What Your Restoration Cash Flow Statement Is Telling You (That Your P&L Isn’t)
Why the Cash Flow Statement Matters
Many restoration business owners feel blindsided when there’s no money in the bank—even though the P&L says they made a profit. That’s because profit and cash flow are not the same thing.
Your cash flow statement bridges the gap between your income statement (P&L) and your balance sheet. It explains why your cash balance went up or down.
There are three sections to focus on:
🔹 1. Cash from Operating Activities
This shows how much cash your business is generating from its actual operations. It adjusts net income for things like:
Depreciation (a non-cash expense)
Changes in receivables (if customers are paying or not)
Changes in payables (if you're paying vendors or holding off)
Tip: This is your most important number. If this is consistently negative, your business model or billing practices need attention—fast.
🔹 2. Cash from Investing Activities
This includes money spent on or earned from assets—like trucks, equipment, or office build-outs. In most cases, this number will be negative, because you’re reinvesting in the business.
Tip: One-time purchases may look like you're “losing money,” but they aren’t bad if you're still generating strong cash from operations.
🔹 3. Cash from Financing Activities
This section reflects how cash is moved through loans and owner activity:
Loan proceeds or repayments
Owner draws or contributions
Tip: Watch this section if you're regularly relying on loans or injecting personal funds just to cover payroll.
What Restoration Owners Should Do With It
Use it to understand cash swings, especially when you're profitable but tight on money
Monitor collection speed—a jump in A/R will show up here
Track major purchases to avoid draining reserves
Know whether your cash is growing sustainably, not just temporarily
Need Help Understanding Why You’re Profitable But Broke?
We help restoration contractors break down their financials into plain language, so they can finally answer the question: "Where did the money go?"