The $1,500 Problem

The financial report said we’d brought in more than $68,000.

The bank account had about $1,500 in it.

And we were struggling to pay the director regularly.

The cash didn’t make sense.

It’s normal for profit and cash not to match exactly. Money moves through a business in ways that don’t always show up on the income statement—loans, debt payments, owner contributions, receivables and other balance-sheet activity.

But this wasn’t a small difference.

So I started following the cash.

That’s when I found two problems.

A significant debt payment was regularly leaving the bank account but wasn’t properly reflected in the books.

At the same time, pledges and accounts receivable were being recorded as though the cash had already reached the bank—even though it hadn’t been collected yet.

The financial reports weren’t showing us the same reality as the bank account.

And that changed the problem.

We didn’t just have a cash-flow problem.

We had an information problem.

Leadership couldn’t make good decisions about spending, staffing or what needed to change if the reports didn’t accurately show where the organization stood.

That’s why, when the financial statements and the bank account seem to be telling different stories, I don’t start by assuming one of them is right.

I follow the cash.

Because sometimes the thing that doesn’t add up is exactly where you need to start looking.