The real problem
Most business owners check the bank balance first. But the bank balance does not always show what is safe to spend.
Can the business afford its next move?
Profit says yes, Cash says no?
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Why profit says yes but cash says no
Learn the 5 numbers every business owner should check before taking money out, hiring, or growing.
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02
Profit and cash are not the same
Profit is what happened on paper. Cash is what is available to use.
- Customers may not have paid yet
- GST and tax may not be set aside
- Suppliers and payroll may be due soon
- Owner drawings may not show clearly in profit
03
Number 1: Cash runway
How many weeks can the business survive with the cash it has today?
- Bank balance
- Upcoming payments
- Payroll
- Rent and loans
- GST and tax
04
Number 2: Real profit
After normal costs, owner pay and tax, is the business really making money?
- Gross profit
- Net profit
- Owner salary or drawings
- One-off income or expenses
- Margin by service or product
05
Number 3: Money stuck with customers
Sales are not useful if the cash is still sitting with customers.
- Unpaid invoices
- Overdue customers
- Large outstanding balances
- Customers paying slower than before
06
Number 4: Bills coming soon
Some cash in the bank has already been spoken for.
- Supplier bills
- Subscriptions
- Loan payments
- Payroll and CPF
- GST and tax obligations
07
Number 5: Tax and GST reserve
Not all cash in the bank belongs to the business owner.
- GST collected
- Corporate tax estimate
- CPF and payroll obligations
- Other tax amounts due
08
The CPR view
Your numbers should answer 3 simple questions.
Cash
Do I have enough money to operate safely?
Profit
Am I really making money after real costs?
Revenue
Is sales growth helping or hurting?
09
Why ordinary Xero gives reports, not decisions
Most Xero files are set up to record transactions. That is useful, but it does not always help the owner decide what to do next.
Profit-Ready Xero means your accounts, reports and monthly review are organised around CPR: Cash, Profit and Revenue.
10
Ordinary Xero vs Profit-Ready Xero
Ordinary Xero
Are the accounts done?
Did we reconcile the bank?
Did we file GST?
Profit-Ready Xero
How much cash is safe to use?
Are we really profitable?
Can we afford the next move?
11
Start with the free resources first
Use the 5-number routine to understand your business better.
When your business becomes more complex, or when you want your Xero set up to show these numbers clearly, you can explore our Profit-Ready Xero and CFO support plans.
View free resources View CFO plans →