Two Miles Daily — Issue 038 Your Bank Balance Is Not Your Available Cash
Executive Brief • August 1, 2026 • Two Miles Advisory
A healthy bank balance can create a false sense of security.
You log in, see money in the account, and assume the business is doing well. You may decide it is safe to make a large purchase, take an owner distribution, hire someone, or pay down debt.
But not every dollar sitting in your bank account is truly available to spend.
Some of that money may already belong to someone—or something—else.
It may be needed for:
Payroll and payroll taxes
Sales tax collected from customers
Upcoming vendor payments
Credit card balances
Loan payments
Income tax estimates
Customer deposits tied to unfinished work
Insurance renewals
Equipment repairs
Other obligations that have not cleared the bank yet
That is why managing a business based only on the current bank balance can be dangerous.
Cash in the Bank Versus Cash Available
Imagine your business has $80,000 in its checking account.
At first glance, that may feel like a comfortable amount of cash. But you also know that the business has:
$24,000 of payroll and payroll taxes due
$18,000 of vendor bills coming due
$7,000 of sales tax collected but not yet remitted
$9,000 reserved for quarterly income taxes
$5,000 in upcoming loan and credit card payments
After accounting for those obligations, only $17,000 is truly uncommitted.
The bank says you have $80,000.
Your financial reality says you have $17,000 available for new decisions.
That is a significant difference.
Why Owners Get Caught Off Guard
Many cash shortages are not caused by an unprofitable business. They happen because the owner did not account for timing.
Revenue may have been deposited, but the related expenses have not yet been paid. Payroll taxes may have been withheld but not remitted. A customer may have paid a deposit for work that still needs to be completed.
The cash is visible, but the obligation is temporarily hidden.
This becomes especially risky when a business is growing. More sales often require more inventory, labor, subcontractors, shipping, equipment, or overhead before the company collects the next round of customer payments.
Growth can increase the amount of cash moving through the business while simultaneously reducing the amount of cash that is actually free to use.
Create Simple Cash Buckets
You do not necessarily need several bank accounts, although separate accounts can be helpful. You do need a way to identify what the money in the account is intended to cover.
A simple cash summary might include:
Operating cash
Money available for ordinary business expenses.
Payroll reserve
The next payroll, employer taxes, and employee withholdings.
Tax reserve
Sales tax, payroll tax, and estimated income tax obligations.
Committed payments
Vendor bills, debt payments, insurance, rent, and recurring expenses.
Customer deposits
Funds received for work or products that have not yet been delivered.
Emergency reserve
Cash set aside for unexpected costs or a temporary decline in revenue.
Once these amounts are identified, subtract them from the bank balance. The remainder gives you a much clearer picture of what the business can safely spend.
Look Forward, Not Just Backward
Financial statements tell you what has already happened. Cash forecasting helps you prepare for what is about to happen.
At least once a week, review:
The current bank balance
Expected customer collections
Payroll and tax deadlines
Bills due within the next few weeks
Debt and credit card payments
Large planned purchases
Any unusually slow-paying customers
A basic 8- to 13-week cash forecast can be one of the most valuable management tools in a growing business. It does not need to be perfect. Its purpose is to help you identify potential shortages early enough to respond.
You may decide to accelerate collections, postpone a purchase, adjust owner distributions, negotiate a vendor payment date, or arrange financing before the situation becomes urgent.
Be Careful With Owner Distributions
One of the easiest mistakes is taking money out of the business simply because cash is currently available.
Before making an owner distribution, ask:
Are all payroll and tax obligations covered?
Are upcoming vendor payments accounted for?
Does the business have enough cash for the next operating cycle?
Are there customer deposits that still need to fund future work?
Will the business still have an appropriate emergency reserve?
A distribution should come from truly available cash—not from money that is temporarily passing through the account.
CFO Insight
Your bank balance answers one question:
How much money is in the account today?
It does not automatically answer the more important question:
How much of that money can the business safely use?
Knowing the difference protects your company from unnecessary cash shortages, missed obligations, emergency borrowing, and decisions based on incomplete information.
Good cash management is not about being afraid to spend. It is about knowing exactly what you can afford before you commit.
About Two Miles Daily
Two Miles Daily is a daily executive briefing from Two Miles Advisory, delivering practical insights on leadership, finance, operations, and business strategy for entrepreneurs and growing businesses.
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Help business owners make one better decision every day.
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Published by Two Miles Advisory