The Five Lines

Your profit and loss statement is not a record of your money. It is a record of your trading. The difference has exactly five lines in it, and this page finds which one it was.

Why the statement cannot see it

A truck note of fourteen hundred dollars a month has maybe two hundred and fifty dollars of interest in it. Only the interest is an expense. The other eleven fifty is principal, and principal never appears on a profit and loss statement. Neither does the money you pay yourself. Neither does the cash you move aside for tax.

All three are real money leaving a real account, and none of them are expenses. So the statement can read healthy while the account falls, and no amount of hunting for waste will find the gap, because the money did not leave as waste.

Run the page

One month. Twenty minutes. A legal pad is enough.

Cash Bridge · One Month Month: ____________

Net profit for the month Straight off the statement, before you argue with it.

Less: what you paid yourself Owner draws and distributions. A draw is not an expense.

Less: loan and equipment principal The payment minus the interest. Trucks, compressors, equipment finance.

Less: cash moved for tax Anything you transferred aside and have not spent.

Less: work finished and not yet paid Including the jobs that were never invoiced. Those are usually the biggest line.

Equals: what the bank account did

The page checks itself. Compare that last figure to your opening and closing bank balance for the same month. If it ties, you have found where the money went. If it does not tie, a line is missing, and the size of the miss tells you how big the missing line is. No single number can do that.

Illustrative example

A nine truck shop. Revenue up. Profit on the statement, nine thousand four hundred dollars. The bank account ended three thousand one hundred dollars lower than it started. Twelve thousand five hundred dollars between the statement and the account.

Six thousand of draws, two thousand three hundred of principal, two thousand four hundred moved for tax, and eighteen hundred of finished work sitting unpaid. More than half of that last figure had never been invoiced at all. Not late. Not disputed. Never sent.

Nine thousand four hundred, minus all five, equals minus three thousand one hundred. Exactly what the account did.

Run it for three months before you conclude anything. One month on its own is often just a cheque that cleared on the wrong day. Three months in a row shows you the friction. Then remove it.

If it does not tie

Bring the month that will not tie and we will find the missing line together, on a call. You keep the page and the answer whether or not anything else ever happens.

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