“I am making profit. But I got no cash in bank.”
Every audit season, many bosses will sit across from me and say this exact sentence.
Same face. Same confusion. Same pain.

I’ve been doing audit for 25 years. I’ve lost count how many times I’ve heard this line.

So let me share the most brutal accounting lesson nobody teaches you in school.

It’s called the Accrual Concept.
The moment you sell, profit goes into your books.
Not when you collect the money. When you sell.

So your P&L looks very shiok.
But cash doesn’t care about your P&L. Cash only knows one thing … Got money inside bank account or not. No means no.

Let me tell you a story about a goreng pisang uncle which i always use during the meeting. Yes, I always use goreng pisang uncle. Bear with me. The lesson is real for SME.

Uncle has been selling pisang goreng for 20 years. Cash business. Simple life. Every day, banana goes in. Cash comes out. Clear cut.

20 years down the road, uncle managed to save RM7,000 in the bank. Blood and sweat money. Saving up for his kid’s Form 6 school fees.

Then one day, a manager from a big café chain walked up to his stall.

“Uncle, we want 200 pisang goreng daily. We’re a big company, solid business, guaranteed volume.”

Uncle did the math on the spot. 200 pcs × RM2 = RM400 per day. One month = RM12,000. One year = RM144,000.

In 20 years of goreng pisang, uncle has never seen numbers like this.

One small condition : Payment term 60 days.
“No problem lah. Big company won’t run away one.”

Month one, uncle went ALL IN.
4am every morning. 200 pisang goreng. Like clockwork. Banana, flour, oil, gas, all pay first from his own pocket.

Month-end, uncle opened his little 555 notebook:

P&L (paper profit):
Sales: RM12,000
Cost: RM7,000
Profit: RM5,000 🎉

Wife happy. Uncle happy. “This month not bad, let’s go makan seafood! Buy new shoes for the kids!”

Spent RM500. Makan besar.

Then uncle opened his cash drawer.

Cash (real cash):

Walk-in customer sales: +RM1,500
Paid banana, flour, oil, gas, rental: −RM7,000
Seafood celebration: −RM500
Chain store payment: RM0 (still 60 days more)
Net cash this month: −RM6,000 😰

P&L says: You made RM5,000.
Cash says: You already lugi RM6,000.

Uncle checked his bank account. RM7,000 savings, now only RM1,000 left. The kid’s school fees? Almost all gone.

That night after closing, uncle sat in front of his stall. Staring at his 555 notebook. RM5,000 profit. Clearly written. Black and white.

But the drawer was almost empty. Kid’s school fees, gone. And the RM12,000 from the chain? Still 30 more days to wait.

That was the moment uncle finally understood:
Profit is paper profit.
Cash is the King.