Finance · 4 min read · Free
Profit Is Not the Same as Cash Available
You can be profitable and still have no money to buy the next deal.
Resellers often reinvest quickly. That can make the business look busy while available cash gets tight. Track inventory value, cash reserve, refunds, and new buying power separately.
What it is
The difference between profitable transactions and money currently available to spend.
Why it matters
Cash can be trapped in unsold inventory even when past sales were profitable.
When to use it
Use before new inventory purchases, owner withdrawals, and weekly reviews.
How to do it
Track available cash separately from inventory cost/value and expected profit. Keep a reserve for refunds, repairs, tax, and opportunity.
Worked example
You make $600 gross profit this month but reinvest almost all proceeds into six new devices. The business may be profitable while the bank balance is still low.
Your action plan
- Calculate current cash
- Calculate inventory at cost
- Set reserve
- Define actual buying power
Common mistakes
- Treating inventory value as cash
- Reinvesting everything
- Withdrawing profit that the business needs as working capital
Key takeaway
Profit describes performance; cash determines what you can do next.
Try this
Calculate how much of your current cash is tied up in unsold inventory.
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