I Made a Profit this Month and I Cannot Account for it.

This is another classic question that has been asked by restaurant owners. “Where did my profits Go?”.  My accountant tells me I made a profit according to my P&L statement and I cannot account for it.

I did not see an increase in my bank account, I seem to have more bills to pay and I do not feel that I am getting ahead financially.  Again, what is the answer to my question?

To resolve this problem, you need to do some extra work and it requires that you create a daily cash flow statement and at the end of the month your cash flow statement should match your bank account.  This will account for all of the money spent for the month.

You can get a free cash flow template from SCORE –  a nonprofit association dedicated to helping small businesses get off the ground, grow and achieve their goals through education and mentorship.


You can also modify it to make a daily cash flow statement.

Again, this will account for every dollar you spent for the month.

However, there is another way.

You have looked at you P&L, you have verified your sales, your costs are within your benchmarks and your other operating costs are in line. Now we come to the profit and loss line item and it shows a profit.

We are back to the same question “Where did my profits go”

Part of the answerer is that it is on your shelves in your storeroom, refrigerator or freezer.

You have inventory that was not used because you over purchased this month. That will account for some of your profits

The second and main reason is you are paying off your accounts payable and they have to come out of your profits for this period.  This is a big reason why your bank account is not growing.

If you purchased major equipment it is a balance sheet entry, however, the money came out of your profit for that month

These are just a few.

There is a solution.  Create another line item after your profit and loss. Call it AP/Other.

All of the cost or expenses that did not go into this months P&L and were paid, will go there.

For example, if you paid a credit card bill and it was for food for the previous month the amount paid will go there.  You have already expensed out the cost in the previous P&L.

Anything paid this month for items in the previous months will have to pay out of this month’s profit.

The purpose of this item is to show where your profits were spent.

I can send you a P&L Format for 13 periods on an excel sheet with the extra line item and more explanations.  Please e-mail me Karone@costgenie.com

Kenny Arone is a restaurant consultant and partner in Cost Genie Menu Costing Software. www.costgenie.com

2 thoughts on “I Made a Profit this Month and I Cannot Account for it.

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