and closing cash. The next week starts with the preceding week’s closing balance. Keep uncertain collections separate from confirmed money.
Test a delayed-payout case and a lower-sales case. These are scenarios, not forecasts. If cash becomes negative before a payout arrives, a positive month-end balance does not remove that earlier gap. That is why weekly dates can be more useful than a single monthly total.
Keep a contribution check beside the cash plan
The order profit calculator checks what an order cohort leaves after entered costs. The cash plan checks when payments happen. Use both. A cash inflow funded by a loan is not a product margin, and recovered stock from a return is not an immediate bank deposit.
Before spending on another campaign, answer two questions: does the order make a useful contribution, and can the business cover the dated cash commitments? If the reports disagree, reconcile the timing and definitions before changing prices or assuming the business is failing.