We were reviewing a monthly close with an owner who had just crossed $1M in cash for the first time. A big milestone with years of work behind it. We started looking at what was actually in that number. Accrued bonuses not yet paid out, and some deferred revenue that had been recognized early. When we stripped those out, discretionary cash was closer to $600K.
Nothing looked broken, and that was the issue.
The owner had been mentally earmarking funds for a distribution. At $1M, that felt straightforward. At $600K in available cash, with a launch cycle coming in six weeks, it wasn’t.
This comes up more than it should, and almost always at inflection points: a record month, a launch that overperformed, a milestone crossed. The moments when business owners are most likely to make a consequential reinvestment or distribution call are exactly when the headline number is least reliable as a guide.
There are two figures worth separating out here.
Cash balance is the total sitting across your accounts right now. Available cash is what’s actually yours to deploy: your balance minus the short-term liabilities you know are coming. Cash balance minus the short-term liabilities you know are coming: payroll, bonuses, tax reservations, any deferred revenue you’ve recognized but haven’t yet earned. In properly maintained accrual books, these show up on the balance sheet and are directly traceable. In less structured setups, they live in someone’s head.
The gap between the two is fine to carry. The problem is when business owners don’t know the gap exists.
Profit First users have a structural head start here, the account separation makes this visible by design. Different buckets, different purposes, and the discipline of not treating the tax account as a float. Most businesses are not set up that way, which means the reconciliation has to happen manually before any significant cash decision gets made.
Where this matters most is in distribution decisions. How much can you take out of the business? That question has to be answered against available cash, not total cash balance. Getting that wrong doesn’t just affect personal finances. It can pull liquidity out of the business at exactly the moment a launch or a hiring decision needs it.
A rolling cash flow forecast solves most of this, because it forces the reconciliation before the decision rather than after. But even without one, the habit of asking “what’s already spoken for in this number?” before acting on a cash milestone is worth building.
If you’ve crossed a cash threshold recently and started thinking about what to do with it, it’s worth spending twenty minutes with your balance sheet before you do. The number you’re looking at is probably not the number that should be driving the decision.
What does the available cash number actually look like in your business right now? Most owners haven’t run the calculation. It takes about twenty minutes and changes the decision.
If you’ve crossed a cash milestone recently and aren’t sure what’s actually yours to deploy, schedule a time below and we’ll map it out: Let’s Talk!
P.S. This is separate from cash flow, which is its own conversation. This issue is specifically about the gap between what’s in the bank and what’s actually available. If you want to get into forecasting, that’s a different thread worth pulling.
If you’re in the agency world, I recently put together a full guide on scaling from $1M to $5M without burning out, covering the hidden financial traps. You can read it here:
The Ultimate Guide to FP&A for Agencies and Consultancies in 2026
Want forward-looking numbers you can act on? See how our FP&A service works.
