Why Your Profit & Loss Statement Doesn’t Match Your Bank Balance

Short answer

Because a Profit & Loss statement shows profit, not cash — and accounting timing matters.

The longer answer

This is one of the most common frustrations business owners have. You look at your bank balance and your P&L, and they don’t line up.

That doesn’t automatically mean something is wrong — but it often means something isn’t being understood.

Common reasons include:

• Outstanding customer invoices

• Credit card payments that haven’t cleared

• Owner transfers or loan activity

• Timing differences between income and expenses

• Uncleared or unreconciled transactions

Why this matters

If your books aren’t reconciled regularly, these differences pile up. Over time, that leads to:

• Confusing reports

• CPA questions at tax time

• Poor cash flow decisions

How to fix it

• Reconcile bank and credit card accounts monthly

• Review both the P&L and balance sheet together

• Separate business activity from owner activity

• Maintain consistent bookkeeping, not just year-end cleanup

Bottom line

Your P&L and bank balance tell different stories, but both need to be accurate. When they’re clean and reconciled, the numbers start making sense again.